Buy/Sell/Hold: This why you should SELL Sterling Bank and UAC of Nigeria

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Buy Sell Hold Stocks

Stocks to Buy/Sell/Hold are picked from the top gainers and losers of the prior week, as well as various analysts’ reports.

Total: HOLD

Recent Results

Results for the nine months ended September 30, 2018 show that revenue rose from N221 billion in 2017 to N229 billion in 2018. Profit before tax rose from N9.6 billion in 2017 to N11.4 billion in 2018. Profit after tax also rose from N5.9 billion in 2017 to N7.6 billion in 2018.

Bua group

Price Information

Current Share Price: N220.90
Price to Earnings Ratio: 7.71X
Price to Book Ratio: 2.4
Year to Date Return: 8.8%
One Year Return: 3.39%

External View

Analysts at FBNQuest have a ‘Neutral’ recommendation on the stock. They have a target price of N279, which represents a potential upside from the stock’s price of N223.30, as at when the report was prepared.

Analysts at United Capital have a ‘Hold’ recommendation on the stock. They have a one year target price of N261.40, which represents a potential upside of 17.1% from the stock’s price of N223.30, as at when the report was prepared.

Our View

Total Nigeria Plc is a HOLD In Nairametrics’ opinion. Year to date, the stock is up 8.8% and has outperformed the Nigerian Stock Exchange All Share Index.

The stock is also trading at a PE ratio within the range of its peers such as 11 Plc, which is trading at 6 times earnings.

UACN: SELL

Recent Results

Results for the nine months ended September 30, 2018, show that revenue dropped from N68.2 billion in 2017 to N55.7 billion in 2018. Profit before tax fell from N3.8 billion in 2017 to N448 million in 2018. Profit after tax also plunged from N1.9 billion in 2017 to N252 million in 2018.

Price Information

Current Share Price: N8.90
Price to Earnings Ratio: 70.1X
Price to Book Ratio: 0.3
Year to Date Return: -8.6%
One Year Return: -46.6%

Coronation Research

External View

Analysts at FBNQuest have a ‘Neutral’ rating on the stock. They have a target price of N12.60 on the stock. This represents a potential upside of 37.2% from the stock’s price of N9.20, as at when the report was prepared.

Our View

UACN is a SELL in Nairametrics’ opinion. The stock is trading at a PE ratio nearly 8 times the average PE on the Nigerian Stock Exchange.

Year to date, the stock has also underperformed the NSE All Share Index, and may decline further with the release of its full-year 2018 results. The stock has touched 10 year lows in the last few weeks.

Investors would be better off waiting for the release of its FY 2018 result and an update from management on turnaround efforts for subsidiaries weighing down the parent company.

Sterling Bank: SELL

Recent Results

Results for the nine months ended September 30, 2018, show that interest income rose from N78.6 billion in 2017 to N93.5 billion in 2018. Profit before tax rose from N6.5 billion in 2017 to N8.2 billion in 2018. Profit after tax jumped from N5.9 billion in 2017 to N8.2 billion in 2018.

Price Information

Current Share Price: N2.36
Price to Earnings Ratio:: 6.21X
Price to Book Ratio: 0.64
Year to Date Return: 24.2%
One Year Return: 12.17%

External View

Analysts at Afrinvest have a ‘Sell’ recommendation on the stock. They have a one-year target price of N1.86. This represents a potential downside of 24.1% from the stock’s price of N2.45, as at when the report was prepared.

Our View

Sterling Bank is a SELL in Nairametrics’ opinion, as the stock trading at a PE ratio much higher than its peers FCMB which is trading at 2.8 times earnings and Fidelity Bank which is trading at 3 times earnings.

On a price to book ratio, Sterling is also a bit expensive compared to its peers trading at a price to book ratio of 0.6. Fidelity Bank is trading at a price to book ratio of 0.3, while FCMB is trading at a price to book ratio of 0.2.

We remain cautiously optimistic on equities as a whole, as the elections approach. Though the NSE has traded strongly in the green in the last few days, further upside would depend on the outcome of the elections.

Investors would be better off waiting on the sidelines, till their conclusion.

1 COMMENT

  1. funny how you said all the nice things about sterling then slap a SELL rating on it based on 0.6x book. its got so much potential as a stock and a company and it will still outperform in bottom line wise both FCMB and Fidelity.

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