Stocks on our Nairametrics Buy/Sell/Hold list are drawn from the top gainers and losers of the previous week, as well as various analysts’ reports.
Access Bank: HOLD
Recent Results: Gross earnings rose from N137 billion in 2018 to N160 billion in 2019. Profit before tax increased from N27.2 billion in 2018 to N45.1 billion in 2019. Profit after tax jumped from N21.9 billion in 2018 to N41.1 billion in 2019.
Price Information
Current Share Price: N6.25
Price to Earnings Ratio: 1.62X
Price to Book Ratio: 0.3
Year to Date Return: -8.09%
One Year Return: -38.38%
Analysts at FBNQuest have an ‘Over Perform’ rating on the stock. They have a target price of N14.7, which represents a potential upside of 153.1% from the stock’s price of N5.8, as at when the report was prepared.
Analysts at United Capital have a ‘Hold’ recommendation on the stock. They have a 12 month target price of N7.1, which represents a potential upside of 19.3%, from the stock’s price of N6, as at when the report was prepared.
Analysts at Afrinvest Securities have a ‘Buy’ recommendation. They have a 12 month target price of N10.44, which represents a potential upside of 80% from the stock’s price of N5.8, as at when the report was prepared.
Our View
Access Bank is a HOLD in Nairametrics’ view. While the stock’s low multiples make a compelling case for a Buy (Access is trading at the lowest price ratio among FUGAZ banks and below the average PE of 7.8 times earnings on the NSE), investors would be better off waiting for the bank’s H1 2019 results.
This would enable investors measure progress made post-merger, more so as the results are likely to be audited. Access is one of the few banks to pay an interim dividend, and management has indicated in the past its willingness to maintain this practice post-merger.
MTN Nigeria: HOLD
Recent Results: Results for the financial year ended December 2018, show revenue increased from N887 billion in 2017 to N1 trillion in 2018. Profit before tax rose from N107 billion in 2017 to N221 billion in 2018. Profit after tax jumped from N81 billion in 2017 to N145 billion in 2018.
Price Information
Current Share Price: N136
Price to Earnings Ratio: NA
Price to Book Ratio: NA
Year to Date Return: 51.1%
One Year Return: NA
External View
Analysts at FBNQuest have a ‘Neutral’ rating on the stock. They have a target price of N148.7 which represents a potential upside of 12.2% from the stock’s price of N132.6, as at when the report was prepared.
Analysts at Chapel Hill Denham have a ‘Buy’ recommendation on the stock. They have a target price of N190.55, which represents a potential upside of 84.5% from the stock’s price of N108.9 when the report was prepared.
Our View
Nairametrics has a HOLD recommendation on the stock. Investors would be better off waiting for further clarity pertaining to investigations by the Economic and Financial Crimes Commission (EFCC), on its listing, as well as some progress with a court case filed against the Office of the Attorney General of the Federation (OAGF).
A negative outcome from any of these cases would lead to a drop in the stock’s price.
The stock is also up by 51.1%, out performing the NSE All Share Index which is down 0.56% year to date.
Dangote Cement: HOLD
Recent Results: Results for the first quarter ended March 2019 show that revenue dipped from N242 billion in 2018 to N240 billion in 2019. Profit before tax fell from N108 billion in 2018 to N78 billion in 2019. Profit after tax also dropped from N72.1 billion in 2018 to N60 billion in 2019.
Price Information
Current Share Price: N199.80
Price to Earnings Ratio: 9.01X
Price to Book Ratio: 3.2
Year to Date Return: 5.32%
One Year Return: -17.61%
External View
Analysts at FBNQuest have an ‘Overperform’ rating on the stock. They have a target price of N246.1 which represents a potential upside of 23% from the stock’s price of N200, as at when the report was prepared.
Analysts at United Capital have a ‘Buy’ recommendation on the stock. They have a twelve month target price of N235, which represents a potential upside of 15.8%, as at when the report was prepared.
Analysts at ARM Securities have a ‘Strong Buy’ recommendation on the stock. They have a target price of N248.14, which represents a potential upside of 24.1% from the stock’s price of N200, as at when the report was prepared.
Analysts at Afrinvest Securities have a ‘Buy’ recommendation on the stock. They have a target price of N257.67, which represents a potential upside of 28.8% from the stock’s price of N200, as at when the report was prepared.
Our View
Dangote Cement is a HOLD in Nairametrics’ opinion. The stock is trading at a PE ratio higher than the average PE on the stock exchange.
The stock has also outperformed the NSE All Share Index, which is down 0.56% year to date.
Flour Mills of Nigeria Plc: SELL
Recent Results: Results for the nine months ended March 2019 show that revenue fell by 6.3% from N427 billion in 2018 to N400 billion in 2019. Profit before tax fell from N19.5 billion in 2018 to N11.2 billion in 2019. Profit after tax also fell from N13.2 billion in 2018 to N7.8 billion in 2019.
Price Information
Current Share Price: N13.40
Price to Earnings Ratio: 6.20X
Price to Book Ratio: 0.37
One Year Return: -55.87%
Year to Date Return: -41.99%
External View
Analysts at FBNQuest have a ‘Neutral’ rating on the stock. They have a target price of N23.3 which represents a potential upside of 68.7% from the stock’s price of N13.8, as at when the report was prepared.
Analysts at United Capital have a ‘Buy’ recommendation on the stock. They have a twelve month target of N27.2, which represents a potential upside of 75.5% from the stock’s price of N15.5, as at when the report was prepared.
Analysts at Afrinvest Securities have a ‘Buy’ recommendation on the stock. They have a target price of N25.80, which represents a potential upside of 87% from the stock’s price of N13.80, as at when the report was prepared.
Our View
Nairametrics has a SELL recommendation on the stock. Results for the nine months ended December 2018 from indicate that its full year results will come in much lower.
Q1 2019 results for companies in the Fast Moving Consumer Goods space have been largely poor. We see no reason why Flour Mills would be different.
The stock recently hit a 10 year low and could drop further if bearish sentiments persist on the bourse.
Disclaimer
Please consult a financial adviser before making an investment decision.
