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Markets

Will Guinness Nigeria be squeezed as well ?

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Guinness Nigeria, Guinness Nigeria Announces Material Circumstances That Will Impact FY 2020, Guinness Nigeria posts N524 million profit in Q2 2020/21

Second quarter results for Guinness Nigeria would determine if the recent dip in revenue is a blip or due to renewed competition in its space.

Guinness Nigeria is our stock pick for the week.

About the company

Guinness Nigeria was incorporated in Nigeria on April 29th, 1950 as a trading company importing Guinness Stout from Dublin, Ireland.

The company has since transited to manufacturing a wide range of alcoholic and non-alcoholic beverages from breweries in Ikeja (Lagos State) and Benin City (Edo State).

Guinness Nigeria Plc was listed on the Nigerian Stock Exchange on January 2nd, 1965.

Recent Results

Results for the first quarter ended September 30, 2018, show that revenue dropped slightly from N29.9 billion in 2017 to N28 billion in 2018. Profit before tax, however, jumped from N41.3 million in 2017 to N1.2 billion. Profit after tax also spiked from N41.3 million in 2017 to N1.2 billion in 2018.

Pricing

Current Share Price: N72

Year High: N120

Year Low: N72

Year to Date: -23.40%

One Year Return: -25%

Price Outlook

If what appears to be a Christmas rally is sustained, the stock could bounce back to the triple digit mark before the end of the year. Year to date, the stock is down 23.40%, underperforming the Nigerian Stock Exchange All-Share Index which is down 16.41%.

On a sectoral basis, however, the stock has been one of the least hit. Nigerian Breweries is down 39.14% year to date, while International Breweries is down 44.04% year to date.

Valuation

Guinness is trading at a price to earnings ratio of 19.3 times earnings, nearly twice the average PE ratio on the Nigerian Stock Exchange (NSE).

Jaiz bank

However, compared to other stocks in the breweries space, it is trading cheaply. Nigerian Breweries is trading at a PE ratio of 27.49 times earnings. International Breweries is trading at 31.9 times earnings.

Firms in the brewery space tend to trade at a premium compared to other stocks, due to their blue-chip status.

Outlook

Second quarter results would be the key determinant for if the firm has been able to maintain its market share in the face of a renewed push by International Breweries.

This has seen its peer, Nigerian Breweries, getting squeezed.

The second quarter is also typically the most active, as it coincides with the festive season when sales are quite high.

While first quarter profits jumped sharply, this was largely due to the low base effects arising from a 2017 result in which the company’s profits dipped sharply, due to high finance costs.

Revenue, however, dipped year on year, due to a drop in domestic earnings.

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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 [email protected]

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    Markets

    Union Bank, LINKASSURE push NGX ASI into recovery

    The market breadth closed positive with the bulls as LINKASSURE led 25 Gainers, and 16 Losers topped by NEM.

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    Nigerian stock exchange market made a bullish recovery on the last day of the week’s trading session. This surge was bolstered by gains made by UBN and LINKASSURE amongst others. The All-Share Index increased by +0.21% to close at 39,198.75 from 39,114.73.

    • Nigerian Stock Exchange market value currently stands at N20.48 trillion. Its Year-to-Date (YTD) returns currently stand at -2.66%.
    • The market breadth closed positive with the bulls as LINKASSURE led 25 Gainers, and 16 Losers topped by NEM, showing a hint of consolation.

    Top gainers

    1. LINKASSURE up +9.25% to close at N0.69
    2. JOHNHOLT up +9.26% to close at N59
    3. UBN up +9.09% to close at N5.40
    4. ROYALEX up +8.33% to close at N0.65
    5. CHIPLC up +8.33% to close at N0.39

    Top losers

    1. NEM down -9.50% to close at N1.81
    2. COURTVILLE down -9.09% to close at N0.20
    3. SUNUASSUR down -8.47% to close at N0.54
    4. INITSPLC down -6.98% to close at N0.40
    5. ETERNA down -6.89% to close at N5.81

    Outlook

    The market recovered from a week-long loss as it posts profit at the end of the trading session.

    • Market sentiments tend toward bullish momentum as the NGX ASI closes with 25 Gainers and 16 losers.
    • Nairametrics however, advises cautious buying in this era of growing uncertainties.

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    Markets

    SEC plans to monitor foreign stock brokers in Nigeria

    SEC is proposing tighter and stricter regulatory oversight and requirements for foreign stockbrokers in the country.

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    on

    Nigerian Stocks snap 7-year losing streak to post first gain in August

    In an attempt to reduce the demand for foreign stocks in Nigeria, the Securities and Exchange Commission (SEC) is proposing tighter and stricter regulatory oversight and requirements for foreign stockbrokers in the country.

    In an interview monitored by Nairametrics, the executive commissioner for operations of the SEC, Dayo Obisan revealed the commission was planning to actively monitor the local facilitators of foreign stocks.

    “At least 400,000 Nigerians have invested in foreign stocks through brokers in the past 18 months,” Obisan said, with Nigerians actively trading or holding foreign equities now exceeding those investing in the local market and about 70% of these participants being less than 40 years of age.

    This is despite the Nigerian Stock Exchange being dubbed the best performing last year after it gained 50% YTD. Stocks are however down 5% YTD.

    In contrast, the S&P 500 Index is currently trading 14.50% YTD, creating a new all-time high.

    Also, the value of transactions is down YTD as demand shifts from the Nigerian stock exchange market to the Cryptocurrency and foreign stock market.

    “There is an increasing interest among the younger population and this is of concern to the commission primarily because it creates an avenue for exploitation,” Obisan said.

    The SEC intends to license firms offering foreign stocks under a “digital sub-broker” regulation, which Obisan says should provide a form of clarity to their activities.

    He also stated the requirement will ensure “regulatory responsibilities in on-boarding clients, custody of assets, and compliance with reporting requirements are met”.

    Continue Reading

      





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