Markets
CORPORATE ACTIONS: Q1 2019 results and Rumours dispelled
@ubagroup and several other financial service firms will be holding their Annual General Meetings in the week to come.
Corporate actions are decisions taken by companies’ boards of directors or management teams, that could have impact on the firms themselves or shareholders.
Examples of corporate actions include the payment of dividends, closing of shareholders’ registers, announcing qualification dates and Annual General Meeting (AGM) dates.
Here is a run down of corporate actions that took place last week and those expected this week.
Corporate actions that took place last week
Results released
Prestige Assurance released its results for the 2018 financial year. Gross premium written increased by 23.6% to N4.7 billion in 2018, the highest in half a decade. Profit after tax however fell by 20.3% to N423 million. The company declared a dividend of three kobo per share.
AIICO Insurance released its full year 2018 results. Gross premium written increased by 17.5% to N37.6 billion in 2018. Profit after tax rose sharply by 158% to N3.1 billion in 2018. The firm declared a dividend of N0.06 per share.
NAHCO Aviance released its full year 2018 results. Revenue increased by 24% to N9.8 billion in 2018. Profit after tax declined by 74.7% to N196 million in 2018. The company declared a dividend of 25 kobo per share. The decline was largely due to a spike in operational expenses and administrative costs.
Abbey Building Society Plc released its full year results for the 2018 financial year. The firm recorded a loss after tax of N665 million.
Q1 2019 results
Tier one lenders GT Bank, Access Bank and Zenith Bank released their Q1 2019 results.
Guaranty Trust Bank’s gross earnings were up 1.2% to N110 billion in 2019. Profit after tax also increased by 10.5% to N49.3 billion in 2019.
Zenith Bank’s gross earnings dipped by 6.9% to N158 billion. Profit after tax rose 6.8% to N50.2 billion.
Access Bank’s gross earnings rose by 16% to N160 billion. Profit after tax jumped by 88% to N41.1 billion. GMD of the bank Herbert Wigwe, during a conference call, attributed the rise to USD swaps which were converted to fixed income securities. He was also confident that the bank would maintain the performance after the position had been wound down.
Unilever Nigeria had a decline in both topline and bottom line. Revenue declined by 20.6% to N19.2 billion in 2019. Profit after tax fell by 44% to N1.5 billion in 2019.
Africa Prudential’s Q1 2019 results show a decline in topline and bottom line. Gross earnings dipped by 9.19% to N869 million. Profit after tax fell by 17.1% to N381 million In 2019.
United Capital also had a decline in its first quarter 2019 results. Gross earnings dropped by 34% to N1.45 billion. Profit after tax fell sharply down 49% to N644 million.
Rumours cleared
Golden Breweries Plc issued a press statement debunking media reports that it had resumed operations.
Grief at Greif
Greif Nigeria Plc, in board resolutions sent to the Nigerian Stock Exchange, stated that it had continued to record losses in the first quarter of the 2019 financial year. Efforts to win back a key customer and increase its prices were unsuccessful.
The company had therefore resolved to stop receiving new orders and suspend production indefinitely.
Meetings held
McNichols Plc held a board meeting where its Q1 2019 results were considered. The board also approved the appointment of Olusegun Layode as a non executive director and chairman. He replaces Ozurumba Afigbo, who had been acting chairman.
UAC Nigeria held an investor call following the release of its full year 2018 results a few weeks ago. Management stated that it was taking steps to address UPDC Plc’s capital structure (which would be concluded before the end of the year) as well as tweaking operations at UAC Foods.
An adjustment
FBN Holdings moved the qualification date for its dividend to the 23rd of April, 2019, from the earlier date of the 22nd of April, 2019 due to the Easter holiday. The shareholders’ register will also be closed from the 24th to 29th of April, 2019 (both days inclusive).
The Holdco will be paying a dividend of 26 kobo per share.
Corporate actions taking place next week
Here is a rundown of corporate actions taking place next week.
Board meetings
FBN Holdings and Julius Berger Plc will be holding board meetings to consider respective Q1 2019 results.
AGMs
UBA, Custodian, Sterling Bank, Ecobank Trans International (ETI), Fidelity Bank and FCMB will be holding their Annual General Meetings this week.
UBA Plc will be holding its Annual General Meeting on Tuesday, 23rd of April, 2019.
Custodian Investment Plc will hold its AGM on Wednesday, the 24th of April, 2019.
Sterling Bank and Ecobank Trans International (ETI) will hold their AGMs on Thursday, the 25th of April, 2019.
Access Bank had also tentatively fixed its AGM for Thursday, the 25th of April, 2019.
Fidelity Bank and FCMB will be holding their AGMs on Friday, the 26th of April, 2019.
Stock Market
Nigerian bourse gains N37.26 billion, triggered by BUACEMENT, ZENITH
Nigerian bourse finished on a bullish note triggered by AIRTELAFRI, BUACEMENT and ZENITH BANK
The Nigerian Stock Exchange All Share Index finished today by 0.30% to 24,097.48 points, with market capitalization also adding N37.26 billion to close at N12.57 trillion.
However, trading activity was lower as evidenced by a 18.01% decline in volume of equities traded to 155.52 million units, while the value of trades also fell slightly by 6.60% to N2.60 billion. GUARANTY was the most traded by volume and value at 19.72 million units and N413.8 million.
Market sentiment, as measured by market breadth, was negative as 18 tickers declined, relative to 17 gainers. REDSTAREX and PZ were the top gainers of the day with 9.76% and 5.00% price appreciation, while OKOMUOIL and UNILEVER topped the losers with 9.95% and 9.78% depreciation in share value.
The sectoral performance was mixed as two of the five indices closed higher, while the other three closed the day in the red. The Banking Index (+0.92%) led the advancers, followed distantly by the industrial Index (+0.09%).
Conversely, the Insurance Index fell by -1.92%, while the Consumer and Oil & Gas Index fell by -0.52% and -0.02% respectively.
READ MORE: Top banks’ stocks plunge, as bears overwhelms Nigerian tier-2 banks’ rally
FCMB (+4.09%), UBA (+2.48%) and ZENITHBANK (+1.87%) lift the lenders’ Index, while BUACEMENT (+2.51%) raised the industrial Index. MANSARD (-9.66%) and CUSTODIAN (-9.09%) drove the Insurance Index lower, UNILEVER (-9.78%) and GLAXOSMITH (-8.08%) accounted for depreciation in the Consumer Goods Index and MRS (-9.78%) depressed the Energy Index. Similarly, MTNN closed the day lower by -0.86%.
Top gainers
REDSTAREX up9.76% to close N3.26,AIRTELAFRI up 3.66% to close at N328.7,BUACEMENT up 2.51% to close at N40.9,ZENITHBANK up 1.87% to close N16.35,PZ up 5.00% to close N4.2
Top losers
OKOMUOIL down 9.95% to close at N69.7,UNILEVER down 9.78% to close at N12.45,MRS down 9.78% to close at N12.45,MTNN down 0.86% to close at N115,DANGCEM down 0.79% to close at N126
Outlook
Nigerian bourse finished on a bullish note triggered by AIRTELAFRI, BUACEMENT. Nairametrics envisages market volatility will increase in the coming days as earning results are scheduled to come out.
FEATURED
The risk of buying Forex at black market rate of N460/$1
Between 2012 and 2017 the naira has depreciated by 30% compounded annually.
If you ask anyone today to choose between being paid in dollars or in naira, there will only be one winner. Since the oil price crash in early March and the ravaging COVID-19 virus, the exchange rate between the naira and dollar has depreciated across the multiple official and unofficial markets where the currency can be purchased.
At the black market, the exchange rate sells for an average N460/$1 (as at this week) and is projected to go higher depending on who you speak to. At the NAFEX market where forex is sold by exporters and investors, the exchange rate is closer to N388/$1 oscillating between a plus or minus N2 band. Just last week the CBN informed the market that the SMIS window where forex is sold to importers and traders that the new floor for forex purchase in N380/$1. The exchange rate at the official CBN window remains N360/$1.
READ ALSO: Investors lose N162 billion amidst buying pressure from ZENITH, GTBANK
This buttresses the growing calls for the unification of the various exchange rate windows. The market wants a single uniform rate. It is easy to see why. No one wants to be on the losing side if a repeat of 2017 occurs. In case you forgot, the exchange rate was highly volatile in the parallel market trading for as high as N505/$1 before crashing down to N366/$1 after the CBN introduced the NAFEX window. Many people lost money as the naira converged towards that rate. You don’t be in this boat if history repeats itself.
This is why speculating the exchange rate between the naira and dollar can be a brutally risky exercise compounded by the multiple exchange windows in the country. Buy at N460/$1 today and hold as most non-savvy speculators often do and the multiple forex windows are collapsed into one at N388/$1, as the central bank governor alludes to, things could get very risky. If unifying the exchange unlocks liquidity into the market rate and it holds at N388/$1, there is every likelihood that the parallel market rate will follow suit. Those on the other side of the trade looking to convert their dollars (purchased at N460/$1) into naira will be burned badly.
Perhaps a consolation is that so long as Nigeria continues to be import-dependent, it is only a matter of time before the naira depreciates to your buying price. Between 2012 and 2017, the naira has depreciated by 30% compounded annually. You probably only need to wait another 2-3 years and you claw back your losses. But the same cannot be said for anyone with a dollar investment and looking to convert to naira. The burn can be severe.
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For example, you purchase $1,000 at N460 and invest in an asset that should earn you 10% or $100 in profits. If by the time you liquidate your $1,100 and the exchange rate has strengthened to say N400, your $1100 is now N440,000 compared to the N460,000 it cost you when you purchased at $1,000. The exchange rate loss has basically wiped out your profits and part of your capital.
Speculating in forex is hugely rewarding but also very risky. Don’t be fooled to believe it only goes up, things can go down faster than you can imagine. The market will always deliver greater fools.
Cryptocurrency
BTC whale moves 10,250 BTC valued at $95,000,000
A BTC whale is an individual or business entity owning around 1000 BTC or more.
BTC whales have been active lately since the last BTC halving unfolded, showing a large amount of transactions taking place lately in the BTC market.
According to data obtained from BTCBlockbot, an unknown BTC whale moved 10,250 BTC ($95M) in block 637,996 estimated to be roughly worth about $95million dollars, this transaction took place, less than 24 hours ago.
Whale alert! 🐋 Someone moved 10,250 BTC ($95M) in block 637,996 https://t.co/xWaZmb2rJZ
— Bitcoin Block Bot (@BtcBlockBot) July 6, 2020
Global investors and traders are still dipping their toes in the BTC market to see how this situation unfolds. While it is difficult to predict market movements, BTC whales have always shown historically that they often determine BTCs trend.
Quick fact; At the BTC market, investors or traders who own a large amount of bitcoins are typically called Bitcoin whales. This means a BTC whale would be an individual or business entity (with a single Bitcoin address) owning around 1000 Bitcoins or more.
READ MORE: BTC whale steps in to buy larger stacks of Bitcoin, at a discount of $8,850
As BTC whales accumulate bitcoins, Bitcoins circulating supply reduces, and this can weaken any bearish trend bitcoin finds itself in. Meaning that over time, it’s possible that as Bitcoin approaches its fixed supply of 21 million, the price of BTC will go up, with BTC’s present demand factored in.
“The price of BTC is now more than 20x higher than it was when we first saw this many whales, implying that more wealth is being held by whales,” Glassnode noted.
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“However, the average balance held by each whale has decreased during this period, such that whales actually hold less BTC now than in 2016, and less wealth (in USD terms) than in 2017,” it added.
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