The first half of the year on the Nigerian Stock Exchange is usually dominated by the release of full-year results by companies. Though impending elections may cause a delay (or an early release in some cases), here are stocks investors should have on their radar in the first and second quarters of the year.
Access Bank/Diamond Bank Plc
The two lenders have a joint top spot by virtue of their ongoing merger process. Recent briefings by the banks indicate that court ordered shareholder meetings will take place some time in February.
Access Bank’s share price had slid since news of the merger was announced, before finding a support level around the N5.80 mark. Share price of both stocks would be worth watching till the merger is consummated.
In the event of a sharp drop in Access share price to the N4 mark (a faint but possible reality depending on market sentiments), the terms and conditions of the merger would have to be revised.
Zenith Bank Plc
Zenith Bank takes second place by virtue of being the bank with the highest profit after tax earning as at the third quarter ended September 30, 2018. The bank is among Nigeria’s tier one banks (collectively known as FUGAZ) that typically kick off the earnings season.
Guaranty Trust Bank Plc
As is typical, Guaranty Trust Bank and Zenith are in a tight race in terms of leadership of the FUGAZ pack. Full year results would be the deciding factor if GTBank takes the lead pertaining to profit this year.
UBA has a spot on this list by virtue of being one of the FUGAZ banks. The bank has also consistently released its full-year results in the month of March.
FBN is one of the largest of the FUGAZ banks, and has consistently released its full year results in April. FUGAZ results are often considered side by side and follow similar patterns in terms of profit drivers and impairments.
FBN has cleaned its books in the last few years, and 2018 should be the last year of heavy impairments.
Seplat Petroleum Development Company Plc
Seplat has a space on our watchlist for two reasons:
First, the firm would most likely be one of those that will file their results on time, having indicated that a board meeting would be held to consider them on the 28th of February, 2019.
The company also takes a prominent place due to the forecast by many analysts of a resumption of militant attacks this year. The company’s operations were badly crippled in 2016/2017 and if this were to repeat itself, management and shareholders would be in a tight spot.
Forte Oil Plc
Forte Oil has a spot on our watchlist by virtue of majority shareholder Femi Otedola’s intentions to divest his entire shareholding. The transaction is expected to be completed in the first half of 2019.
It is yet unknown if Prudent energy the incoming owner, will keep the firm on the exchange or delist.
A H1 equity watchlist would be incomplete without considering Dangote Cement, which amounts to roughly a quarter of the NSE’s total market capitalization.
While FY 2018 results may come in flat, the company may decide to increase its dividend output and is a clear market driver.
Cement Company of Northern Nigeria
Cement Company of Northern Nigeria (also known as Sokoto Cement) was the best performing stock last year, hence a place on the H1 2019 watchlist. The rally in price has been largely due to the improved performance.
H1 2019 results would be the first after its merger with Kalambaina cement and would indicate if it can maintain the growth witnessed last year.
Resort Savings and Loans
Resort Savings and Loans has a spot in our H1 watchlist by virtue of the removal of a technical suspension placed on it a few weeks ago.
The company is in talks with private equity firm, Milost Global, and the suspension had prevented the injection of capital by the firm. Milost has not had much luck with listed firms on the NSE. Talks with Unity Bank Plc, Japaul Oil, and Maritime Plc ended abruptly, in a somewhat controversial manner.
Total Nigeria Plc
Total has a spot on our watchlist by virtue of a stellar 2018 result, which Nairametrics believes will culminate in a bumper full-year dividend.
The company has also a tradition of releasing its full-year results on time. FY 2017 results were released sometime in February, FY 2016 in March and FY 2015 in April.
Nigerian Breweries Plc
Nigerian Breweries is on our H1 watchlist for two reasons. The company has a tradition of releasing its results on time. FY 2015, 2016 and 2017 results were all released in the month of February.
Asides that, the company is very likely to turn in poor full-year results. Q4 2018 ( which is typically embedded within its full-year results) will be a key factor in deciding if the stock would be worth holding this year.
The breweries sector has become a fiercely competitive space in the last few years, with the scaling up of International Breweries.
The festive period (October to December) is typically the best performing month for brewers, and so Guinness ‘s second-quarter results are one to watch out for, to evaluate how well it has held up to its competitors.
International Breweries has slowly and steadily carved into the market share of the bigger brewers. 2018 full year and Q1 2019 results would be a pointer as to the sustainability of this.
Stanbic is pushing the tier two borders, and to some extent, should be in a class of its own. The bank’s 9M 2018 results show a marked improvement from the prior year.
While Stanbic typically pays a minute final dividend, (in addition to the bank indicating its intentions to conserve capital), it could decide to increase it.
Ecobank Trans International
ETI alongside Stanbic ideally would be categorised as a mid-tier bank. The pan African bank has cleaned its books in the last few years, and this has reflected in its bottom-line. Ecobank made the third highest profit as at Q3 2018 with a profit after tax of N75 billion.
The bank has not paid dividends in the last few years due to the magnitude of provisions, but 2018 results could buck the trend.
Fidelity Bank has emerged a leader in the tier two space, alongside Stanbic IBTC (alongside FCMB and Stanbic IBTC). Dividend payments have however not matched the consistent increase in both top and bottom line. The full-year 2018 results will be a key determinant if this will continue or change.
While Sterling bank was in the news last year, due to its bank wars’, the lender turned in decent results with an improvement in both top and bottom line. The stock was also one of the best performing on the NSE, last year.
2018 would be the first full year result of the current Managing Director, Suleiman Abubakar. H1 2019 results would indicate if the bank will either continue on the growth trajectory last year or coast.
NAHCO and SAHCO
NAHCO and SAHCO occupy the joint last spot on this list, despite operating in a somewhat overlooked sector on the NSE. The two firms operate as a duopoly, and SAHCO’s listing would provide an opportunity to compare results alongside.
NAHCO has had a turbulent ride in the last few years, and the new management and majority ownership should play a stabilizing factor.
Why Bitcoin could be worth $1,000,000
Leader of Europe’s biggest crypto exchange revealed the price of the flagship crypto could hit the $1,000,000 million mark.
Jesse Powell, the leader of Kraken, Europe’s biggest crypto exchange said Bitcoin could be priceless and the world will soon give up pricing the world’s most popular crypto asset in U.S dollar terms.
Speaking to Bloomberg, he revealed the price of the flagship crypto could hit the $1,000,000 million mark within a decade.
— Bloomberg TV (@BloombergTV) March 4, 2021
He said, “The people that are believers in Bitcoin see… it’s going to replace all of the world’s currency so that basically means whatever the market cap of the dollar is, the euro — all of that combined is what Bitcoin could be worth,” Powell continued.
“I think in the near term, people see it surpassing gold as a store of value, so I think $1 million as a price target within the next ten years is pretty reasonable.”
The top European crypto leader was obviously bullish on the flagship crypto-asset;
“Of course, you know, we can only speculate, but when we measure it in terms of dollars, you have to think it’s going to infinity,” he told Bloomberg TV about future price trajectory.
“This national currency’s only fifty years old, it’s already showing extreme signs of weakness, and pretty soon I think people are going to start measuring the price of things in Bitcoin,” he noted.
In addition, a crypto strategist William Clemente said, “Looking at Reserve Risk, this Bitcoin Bullish Run is still in its Early-Mid stages.”
— William Clemente III (@WClementeIII) March 3, 2021
Recall some months back, Raoul Pal, the founding partner and CEO of Global Macro Investor who has more than 50% of his capital in the flagship crypto, predicted a wave of institutional funds that could likely push Bitcoin to $1,000,000 in the next 5 years.
In an interview with Stansberry Research, as seen on Youtube, the former hedge fund manager revealed the global economy was moving from the “hope phase” to the “insolvency phase” as global investors realize that the economy is going to take much longer recovering from COVID-19 pandemic than anticipated.
He said, “There’s no stimulus around, and we’ve got more problems to come to Europe, the US, and elsewhere, and businesses don’t have enough cash flow. They’re closing in droves and that’s what I call the ‘Insolvency Phase’…
“Yeah, I think [$1 million is] about right. Just from what I know from all of the institutions and all of the people I speak to, there is an enormous wall of money coming into this. It’s an enormous wall of money. Just the pipes aren’t there to allow people to do it yet, and that’s coming, but it’s on everybody’s radar screen and there’s a lot of smart people working on it.”
Why buying Bitcoin in Nigeria is not cheap
It appears to have become much difficult for Africa’s most important crypto market to get Bitcoin at a fair value.
It’s no longer news that the recent CBN reminder restricting Nigerian financial institutions from Bitcoin and other Crypto assets have started to spur negative effect in the crypto industry when considering the cost of buying the world’s most popular cryptocurrency at Africa’s largest crypto market.
A recent study by Nairametrics revealed the flagship crypto asset, Bitcoin traded as high as 46% premium on some P2P exchanges and untraditional channels when compared to the use of Nigerian bank debit cards before the Crypto ban took effect, meaning the price of a bitcoin on such platforms was much expensive than its average price on other Crypto exchanges of around $49,000 at the time.
Crypto experts are of the bias that although the Central Bank’s recent directive does not criminalize ownership of Bitcoin, the circular will however make it difficult for them to process debit, credit card, and bank transfer transactions.
This is already increasing the complexity of a significant number of Nigerians that often use their local currencies in buying crypto assets. Many Crypto exchanges interviewed by Nairametrics spoke on the challenges many of its Nigerian users face buying Bitcoin at a fair value on the account that Nigerian leading financial payment providers such as Paystack, Flutterwave have arbitrarily cut ties with Crypto exchanges.
Adding more woes to young Nigerians adamant about buying the flagship crypto asset is the prevailing dollar scarcity in Africa’s leading economy which had often led many to buy the dollar at the black market rate of as high as N500, knowing fully well that all Crypto assets value are denominated in U.S dollar.
Adding credence to this, Rume Ophi a.k.a. Cryptopreacher, and Nigerian Crypto Educationist said;
“Nigeria’s bitcoin price isn’t consistent because it is pegged to the dollar (Usdt), which is a bit different from the parallel market, the one we call the black market or abokifx.”
He added weight to the exchange rate disparity on some Crypto exchanges and other channels Nigerians have been left with
“At the time of writing, Paxful an online peer 2 peer platform pegged 1 USDT to 475. This means you need 475 naira to get 0.0000004sat (the smallest unit of bitcoin is called sat). Whereas a black market vendor is also known as OTC will sell for 480/$,” Ophi said.
The effect of the CBN crypto ban is already breeding bad actors that are currently taking advantage of the high thirst for Bitcoin as Luno a leading African-based Crypto exchange in an email sent to Nairametrics sheds more light on the cost bitcoin buyers in Nigeria must bear;
“Pushing people underground also makes it easier for scammers to exploit Nigerians, and we are already seeing Bitcoin trade at huge premiums in the country as a result of the ban.
“Other companies have made the choice to find workarounds that are less visible for regulators – for example, Peer-2-Peer (P2P) trading. Our view is that P2P trading would go against the spirit of the CBN’s directive.
“We believe that the focus should instead be on demonstrating to the CBN that exchanges such as Luno have the necessary controls in place to address the concerns it has in relation to cryptocurrencies.”
What you should know
- Recall, the Central Bank of Nigeria had recently notified Deposit Money Banks, Non-Financial Institutions, other financial institutions against doing business in Crypto and other digital assets.
- In a circular dated 5th February 2021 and distributed to regulated financial firms, the apex bank of Africa’s largest economy warned and reminded local financial institutions against having any transactions in crypto or facilitating payments for crypto exchanges.
- Nigerian Apex bank further warned Nigerian financial stakeholders that any breach of this directive will attract serious regulatory sanctions.
Luno also spoke on the effect the CBN crypto ban will have on Nigerians in the long term, stating,
“Any attempt to restrict access to cryptocurrency does not protect Nigerians. It holds them back and leaves them vulnerable. It prevents honest Nigerians from taking advantage of all that cryptocurrency has to offer them.”
Bottom line: The rate of purchasing the most widely used Crypto asset in Nigeria is currently trading at a premium amid the Central Bank’s directive, suggesting it is getting much harder for Africa’s most important crypto market in getting Bitcoin at a fair value.
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