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NEM Insurance Plc hits slow mode

NEM Insurance had a slightly turbulent 2018, due to issues pertaining to its 2018 AGM.

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NEM Insurance Plc, NEM Insurance's share capital, NAICOM

NEM Insurance had a slightly turbulent 2018, due to issues pertaining to its 2018 AGM, though the storms seem to have settled. However, the company is in line to deliver a flat result, compared to the last two years.

About the company

NEM Insurance was incorporated in 1970. The company was listed on the Nigerian Stock Exchange (NSE) in 1989, following its privatization by the Federal Government. The firm operates in the general insurance segment.

Recent results

Results for the nine months ended September 30, 2018 show that gross premium written increased from N11 billion in 2017 to N12.5 billion in 2018. Profit before tax dipped slightly from N2 billion in 2017 to N1.8 billion in 2018. Profit after tax also dropped slightly from N1.69 billion in 2017 to N1.6 billion in 2018.

Pricing

Current Share Price: N2.51
Year High: N2.51
Year Low: N1.72
Year to Date Return: -7.04%
One Year Return: 38.12%

Price Outlook

The Nigerian Stock Exchange has rallied in the last few weeks, as some foreign investors take positions in anticipation of a peaceful election, and due to the US Fed halting on increases in its interest rate. The stock has underperformed the NSE, down 7% year to date.

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Possibilities of a rally are quite low, more so as its 9M 2018 results are flat year on year.

Price valuation

NEM is currently trading at a price to earnings ratio of 4.74 times earnings, far lower than the average PE on the Nigerian Stock Exchange. It is, however, trading within a similar range to its peer AIICO Insurance which is trading at 5.6 times earnings.

Outlook

The company is most likely ending up with a flat 2018 result due to a rise in reinsurance expenses, after upbeat 2016 and 2017 full year results.

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Audited full year and Q1 2019 results will give an inkling if this is a onetime occurrence.

NEM is one of the few insurance firms that have done fairly well in the last couple of years, leading to institutional investors such as VFD (which exited last year) and AFIG Funds taking a position. That is unlikely to change anytime soon.

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]

2 Comments

2 Comments

  1. [email protected]

    February 14, 2019 at 9:09 pm

    How can you possibly say AIICO trades at a PE of 11? What is was their earning per share and share price. You guys will have to be more careful in your reporting so as not to miss lead the investing public. I see too many inaccuracies on this site and I have learnt to double check assertions made here.

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Funds Management

Before you transfer RSA: Best Pension Fund managers in Nigeria (1)

Pension fund managers based on the availability of information on the website, responsiveness to inquiries, and ease of navigation of the websites, among other factors.

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Pension

In a recently published article, I did a piece on what to look for in a fund manager. Since then, a few people have contacted me to ask for my recommendations.

Unfortunately, I do not recommend fund managers, however, I try as much as possible to put the facts out there and leave readers, RSA holders and investors, to make their choice. This is even more important now with the transfer window open for RSA holders.

For those who want to use the pension fund performance as part of the decision variable for choosing where to transfer to, please refer to my recent piece on the YTD ranking of pension funds or contact me directly via the comments page of this article.

Recently, I did a piece on the most transparent pension fund administrators in Nigeria, that article too can be a reference point. Although, a lot has changed since I wrote that piece, either as a result of the article or as a result of adherence to best practice requirements by the pension fund administrators or managers.

So, here are my take on pension fund managers based on the availability of information on the website, responsiveness to enquiries, and ease of navigation of the websites, among other factors, in no particular order.

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OAK Pension Fund Administrators

Wow! OAk, you rock! This fund administrator packaged the pricing information in such a downloadable form that anyone can see it in pdf format for the entire month. However, the only issue is that for anyone without the ability to translate pdf files into excel, the historical analysis may be a problem.

Current and past Funds’ audited financial statements are also available for download. I did not see a chart of the fees or portfolio structure, two pertinent pieces of information that investors may need.

Sigma Fund Administrators

Its presentation of the daily reporting for all four funds is a beauty to behold. The data comes in an easily downloadable form. With their information on portfolio structure, it is easy to know what the funds are invested in and to what extent.

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You can also easily find the fee structure, which shows you how much fee you are or will be charged. Also available, are current and past audited financial statements for the various pension funds.

First Guarantee Fund Administrators

It reported on all 4 in the last 10 business days, thereby meeting the minimum requirement. Again, it would have been good to show the entire month for people who had no time to visit the site weekly.

The implication of this is that historical data is lacking on the site. There is information on portfolio structure, so it is easily discernible what the funds invest in, however, I could not see any fee chart that shows what investors are being charged. There are audited financial statements but they take an undue amount of time to open up when clicked on.

Stanbic IBTC Fund Administrators

This is one of the most transparent fund managers in Nigeria in mutual and pension funds. In a beautiful format that can be copied, this fund administrator reports its prices for all 5 funds (including micro pension fund). With portfolio structure information readily available and up to date, you can see where your funds reinvested.

However, the only information I saw about fees, is the flat administration fee charge. There is need to put any other fee charged out there for investors to see. The audited financial reports on display are about the pension fund and fund returns for 2019. I did not see the returns for earlier years, although there is information on 3-year rolling returns.

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Anchor Fund Administrators

It reports in a very imaginative form, where you can get pricing information for a long period of time. There is also an updated portfolio structure detailing what the funds are invested in and the percentages. There is also a rate of return page where you can see the historical performance of the funds. There are current and past financial reports on display for download and analysis.

Stanbic IBTC

Legacy Pension Fund Administrators

It reports on funds – all 5 funds (including micro pension fund), on beautifully and strategically positioned clickable icons on their website. The icons which opens up when you click on the view history, displays the required information which is accessible by defining the period of interest.

Information on the portfolio structure comes in a downloadable format, so you can easily know what the funds are invested in. There is information about the admin fees charged, but that is so close to the price icon that you need to look very closely to see.

The annual rate of return of the funds is also available dating from 2006 (depending on when the fund was launched). You can also see each fund audited financial statement, the latest of which is for 2019, as expected.

ARM Pension Fund Administrators

It reports on all 5 funds (including micro pension fund) on beautifully positioned and strategically clickable icons on their website. Past and current funds’ audited financial statements are readily available. It does not, however, look like there were information on portfolio structure, fee or rate of returns as I could not find those on the web site.

Conclusion

I will be releasing another part of this piece as it is not possible to evaluate all the PFAs in one article. So, stay tuned.

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Currencies

U.S dollar set for weekly losses, currency traders buy Euro, British Pound

Currency traders’ recent moves in the money market will continue to put the U.S dollar under pressure in the short term.

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The US dollar remains king, U.S dollar gains against major currencies, America threatens China with sanctions., U.S dollar slumps against major currencies, investors become optimistic about global demand, U.S Dollar Stands Firm, Foreign Exchange Traders Remain Neutral 

The U.S dollar is set for weekly losses against a basket of major global currencies amid a relatively calm trading session prevailing at the currency market

  • At the time of writing, the U.S. dollar index was stable around the 91.88 price band; still, it’s critical to note it’s not far from its three-month low of 91.84 it hit overnight.
  • Currency traders are moving in droves to riskier currencies amid the significant improving risk urge seen around global investors, which has helped triggered the prices of global equities, energy commodities to go up.
  • The U.S currency market was closed on Thursday as it observed the Thanksgiving holiday.

What this means: The greenback has been under increased pressure, taking into consideration global investors, increased their buying pressure on riskier currencies on the bias that a string of COVID-19 vaccines news reports and hopes for a more stable period at the world’s largest economy, had no pressing need to keep their investments in the safe-haven currency.

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.

Stephen Innes, Chief Global Market Strategist at Axi in an explanatory note to Nairametrics, spoke on the market conditions the U.S dollar arch-rival (Euro) is facing right now, taking into account that the prevailing odds are still weighing against the Euro despite its recent demand from traders;

“Just like mice and men, the best-laid plans of forex traders often go awry. Just as the street was making a good argument to “sell the buck” into year-end, the ECB minutes said, please pull in the bullish Euro reigns.

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“Dovish headlines from the ECB account of the October meeting, together with a dovish speech from ECB chief economist, seem to be weighing on the euro.

“There is now an interesting dynamic between Lane and ECB board member Schnabel, who, earlier this week, gave a decidedly hawkish speech (emphasizing side effects of non-conventional measures and the need to stretch out the ‘medium-term’).”

Bottom-line: Currency traders’ recent moves in the money market will continue to put the U.S dollar under pressure in the short term amid prolonged risk-on bias currently in play, triggered by COVID-19 vaccine hopes.

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Cryptocurrency

Canadian investment company buys more Bitcoin

The Canadian investment company recently disclosed it added about 73.9 BTC to its reserves since the middle of 2020.

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Bitcoin price drops $1400 in minutes, Binance, BTC wallets holdings 0.1 BTC reaches all time high, 13,000 BTC wallets are now worth more than $1,000,000

Cypherpunk Holdings a publicly listed Canadian investment company, amid record sell-offs prevailing in the flagship crypto market, has recently purchased more Bitcoin (BTC).

The Canadian investment company recently disclosed it added about 73.9 BTC to its reserves since the middle of 2020. Cypherpunk holdings raised cash by selling other crypto-assets like Monero (XMR) and Ethereum (ETH).

With the purchase, Cypherpunk now has 276.5 Bitcoins making it the 9th public Bitcoin holder. At current values, such crypto is worth about $5 million.

The report further added that “During October 2020, Cypherpunk Holdings Inc. was added to the unofficial list of public companies with a treasury position in Bitcoin alongside other companies such as MicroStrategy [MSTR], Square [SQ], and Galaxy Digital Holdings [GLXY].”

At the time of writing, Bitcoin price traded at $17,151.39 with a daily trading volume of $44 billion. BTC price is down -3.0% in the last 24 hours. It has a circulating supply of 19 million coins and a max supply of 21 million coins.

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Recall a publicly-traded company based in America, MicroStrategy, adopted Bitcoin as a treasury reserve asset to hedge against fiat inflation. This is seen in many quarters as a big deal and it’s good to see BTC’s being used as intended – a hard money/savings instrument.

Bottom-line: The many global economic uncertainties that include inflation and the depreciation in value for most global fiat currencies have made cash an unreliable store of value, pushing well-known companies like Square, MicroStrategy, Grayscale to store their value in a deflationary currency like Bitcoin.

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