This week was a bearish one on the Nigerian Stock Exchange, as the All Share Index opened at 32,058.28 basis points and closed at 31,678.70 points, down 379.58 basis points or 1.18%. Year to date, the index is down 17.17%.
30 equities appreciated in price during the week, higher than 24 in the previous week. 24 equities depreciated in price, lower than 36 in the previous week, while 115 equities remained unchanged higher than one hundred and nine (109) equities recorded in the preceding week.
Prestige Assurance Plc
Prestige Assurance was the best performing stock this week. The stock opened at N0.56 and closed at N0.79, up N0.23 or 41.07%. Year to date, the stock is up 58%
PZ Cussons Nigeria Plc
PZ Cussons Nigeria appreciated by 18.33% this week. The stock opened at N9 and closed at N10.65, up N1.65. Year to date the stock is down 48.30%.
Consolidated Hallmark Insurance Plc
Consolidated Hallmark Insurance opened at N0.33 and closed at N0.38, up N0.05 or 15.15%. Year to date, the stock is down 24%.
Flour Mills Nigeria Plc
Flour Mills of Nigeria Plc opened at N17.20 and closed at N19.80, up N2.60 or 15.12%. Year to date, the stock is down 31.72%.
NPF Microfinance Bank Plc
NPF Microfinance Bank gained 12.50% this week. The stock opened at N1.36 and closed at N1.53, up N0.17. Year to date, the stock is up 22.40%.
11 Plc (pronounced double one) opened at N150 and closed at N165, up N15 or 10%. Year to date, the stock is down 15.21%.
The company this week announced a partnership with Air BP on the sale of aviation fuel, after a 5 year absence.
GSK Consumer Plc
GlaxoSmithKline Consumer Nigeria Plc gained 9.96% this week. The stock opened at N12 and closed at N13.25, up N1.20. Year to date, the stock is down 38.6%.
CAP Plc opened at N26.60 and closed at N29.20, up N2.60 or 9.77%. Year to date the stock is down 14.12%
UACN Property Development Company
UACN Property Development Company opened at N1.44 and closed at N1.57, up N0.13 or 9.03%. Year to date, the stock is down 43.73%.
The company held its annual general meeting, this week.
Veritas Kapital Assurance Plc
Veritas Kapital Assurance rounds up the top 10 gainers for the week. The stock gained 8.70% this week, opening at N0.23 and closing at N0.25, up N0.02.
Ikeja Hotels Plc
Ikeja Hotels Plc was the worst performing stock this week, shedding 18.54%. The stock opened at N2.05 and closed at a year low of N1.67, down N0.38. Year to date, the stock is down 6.18%.
The company this week issued a press release, stating that OMA investments Limited had increased its stake in the firm, and was now the single largest individual shareholder. The release was in response to an article by Nairametrics.
Lafarge Africa Plc
Lafarge Africa Plc shed 12.50%. The stock opened at N16 and closed at N14, down N2. Year to date, the stock is down 68.81% and is trading at a 5 year low.
Jaiz Bank Plc
Jaiz Bank Plc opened at N0.45 and closed at N0.41, down N0.04 or 8.89%. Year to date, the stock is down 34.92%.
Law Union and Rock Insurance Plc
Law Union and Rock Insurance declined by 8.77%. The stock opened at N0.57 and closed at N0.52, down N0.05. Year to date, the stock is down 32.47%.
Unity Bank Plc
Unity Bank Plc opened at N0.93 and closed at N0.85, down N0.08 or 8.60%. Year to date, the stock is up 60.38%.
The bank this week announced it would hold its 12th Annual General Meeting (AGM) on the 17th of December, 2018. Venue is the Ibom Hotel and Golf Resort, Akwa Ibom State.
AG Leventis Plc
AG Leventis Plc opened at N0.36 and closed at N0.33, down N0.03 or 8.33%. Year to date, the stock is down 52.86%, and is trading at a year low.
Mutual Benefits Assurance Plc
Mutual Benefits Assurance Plc shed 8% this week. The stock opened at 0.25 and closed at N0.23, down N0.02. Year to date, the stock is down 54% and is trading at a year low.
Forte Oil Plc
Forte Oil Plc opened at N20.60 and closed at N19.20, down N1.40 or 6.80%. Year to date, the stock is down 55.84%.
Presco Plc opened at N66.25 and closed at N62.15, down N4.10 or 6.19%. Year to date, the stock is down 9.27%.
Wapic Insurance Plc
Wapic Insurance Plc rounds up the top 10 losers for the week. The stock shed 4.76% this week, opening at N0.42 and closed at N0.40, down N0.02. Year to date, the stock is down 20%.
Exchange rate stabilizes at the black market as dollar supply hits record low
The Naira remained stable against the dollar to close at N475/$1at the black market.
Nigeria’s exchange rate at the NAFEX window appreciated to N385.50 during intraday trading on Monday, August 10, 2020. In another development, the exchange rate at the parallel market remained stable on Monday as it closed at N475/$1 after exchanging as high as N485/$1.
Parallel Market: At the black market where forex is traded unofficially, the Naira remained stable against the dollar to close at N475/$1 on Monday, according to information from Abokifx, a prominent FX tracking website. This was the same rate that it exchanged on Friday, August 7.
NAFEX: The Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Monday, closing at N385.50/$1.
- This represents a 50 kobo gain when compared to the N386 rate close that was reported on the last trading day, Friday, August 7.
- The opening indicative rate was N386.17 to a dollar on Monday. This represents a 62 kobo drop when compared to the N385.55 to a dollar that was recorded on Friday.
- The Naira fell to as high as N386 during intraday trading before strengthening to the closed rate of N386. It also sold for as low as N384/$1 during intraday trading.
Forex is sold at several prices and at different times during the day.
Forex Turnover: Meanwhile, forex turnover at the Investor and Exporters (I&E) window recorded a massive decline on Monday, August 10, 2020, as it dropped by 95.7% day on day.
- According to the data tracked by Nairametrics from FMDQ, forex turnover dropped from $92.22 million on Friday, August 7, 2020, to a record low of $3.97 million on Monday, August 10, 2020.
- The forex turnover for the day fell to a record low after a decent supply the previous trading day. This just as dollar supply has remained very weak.
- The average forex sale for last week was about $50.6 million which is an improvement on the $32 million that was recorded the previous week. FX turnover hit a record low of $3.97 million after a few days of decent volume and is a far cry from the over $200 million turnover that was recorded in January.
- Total forex trading at the NAFEX window in the month of July was $937 million compared to $875 million in June.
- The exchange rate disparity between the official NAFEX rate and the black-market rate is still as wide as N89.5. Nigeria maintains multiple exchange rates comprising the CBN official rate, the BDC rates, SMIS, and the NAFEX (I&E window). The wide disparity between the 2 rates has created huge arbitrage opportunities for some highly connected individuals.
Exchange rate unification remains on the cards and yet to be implemented weeks after the central bank governor confirmed it will be executed.
DMO announces August 2020 FGN Savings Bond offer for subscription
The FGN Savings Bond is backed by the full faith of the Federal Government of Nigeria.
The Debt Management Office, on behalf of the Federal Government of Nigeria, recently offered for Subscription the August 2020 Federal Government of Nigeria Savings Bond.
The Federal Government of Nigeria Savings Bond is an investment product issued through the Debt Management Office (DMO) on behalf of the Federal Government.
The FGN Savings Bond is backed by the full faith of the Federal Government of Nigeria. As such, it is deemed to hold no default risk (Zero-Based Risk).
This is, therefore, to inform you that the Federal Government of Nigeria Savings Bond offer(s) for the month of August – 2020 has commenced on the 10th of August, 2020. It will close on the 14th of August, 2020.
It consists of two (2) tenors:
2-Year FGN Savings Bond due August 12, 2022: 3.61% per annum
3-Year FGN Savings Bond due August 12, 2023: 4.61% per annum
Please find below additional information to guide your application:
Unit of Sale: N1,000 per unit subject to a minimum subscription of N5,000.00 and in multiples of N1,000.00 thereafter, subject to a maximum subscription of N50,000,000.00.
Coupon Payment: Payable every quarter with principal repayment at maturity.
Settlement Date: August 19, 2020.
Coupon Payment Date: November 19, February 19, May 19, August 19
Security: The Federal Government of Nigeria Savings Bond is backed by the full faith and credit of the Federal Government of Nigeria (FGN).
Total Nigeria caught in the oil demand and lockdown saga
In Q1 2020, the company had recorded a revenue drop of 9.3% to N70.2 billion compared to Q1 2019.
The year 2020 was supposed to be a good one for the global oil and gas industry. Save for the unprecedented fangs of the Covid-19 pandemic, the IEA had forecasted in February that the global oil demand would grow by 825,000 barrels a day in 2020. On the contrary, lockdown measures restraining travel and other economic activities to contain the pandemic in many parts of the world had global oil demand down around 90,000 barrels a day from 2019. While the upstream sector had a direct hit owing to this reduced demand, the impact of the pandemic on the downstream oil industry caused the price of crude oil to fall significantly in a short period of time. GlobalData had forecasted that the energy sector would face downward earnings revisions of 208% in 2020.
With the pandemic leading to a slowdown in a wide range of business and personal travel, even gasoline demand had reduced and this has led to inventory challenges in both the distribution network as well as the refineries. In Nigeria, following the challenges of the pandemic, the federal government deregulated the downstream sector of the oil industry through the removal of fuel subsidy. While it presents a level playing field for the downstream oil private sector, it didn’t take long before companies like Total Nigeria plc. started caving into the overall reduction in inventory from the reduced demand for oil products in Q2 2020. Consequently, the company witnessed a 45% reduction in inventories from N33.6 billion as at 31st December 2019 to N18.5 at the end of Q2 2020.
How the exogenous shocks affected an already ailing Total Nigeria
The success or failure of any organization depends on both the macroeconomic environment as well as the operations of the company itself. For Total Nigeria, the timing for the crisis had been off as it too had operational challenges to deal with. In Q1 2020, the company had recorded a revenue drop of 9.3% to N70.2 billion compared to Q1 2019. While the headwinds of the pandemic might have played a small role in the decline at least in the latter part of the quarter, the loss after tax of N163 million it had recorded was 65.6% better than the loss after tax of the comparative quarter – a testament of the series of operational challenges it had from huge loans to raging expenses. While the company had set off on a strategic trajectory deploying a series of initiatives around cost efficiency, process optimization, as well as a significant reduction of working capital requirement and finance costs, Q2 had its own troubles waiting.
Restrictions in the oil market had led to weaknesses across product lines. Total revenue fell by as much as 50% from N73 billion in Q2 2019 to N36.5 billion in Q2 2020. Revenues from petroleum products had contracted by 55.7% while lubricant sales also fell by 26.7% in the quarter. Across the company’s core business sectors comprising Networks, General Trade, and Aviation, revenue from aviation experienced the most decline, falling by 83.0%. Its performance can be predominantly attributed to the fall in demand owing to strict lockdown measures even in major Nigerian cities.
The outcome of the company’s internal and external challenges is a loss after tax of N373.9 million from N604 million in Q2 2019 – an alarming drop of 161.9%. However, its strategic intent is also visible. Net cash balance was a negative N19.6 billion at the end of the quarter, compared to negative N41.8 billion a year ago. Finance costs also declined by 76.1% to N830.3 million as the company sought to reduce its leverage position. In the same vein, borrowings came at N31.0 billion in Q2 2020 as opposed to the N39.9 billion in Q2 2019. Yet, the success of the company in the immediate future is somewhat bleak.
This is because of the conditions of the oil market and overall economic landscape which is set to take a few years before returning to the norm as well as the financial and operational position of the company. That said, its earnings per share (EPS) of N4.37 and its price-to-earnings ratio of 18.12, reveal that the company has a good potential to make a rebound. However, it could take a few years. Hence, investors must be willing to wait for the long term. With its share price of N79.10 at the far bottom of its 52-week range of N78 and N129.50, it’s a great time to purchase its shares if you are willing to wait the long term.