International Breweries is a SELL

Stocks on our Buy Sell Hold are drawn from various analysts’ reports, as well as the top gainers and losers from the previous week.  

Zenith Bank: HOLD  

Recent Results: Gross earnings dipped from N745 billion in 2017 to N630 billion in 2018. Profit before tax, however, rose from N199 billion in 2017 to N231 billion in 2018. Profit after tax also rose from N173 billion in 2017 to N193 billion in 2018. 

Price Information 

Current Share Price: N22
Price to Earnings Ratio: 3.76X
Price to Book Ratio: 1.08
Year to Date Return: -3.7% 
One Year Return: -4.7% 

External View 

Analysts at United Capital have a ‘Buy’ recommendation on the stock. They have a 12–month target price of N35.70, which implies a potential upside of 61% from the stock’s price of N22 as at when the report was prepared.  

Our View 

Zenith Bank is a HOLD in Nairametrics’ opinion.

Though the stock is trading cheaply (GT Bank its peer is trading at 5.5 times earnings), and much lower than the average PE ratio on the Exchange, the year to date decline does not give enough room for entry. 

If the market continues to decline, like it has done in the last 5 days, the stock could fall below the N20 mark. 

FCMB: HOLD 

Recent Results:  

Results for the nine months ended September 30, 2018, show gross earnings for the group increased from N118 billion in 2017 to N132 billion in 2018. This marks an 11.8% increase year on year. 

Profit before tax jumped from N6.8 billion in 2017 to N14.7 billion in 2018. This represents a 116% increase year on year. Profit after tax also increased from N5.4 billion in 2017 to N11.3 billion in 2018. This marks a 109% increase year on year. 

Price Information 

Current Share Price: N1.92
Price to Earnings Ratio: 2.51X
Price to Book Ratio: 0.2
Year to Date Return:  3.7%
One Year Return: -21.53% 

External View 

Analysts at FBNQuest have an ‘Overperform’ rating on the stock. They have a target price of N2.90. This represents a potential upside of 56.5% from the stock’s price of N1.90, as at when the result was prepared.  

Analysts at United Capital have a ‘Buy’ recommendation on the stock. They have a target price of N2.50, which represents a potential upside of 35.1% from the stock’s price of N1.90, as at when the report was prepared.  

Our View  

FCMB is a HOLD in Nairametrics’ opinion. The stock is currently outperforming the index, which is down 1.73% year to date. The group has also yet to release its full-year 2018 audited results.  

International Breweries: SELL  

Recent Results: Results for the third quarter ended September 30, 2018, show that revenue increased from N36.5 billion in 2017 to N83.3 billion in 2018. Profit before tax, however, fell from N3.1 billion in 2017 to N2 billion in 2018. The company made a loss after tax of N7.1 billion, compared to a profit after tax of N1.4 billion made in the prior year. 

Price Information 

Current Share Price: N24.05 
Price to Earnings Ratio: NA
Price to Book Ratio: 5.8
Year to Date Return: -21.1%
One Year Return:  -57.81% 

External View 

Analysts at United Capital have a ‘Buy’ recommendation on the stock. They have a 12–month target price of N38.10, which represents a potential upside of 58.4%, from the stock’s price of N24.10 as at when the report was prepared.  

Analysts at FBNQuest have an ‘Underperform’ rating on the stock. They have a target price of N28.20, which represents a potential upside of 17.4% from the stock’s price of N24.10, as at when the results were prepared.  

Our View 

International Breweries is a SELL in Nairametrics’ opinion, though the stock is trading at a year to date and one–year low.  

While the company is clawing market share from its larger competitors (Nigerian Breweries and Guinness Nigeria) the firm, from all indications, it will record a full-year loss in 2018. 

This would lead to a further decline in share price when the results are released. 

Disclaimer 

Please consult a stockbroker/financial adviser before making any investment decisions.