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This is why AIICO Insurance is a HOLD

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

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Nigerian stocks, Buy Sell Hold, results

Stocks on our Buy/Sell/Hold list are drawn from the gainers and losers of the previous week as well as various analyst reports.

AIICO Insurance: HOLD

Recent Results:

Results for the nine months ended September 30, 2018 show that gross premium written increased from N23.5 billion in 2017 to N27.6 billion in 2018. Profit before tax, however, fell from N2.7 billion in 2017 to N2.1 billion in 2018. Profit after tax also declined from N2.4 billion in 2017 to N1.8 billion in 2018.

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Price Information

Current Share Price: N0.69
Price to Earnings Ratio: 11.17X
Price to Book Ratio: 0.3
Year to Date Return: 32.69%
One Year Return: 35.57%

External View

None

Our View

AIICO Insurance is a HOLD in Nairametrics’ opinion. The stock is trading close to its year low of N0.59, and could touch that mark if bearish sentiments persist in the market.

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The company is yet to state if it will proceed with a proposed N5.28 billion private placement, especially in light of the scrapping of the policy by the National Insurance Commission (NAICOM).

Investors keen on taking positions would be better off waiting for further clarity regarding this.

FBN Holdings: HOLD 

Recent results:

Results for the third quarter ended September 30, 2018 show 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. Profit after tax dropped from N45.8 billion in 2017 to N44.9 billion in 2018.

Price Information

Current Share Price: N7.20
Price Earnings Ratio: 5.15X
Year to Date Return: -18.18%
One Year Return: -19.05%

External Views

Analysts at United Capital have a ‘Buy’ recommendation on the stock. They have a 12 month target price of N10.7. This represents a potential upside of 40.8%.

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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 potential upside of 30.1% from the stock’s price of N7.60 as at when the report was prepared.

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Our View

FBN Holdings is a HOLD in our opinion. The stock is currently trading at 6.7% above its year low of N6.75, and could dip further if bearish sentiments persist in the market.

CCNN: HOLD

Recent results:

Results for the half year ended June 2018 show that revenue increased from N8.5 billion in 2017 to N12 billion in 2018. Profit before tax jumped from N1.3 billion in 2017 to N3.6 billion in 2018. Profit after tax also increased from N1 billion in 2017 to N2.6 billion in 2018.

Price Information

Current Share Price: N15.70
Price Earnings Ratio: 4.11X
Year to Date Return: 65.26%
One Year Return: 73.21%

External Views

None

Our View

Cement Company of Northern Nigeria is a HOLD in Nairametrics’ opinion, as the stock is up 65.26% year to date. Investors may have to wait a while before taking position, as the stock is trading at nearly twice its year low of N9.50.

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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 onome.ohwovoriole@nairametrics.com

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Coronavirus

Covid-19 Update in Nigeria

On the 29th of May 2020, 387 new confirmed cases and 2 deaths were recorded in Nigeria bringing the total confirmed cases recorded in the country to 9,302.

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COVID-19: FCMB reschedule operations

The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to rise as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 9,302 confirmed cases.

On the 29th of May 2020, 387 new confirmed cases and 2 deaths were recorded in Nigeria.

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To date, 9302 cases have been confirmed, 2697 cases have been discharged and 261 deaths have been recorded in 35 states and the Federal Capital Territory.

Covid-19 Case Updates- May 29th 2020

  • Total Number of Cases – 9,302
  • Total Number Discharged – 2,697
  • Total Deaths – 261
  • Total Tests Carried out – 58.726

The 387 new cases were reported from 14 states- Lagos (254), FCT (29), Jigawa (24), Edo (22), Oyo (15), Rivers (14), Kaduna (11), Borno (6), Kano (3), Plateau (2), Yobe( 2), Gombe (2), Bauchi (2), Ondo (1).

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

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The latest numbers bring Lagos state total confirmed cases to 4377, followed by Kano (942), Abuja at 564, Katsina (358), Oyo (275), Jigawa (265), Borno (264), Edo (262), Ogun (246), Bauchi (236), Kaduna (232),  Rivers (190), Gombe (154), Sokoto (116), Plateau (101).

Kwara State has recorded 87 cases, Zamfara (76), Nasarawa (62), Delta (57), Yobe (49), Akwa Ibom (45), Osun (44), Ebonyi (40), Adamawa (38), Imo (34), Kebbi (33), Niger (30), Ondo (25), Ekiti (20), Taraba and Enugu (18), Bayelsa (12), Anambra (11), Abia (10), Benue (7), while Kogi state has recorded 2 cases.

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, President Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

 

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READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

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DateConfirmed caseNew casesTotal deathsNew deathsTotal recoveryActive casesCritical cases
May 29, 202093023872612269763447
May 28, 202089151822595259260647
May 27, 202087333892545250159787
May 26, 2020834427624916238557107
May 25, 202080682292337231155247
May 24, 202078393132265226353607
May 23, 202075262652210217451317
May 22, 2020726124522110200750337
May 21, 2020701633921111190748987
May 20, 202066772842008184046377
May 19, 202064012261921173444757
May 18, 202061752161919164443407
May 17, 202059593881826159441837
May 16, 202056211761765147239737
May 15, 202054452881713132039544
May 14, 202051621931683118038154
May 13, 202049711841646107037374
May 12, 20204787146158695936704
May 11, 202046412421521090235894
May 10, 202043992481421777834794
May 9, 202041512391271174532784
May 8, 202039123861181067931154
May 7, 20203526381108460128184
May 6, 20203145195104553425071
May 5, 2020295014899548123704
May 4, 2020280224594641722912
May 3, 2020255817088240020702
May 2, 20202388220861735119522
May 1, 20202170238691035117512
April 30, 2020193220459731715562
April 29, 2020172819652730713692
April 28, 2020153219545425512322
April 27, 20201337644102559942
April 26, 20201273914152399942
April 25, 20201182873632229252
April 24, 202010951143312088552
April 23, 20209811083231977532
April 22, 2020873912931976482
April 21, 20207821172631975602
April 20, 2020665382311884662
April 19, 2020627862221704362
April 18, 2020541482021663562
April 17, 2020493511841593172
April 16, 2020442351311522772
April 15, 2020407341211282672
April 14, 202037330111992632
April 13, 202034320100912422
April 12, 20203235100852282
April 11, 202031813103702382
April 10, 20203051770582402
April 9, 20202881471512302
April 8, 20202742260442262
April 7, 20202541661442042
April 6, 2020238650351982
April 5, 20202321851331942
April 4, 2020214540251850
April 3, 20202092542251800
April 2, 20201841020201620
April 1, 2020174352091630
March 31, 202013982091280
March 30, 2020131202181210
March 29, 2020111221031070
March 28, 20208919103850
March 27, 2020705103660
March 26, 20206514102620
March 25, 2020517102480
March 24, 2020444102410
March 23, 20204010112370
March 22, 2020308002280
March 21, 20202210001210
March 20, 2020124001110
March 19, 20208000170
March 18, 20208500170
March 17, 20203100030
March 16, 20202000020
March 15, 20202000020
March 14, 20202000020
March 13, 20202000020
March 12, 20202000020
March 11, 20202000020
March 10, 20202000020
March 9, 20202100020
March 8, 20201000010
March 7, 20201000010
March 6, 20201000010
March 5, 20201000010
March 4, 20201000010
March 3, 20201000010
March 2, 20201000010
March 1, 20201000010
February 29, 20201000010
February 28, 20201100010

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Coronavirus

COVID-19 now a national security threat, as 2020 fiscal deficit exceeds FRA Standards

Reports from the Addendum to the 2020-2022 MTEF/FSP reveal that the revised fiscal deficit is estimated at N4.58 trillion from N1.85 trillion

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Covid-19 Regarded As Threat To National Security With 2020 Fiscal Deficit Higher Than FRA Standards

Given the vulnerability of Nigeria to the current global economic disruption, a series of key adjustments have been made to the 2020 fiscal framework. One of such is the fiscal deficit and deficit financing strategy following revisions to projected revenue and planned expenditure.

Reports from the Addendum to the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), reveal that the revised fiscal deficit is estimated at N4.58 trillion from N1.85 trillion in the 2020 Budget Framework passed by NASS.

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This level of deficit is 3.29% of GDP and this is above the threshold of 3% of GDP as stipulated in the Fiscal Responsibility Act (FRA), 2007. Section 12 of the Fiscal Responsibility Act (FRA), 2007 (as amended), stipulates that:

(i) “the estimates of aggregate expenditure and the aggregate amount appropriated by the National Assembly for each financial year shall not be more than the estimated aggregate revenue plus a deficit, not exceeding three% of the estimated Gross Domestic Product or any sustainable percentage as may be determined by the National Assembly for each financial year”; and,

(ii) “aggregate expenditure for the financial year may exceed the ceiling imposed by the provisions of (i) above, if in the opinion of the President there is a clear and present threat to national security or sovereignty of the Federal Republic of Nigeria.”

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(READ MORE: FG discloses how it will finance N5.36 trillion budget deficit)

According to the report, when the revenues and expenditures of the 10 GOEs as well as expenditures financed from project-tied loans are captured in the FGN’s budget, the aggregate fiscal deficit for 2020 will be N4.95 trillion, which is 3.55% of GDP.”

 “We believe that the COVID-19 crisis poses a threat to national security within the contemplation of the FRA 2007, and therefore the President can legitimately approve a deficit in excess of 3% of GDP.” 

The deficit will primarily be financed by new borrowings estimated at N4.17 trillion – N1.98 trillion from external (multilateral) concessional sources like the IMF, World Bank, & African Development Bank, and new domestic debts of about N593.89 billion. N126.04 billion will also be derived from Privatization proceeds, N263.63 billion from the Federal Government’s Special Accounts to fund covid-19 expenditures, and N387.30 billion will be drawn down on multilateral/bilateral loans obtained for specific development projects.

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FEATURED

Pension Fund Managers dump Nigerian Treasury Bills

Pension fund managers redeemed treasury bills worth N512 million Naira in the two months combined but did not invest any additional kobo into treasury bills within the same period.

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Pension funds, Treasury Bill Investment: Ghana Vs Nigeria, Further rate decline expected as N405 billion worth of treasury bills mature , CBN’s N225.45 billion T-bills auction records oversubscription, as rate fall below 5% , Nigeria’s 364-day treasury bills falls to 3.84% per annum

Analysis of the recently released summary of Pension Fund Asset data for the first two months of 2020 by the Pension Commission of Nigeria has shown that pension fund managers are no longer in love with Treasury Bills like they used to be in the past.

Time was when fund managers allocated much of their assets to treasury bills, but that seems to be waning as yields on treasury bills head towards subzero.

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According to the analysis, pension fund managers redeemed treasury bills worth N512 million in the two months combined but did not invest any additional kobo into treasury bills within the same period.

READ ALSO: Nigeria’s pension contributors add N186.43 billion to pension asset

Prior to this event, the pension fund had invested a combined sum of N1.88 trillion into treasury bills, representing 18.4% of total pension fund assets.

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With that development, pension fund managers allocation to treasury bills now stands at 13%. This is about the first time, in over 5 years that PFM’s are shying away from treasury bills.

The love seems to have shifted to bank placements which attracted additional investment if N420 million from pension fund managers. FGN Bonds continue their camaraderie with pension fund managers as they pumped additional N352 million into FGN bonds in January and February, combined. This seeming reallocation to bank placements is indicative of pension fund managers’ desire to hold on to their cash, while waiting and hoping that yields will trend up anytime soon.

READ MORE: Pension fund multi fund structure performance

Yield Analysis: Fund managers who are out to seek ways to generate positive alpha or returns for their investors are running away because of the low treasury bill yields. The last Treasury Bill option that was conducted on May 13th, 2020, had stop rates of 2.5%, 2.85% and 3.84% for 91-day, 182-day and 364-day treasury bills respectively. Those rates were not enticing enough for the fund managers.

Strong Market Demand: This does not mean that Nigerian Treasury Bills are no longer in demand because, according to the NTB Auction Results sheet of May 13th, 2020, all the three tenors of treasury bills were oversubscribed.

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While the 91-day Treasury Bill had N4,384,80,000 on offer, it attracted a total subscription of N22,334,588,000, the 182-day tenor which had N12,920,900,000 on offer saw N41,194,993,000 being subscribed for, while investors bid N102,030,671,000 for the 364-day tenor which had N16,536,720,000 on offer.

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READ ALSO: Pension contributions from Nigerians under 30 dwindling at an alarming rate

Pension Fund Asset Allocation: All said and done, FGN bonds continue to be the asset type with the highest allocation from pension managers. Out of the N10.5 trillion total pension fund asset value as at February, 29th 2020, N5.6 trillion sits with FGN Bonds, while bank placements come second with an allocation of N1.48 trillion leaving Treasury Bills in the third position with an asset allocation of N1.37 trillion.

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