Markets
Corporate Actions: A merger in the works and 5 new MDs
Corporate actions are decisions taken by companies’ boards of directors or management teams, that could have an impact on the firms themselves or shareholders.
Examples of corporate actions include the payment of dividends, closing of shareholders’ registers, announcing qualification dates and Annual General Meeting (AGM) dates.
Here is a review of corporate actions that took place this week.
Corporate Actions that held this week
Access and Diamond announce merger
This was the biggest corporate action that took place on the Nigerian Stock Exchange last week. After speculation, and even denial, Access Bank Plc and Diamond Bank Plc confirmed the merger talk.
As part of terms and conditions of the merger, Diamond Bank shareholders will get a payment of N1 per share and 2 Access bank shares for every 7 Diamond shares they own.
CEOs of the two banks Uzoma Dozie and Herbert Wigwe held a joint press briefing and an investor call following the announcement.
Access bank also sent a notice to the Nigerian Stock Exchange (NSE) of an Extraordinary General Meeting to be held on the 1st of February, 2019. The bank intends to raise N75 billion through a rights issue, to l boost its capital base ahead of the merger.
The move would make the resulting entity, the biggest bank in the country by asset size.
Investors piled into Diamond Bank, with the stock topping the gainers chart with a 57.89% gain.
Skyway Aviation Handling Company IPO extended
Skyway Aviation Handling Company Initial Public Offer, which was billed to end on Wednesday, 19 December 2018, will now close on Wednesday, 9 January 2019. The company is offering for sale 406,074,000 ordinary shares of 50 kobo each at N4.65 per share.
Cement Company of Northern Nigeria releases 9 months 2018 results
Cement Company of Northern Nigeria released its results for the nine months ended September 30, 2018. They showed a sharp increase in both top line and bottom-line.
Lafarge Africa Plc opens rights issue
Lafarge Africa commenced its N89.2 billion rights issue. The offer opened on Monday 17th December 2018 and will close on Wednesday 23rd January 2019.
A total of 7,434,367,256 shares will thus be issued at ₦12 per share, at the rate of 6 new shares for every 7 shares held by shareholders as at 4th December 2018 which is the qualification date.
Neimeth bounces back
Neimeth International Pharmaceuticals Plc released its results for the financial year ended September 30, 2018.
The company returned to profit-making as profit after tax stood at ₦184 million as against a loss of ₦411 million in 2017.
The company did not declare a dividend due to negative retained earnings but will give a bonus issue of 1 new share for every 10 held.
New CEOs appointed
Last week, five companies appointed Acting Managing Directors/CEOs.
Cutix Plc announced the appointment of Agnes Oduoye as Acting Managing Director, effective November 1, 2018, following the exit of the CEO, Ifeanyi Francis Uzodike.
Nigerian Aviation Handling Company Plc appointed Mrs. Olatokunbo Adenike Fagbemi as Acting Group Managing Director of the company with effect from 20th December 2018.
She replaces Mr. Idris Yakubu who resigned from the company with effect from 20th December 2018.
Prior to her appointment, she was a Non-Executive Director of the Company.
Mrs Modupe Oguntade, the Chief Financial Officer of Berger Paints Nigeria Plc (BPN), has been appointed as Acting Managing Director/Chief Executive Officer of BPN, effective January 7, 2019.
Oguntade will replace, Mr. Peter Folikwe, who will be exiting the board, having completed his four-year tenure as Managing Director.
Deji Mustapha was appointed Acting Managing Director of Morrison Pharmaceuticals Plc effective 10th December 2018. This follows the resignation of Nwabueze Oputa effective 30th of November, 2018
Adewale Adeyipo has been appointed Acting CEO of CWG Plc effective January 1, 2018. James Agada, the current CEO of will end his tenure by the 31st of December 2018. Agada was appointed in 2016 following the retirement of Austin Okere, a co-founder of the firm.
Linkage Assurance appoints Executive Director
Linkage Assurance Plc announced the appointment of Okanlawon Adelagun as its new Executive Director, Technical effective January 7, 2019.
Etranzact to raise N7 billion
Etranzact International, in a notice sent to the Nigerian Stock Exchange, disclosed its intentions to raise N7 billion either by equity/debt, or a combination of both.
The company’s management stepped down sometime this year, following an instruction by the CBN.
Proceeds will be used to upgrade and enhance the company’s technology infrastructure and network security systems, invest in an agent network expansion program, as well as human resources, and employee development.
Beta Glass may expand plant capacity
Frigoglass Plc (the parent company of Beta Glass Plc) has announced its intentions to invest €25 – €30 million to expand production capacity at the Beta Glass Guinea plant, located in Agbara, Ogun State.
Newrest ASL Nigeria Plc on its way out
Airline Services Limited (Newrest ASL) unveiled plans to delist from the Nigerian Stock Exchange. The company will seek shareholders’ approval for this at an EGM to hold on January 29, 2018.
The board of the company also authorized the Chairman, Richard Akerele, and CEO, Jonathan Stent-Torriani, to take all steps necessary.
Ecobank squashes rumours
Ecobank Trans International has denied rumors that there were overstatements in its balance sheet for the year ended 31 December 2017 and the three quarterly reports released during the 2018 year, emanating from incorrect exchange rates used.
The bank stated that as a policy within Ecobank Group, it used the official rate in the respective jurisdictions in which it operates to translate the results and balances of affiliates into the Group’s reporting currency, the US Dollar
It is however moving to the NAFEX rates, used by its peers. This was following approval by its board and was necessitated by most of its peers using the NAFEX rate. NAFEX stands for Nigerian Autonomous Foreign Exchange rate, and is arrived at independently by commercial banks.
Nigerian Breweries to appeal court judgment
Nigerian Breweries is to appeal a court judgment awarded against the company in a suit filed by Professor Ernest Izevbigie. Izevbigie had argued that the low sugar inscription on one of its brands was a trade trick.
The company has robustly denied this.
Unity Bank Plc
Unity Bank held its Annual General Meeting (AGM) last week. The firm is yet to issue any notice on resolutions agreed to at the meeting.
Continental Reinsurance
The firm held an Extraordinary General Meeting last week. Top on the agenda was obtaining shareholders’ approval for the purchase of minority holdings, or exchange with CRe Africa shares.
This would result in the delisting of the firm from the NSE.
Stock Market
GTBank, Cadbury, keep Nigerian Stocks fired up, Investors gain N105.76 Billion
Market breadth closed positive as LINKASSURE led 46 Gainers as against 2 Losers topped by WEMABANK
Nigerian Stock Market ended the Tuesday trading session on a bullish note.
The All Share Index gained by 0.28% to close at 28,777.96 basis points as against +0.28% appreciation recorded previously. Its Year-to-Date (YTD) returns currently stand at +7.21%, and investors gained 105.76 Billion.
READ: #EndSARS protests curb Bulls at the Nigerian Stock Market
- Nigerian bourse trading turnover also ended positively as volume ticked up by +20.44%, as against the +20.44% uptick recorded in the previous session.
- FBNH, ACCESS, and FIDELITYBK were the most active to boost market turnover. CILEASING led the list of active stocks that recorded an impressive volume spike at the end of today’s session.
- Market breadth closed positive as LINKASSURE led 46 Gainers as against 2 Losers topped by WEMABANK at the end of today’s session – an improved performance when compared with the previous outlook.
READ: Why you should avoid investing long term in Nigeria’s stock market
Top gainers
- FLOURMILL up 9.50% to close at N26.5
- CONOIL up 9.81% to close at N17.35
- CADBURY up 9.21% to close at N8.3
- GUINNESS up 5.63% to close at N16.9
- GUARANTY up 1.96% to close at N31.25
READ: #EndSARS: FG creates new N25 billion Youth Fund, to increase to N75 billion in 3 years
Top Losers
- WEMABANK down 1.72% to close at N0.57
- NEM down 1.46% to close at N2.03
- DEAPCAP flat to close at N0.27
- UNIONDICON flat to close at N10.95
- MOBIL flat to close at N178.3
READ: Nigerian bourse close flat, triggered by low market liquidity
Outlook
Nigerian Stocks were all fired up at Tuesday’s trading session. The surge is partially attributed to the leading blue-chip stocks that includes GTBank, Cadbury, Conoil, and Flour mills.
- Buying pressure got intensified as Nigeria’s major export earning – crude oil recorded impressive gains amidst the falling US dollar.
- Nairametrics, however, advises that you seek to buy stocks from a certified stockbroker, as some local equities exhibit cyclic returns.
Company Results
Flour Mills reports N9.9 billion profit in HY 2020/21
The increase in profit before tax was largely driven by the agro-allied segment.
Flour Mills Nigeria, announced its unaudited 2020/21 half-year financial results today, showing continued growth with a Profit after Tax of N9.9 billion for the six months ended 30th September 2020.
This information is contained in the press release by the Group, which is in line with Flour Mills’ Half-year 2020/21 financial statement.
READ: UBA Plc H1’2020 results, a true reflection of its rightsizing decision?
What you should know
- Flour Mills’ revenue was N355.1 billion, compared to N270,8 billion in H1 2019/20.
- The Group’s profit before tax was N14.6 billion, compared to N8.6 billion in H1 2019/20. The increase in profit before tax was largely driven by the agro-allied segment, which generated a profit of N6.3 billion compared to a loss the previous year.
- The agro-allied segment saw very strong improvement in the edible oils and fats, protein, and fertilizer businesses, following the investments over the last few years.
- The Group’s profit after tax was N9.9 billion, compared to N5.9 billion in H1 2019/20.
- FMN continued to show sustained growth in key segments driven by the closure of the Nigerian border since August 2019.
READ: CBN approves emergency maize import for 4 companies
Operational review
Despite prevailing economic headwinds, the Group continued to show sustained growth in key segments driven by the border closure since August 2019.
As the FMN key segment continues to capitalize on this development due to the strategic placement of the Group’s business in the industry.
READ: Access, GTBank, two others pay PWC & EY N1.5 billion as Audit fees in H1 2020
This development led to a strong performance in edible oils and proteins supported by agro-inputs (fertilizer) and agro-distribution and aggregation structures.
In line with FMN’s growth strategy, the edible oils and fats value chain saw a significant year-on-year increase of 32% in volume, turning in a profit when compared to the loss in H1 2019/20.
However, volumes for the protein value chain also increased by 18% year-on-year, while the starch value chain was up by 31% year-on-year.
READ: Warehousing and logistics: Key to the success of deregulation in Nigeria
What they are saying
Commenting on the result, Paul Gbededo, the Group Managing Director /CEO, stated; “With this result, our business has once again shown resilience, by following the path of sustainable growth despite the prevailing challenges in both the local and global economy.”
He further assured that “in line with our vision to continue to grow value for our investors, Management will for the remaining part of the financial year continue to concentrate on improving operational effectiveness through accelerated strategies for Group-wide cost optimization, which will ensure sustainability in the current market climate, while we continue to invest in growing the business further.”
Currencies
U.S dollar drops over resurging COVID-19
The U.S dollar dropped amid worries about the second wave of COVID-19 caseloads in the emerged markets.
The dollar pulled back some gains recorded on Monday against most of its major rivals at London’s trading session, amid worries about the second wave of COVID-19 caseloads in the emerged markets that include France, Germany, and the United States.
Against a basket of major global currencies, the U.S dollar dropped by 0.13% at the time of this publication.
READ: Will CBN’s recent MPR reduction have any positive outcomes?
READ: U.S Banks now permitted to hold Tether, Circle
Also, the highly contested U.S election made currency traders a bit cautious about taking large currency positions.
However, since the U.S election is about a week away, many currency traders appear to have already figured out their positions.
READ: How declining interest rates, others drive a shift in Nigeria’s investment sector
READ: U.S dollar drops, low U.S interest rates expected to persist for long
Quick fact: The U.S. Dollar Index tracks the greenback against a basket of major global currencies such as the Japanese yen, British pound sterling, Swedish Krona, Euro, etc. Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe, and Japan, would need to pay more dollars in fulfilling such payment obligations.
What they are saying
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics further gave insights on the macros prevailing at the currency market
READ: Currency traders relatively neutral on U.S dollar, despite impressive U.S Jobs report
“The markets want to load up on currencies but are still dealing with the fool me twice syndrome, as inaccurate polls from 2016 remain fresh in their mind and are wary of making the same mistake twice in a row.
“And this has introduced significant bias for the past week. Traders want to get involved but are holding back, fearing the worst-case of a socially disruptive outcome and have not fully started to take heart in the improved prospects of a bipartisan stimulus agreement even as the dollar sits on the brink of the next leg lower.”
READ: U.S dollar drops lower, as U.S Federal Reserve plans on boosting inflation
READ: Exchange rate remains flat, currency traders resume operations after curfew is relaxed
“Adding more pressure on the dollar in the midterm,” are comments made by Federal Reserve Chair, Jerome Powell, stating an accommodative shift in the central bank’s approach to inflation is increasing pressure on the greenback as currency traders interpreted that U.S interest rates could remain lower for a longer period of time.
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Altu Sadie
January 7, 2019 at 12:09 pm
Ecobank is changing to NAFEX which means that its Income statement and Balance sheet will reduce when translating from Naira to USD. The CBN rate previously used was 306 vs NAFEX of 360. They will now publish results using the same exchange rates as their piers. They still deny they overstated results.