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Markets

Buy/Sell/Hold: Why you should HOLD FBN Holdings stocks

Stocks on our Buy/Sell/Hold list are drawn from the top losers and gainers of the prior week.

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Nigerian stocks, Buy Sell Hold, results

Stocks on our Buy/Sell/Hold list are drawn from the top losers and gainers of the prior week, as well as various analysts’ reports.

Eterna Oil: HOLD

Recent Results:

Latest Results for the nine months ended September 30, 2018, show that revenue increased from N135 billion in 2017 to N205 billion in 2018. Profit before tax, however, fell sharply from N2.9 billion in 2017 to N1.7 billion in 2018. Profit after tax also fell from N2 billion in 2017 to N1.1 billion in 2018.

Price Information

Current Share Price: N5.45
Price to Earnings Ratio: 3.54×
Price to Book Ratio: 0.57
Year to Date Return: 34%
One Year Return: 42.89

External View: None

Our View

Eterna Oil is a HOLD in Nairametrics’ opinion. The stock is trading at a PE ratio largely in line with other companies in the sector such as Total and 11 Plc which are trading at 5 times earnings each. Year to date, the stock is up 34%. Investors already in would be better off holding.

PZ Cussons: SELL

Recent Results:

Results for the first quarter ended August 2018 show that revenue fell from N18.5 billion in 2017 to N15.8 billion in 2018. The company’s losses worsened year on year from N181 million in 2017 to N204 million in 2018.

Price Information

Current Share Price: N10
Price to Earnings Ratio: 11.89X
Price to Book Ratio: 0.9
Year to Date Return: 51.46%
One Year Return: 56.04%

External View

Analysts at United Capital have a BUY recommendation on the stock. They have a 12-month target price of N20.6 which represents  an 86.4% upside from the stock’s price of N11.1 as at when the report was prepared.

Analysts at FBN Quest have an ‘Underperform’ rating on the stock. They have a target price of N19.1 which represents a potential upside of 91% from the stock’s price of N10 as at when the report was prepared.

Analysts at Afrinvest have a BUY recommendation on the stock. They have a target price of N15.04 which represents a potential upside of 122.7% from the stock’s price of N22.27 as at when the report was prepared.

Our View

PZ Cussons is a SELL in Nairametrics’ opinion. The company’s results have remained negative in the last two quarters, and have shown no sign of changing.

FBN Holdings: HOLD

Recent Results:

Results for the third quarter ended September 30, 2018, show that interest income dropped from N356 billion in 2017 to N337 billion in 2018.

Profit before tax dropped from N55.4 billion in 2017 to N51.3 billion in 2018. This represents a 7.4% drop year on year. Profit after tax dropped from N45.8 billion in 2017 to N44.9 billion in 2018. This represents a 1.9% decrease year on year.

Price Information

Current Share Price: N7.55
Price to Earnings Ratio: 5.40x
Price to Book Ratio: 0.3
Year to Date Return: 14.20%
One Year Return: 7.20%

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External View

Analysts at United Capital have a BUY recommendation on the stock. They have a 12-month target price of N10.7 which represents a 33.8% upside from the stock’s price of N8 as at when the report was prepared.

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Analysts at Afrinvest have a BUY recommendation on the stock. They have a 12-month target price of N9.89 which represents a 30.1% upside from the stock’s price of N7.60 as at when the report was prepared.

Our View

FBN Holdings is a HOLD in Nairametrics’ opinion, as the stock is trading largely in line with other tier 1 peers such as Zenith Bank which is trading at a PE ratio of 4.1 times earnings and Guaranty Trust Bank which is trading at 5.5 times earnings.

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Year to date, the stock is down 14.20%. Investors would be better off waiting for a further price drop before taking positions.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.You can contact him via [email protected]

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Consumer Goods

Sell-off of shares by investors extend Flourmillers loss on NSE to N25 billion

Nigerian Flour millers on NSE suffer a decline as wary investors offload shares.

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Bloody February: Sell off of shares by investors extend Flourmillers loss on NSE to N25 billion

The sell-off of shares on the Nigerian Stock Exchange has triggered an N24.9 billion loss in the market capitalization of Flour Millers since the beginning of February, as wary investors offload.

It is important to note that the Nigerian Equity Market has been on the downward trend since the beginning of February, as wary investors sell off stakes in companies as the yields in the money market become attractive.

The results of this move led to a decline in the shares of companies listed on the Nigerian Stock Exchange, including a decline in the shares of Flour millers listed on the bourse.

A review of the performance of the stocks of these Flour millers on NSE revealed that the market capitalization of FLOUR MILLS, HONYFLOUR, and Northern Nigeria Flour Mills from the open of trade on February 1 till the close of trading activities on February 24 has declined from N154 billion to N129 billion.

How they have all performed

FlourMills has declined from N142.3 billion to N118.3 billion. However, the market cap of Honeywell Flour Mills has also declined, albeit marginally from N10.31 billion to N9.91 billion, while that of NNFM has declined from N1.72 billion to N1.25 billion. When added up, the three millers have lost N24.85 billion in market capitalization.

However, Flour Mills, the largest miller on NSE lost the most with N23.98 billion, as a percentage of market capitalization. Flour Mills is down by 16.85%.

Market activity

At the end of trading activities on the floor of the Nigerian Stock Exchange, the shares of Flour Mills declined by 6.9% to close at N28.85 per share, as investors sell off 5,029,161 ordinary shares of the company worth N143,009,264.10.

Shares of Honeywell at the close of trading activities today declined by 1.6%, while shares of Northern Nigeria Flour Mills remained unchanged at N7.02 per share.

The Consumer good index to which the Flour millers belong has fallen by 6.1% year since the beginning of February, compared to the Nigerian Stock Exchange All Share Index -5.17%.

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Currencies

Exchange rate weakens at NAFEX window as oil price hit $67

Naira lost 20 kobo against the US Dollar on Wednesday to close at N408.8/$1 at the NAFEX window, while oil price hit $67 per barrel

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Forex, Nafex, parallel market, exchange rate, Naira, Dollar

Wednesday 24th February 2021: The exchange rate between the Naira and the US Dollar closed at N408.8 to a dollar at the Investors and Exporters window where forex is traded officially.

Naira lost 20 kobo against the US Dollar to close at N408.8/$1 at the NAFEX window, which represents a 0.05% decline compared to N408.6/$1 recorded on Tuesday.

Meanwhile, the exchange rate remained stable in the parallel market, as it closed at N480/$1 on Wednesday, the same as recorded on the previous trading day.

Brent Crude oil appreciated on Wednesday to close above $67 per barrel, which is only less than $3 from the predicted $70 per barrel made by Goldman Sach earlier in the week.

Trading at the official NAFEX window

Naira depreciated marginally against the US Dollar in the Investors and Exporters window on Wednesday, as it closed at N408.8/$1. This represents a 0.05% loss when compared to N408.6/$1 recorded a day earlier.

  • The opening indicative rate closed at N409.5 to a dollar on Wednesday. This is the same as recorded on Tuesday and is the highest recorded since January 5th, 2021.
  • Also, an exchange rate of N429.75 to a dollar was the highest rate during intra-day trading before it closed at N408.8/$1. It also sold for as low as N390/$1 during intra-day trading.
  • Forex turnover at the Investor and Exporters (I&E) window increased by 72.2% on Wednesday, February 24, 2021.
  • According to the data tracked by Nairametrics from FMDQ, forex turnover increased from $123.37 million recorded on Tuesday, February 23rd, 2021, to $212.43 million on Wednesday, February 24th, 2021.
  • A cursory look at the data shows that Wednesday’s figure of $212.43 million is the highest turnover recorded since 14th January 2021, over a month ago.

Cryptocurrency watch

The world’s flagship crypto, bitcoin recovered partly from its precarious fall on Wednesday, after U.S. Treasury Secretary Janet Yellen and Elon Musk weighed in on Bitcoin’s recent rally.

  • Bitcoin, which at one point lost about $13,000 in value after dropping from its all-time high of $58,330.57 to $45,290.59 within the space of two days.
  • On Wednesday, Bitcoin traded at $49,486.36 as it solidifies its position as the most valuable crypto asset with a market value of $922.3 billion.
  • Meanwhile, major financial leaders have supported the bias of the Central Bank of Nigeria in placing a ban on crypto-related transactions.
  • They warn investors and the public of the dangers of owning bitcoin, as they also stated that the popular crypto asset could be ideal for money laundering and illicit transactions

Oil prices hit $67

Brent crude oil price rose by 2.89% on Wednesday to close at $67.26 compared to $65.37 recorded on Tuesday 23rd February 2021.

  • The increase in price is as a result of Goldman Sach’s prediction that oil prices would climb around $70 per barrel in the second quarter of the year and $75 in Q3 2021. This is $10 above its previous forecasts.
  • According to a report, the increase in oil prices could also be attributed to the restoration of around 80% of lost production after the Texas freeze that had reduced oil supply in recent weeks.
  • Meanwhile, Saudi Arabia and Russia are heading to the OPEC+ meeting next week with varying opinions on whether to add more supply to the market in April, which could shape the performance of the oil market.
  • However, Brent closed at $67.26 (+2.89%), WTI closed at $63.22 (+2.51%), Bonny Light at $63.73 (+1.43%), OPEC Basket ($63.73), and Natural Gas closed at $2.854 (-0.87%).

Dwindling external reserve despite increased oil price

Nigeria’s external reserve dipped marginally by 0.14% on Tuesday 23rd of February 2021, to stand at $35.23 billion.

  • Nigeria’s external reserve position has now hit its lowest level in almost two months.
  • It is worth noting that Nigeria has lost a sum of $1.08 billion in external reserve in February alone.
  • This downturn has continued to persist despite bullish trends in the global crude oil market.

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