Stocks on our Buy/Sell/Hold list are drawn from the top gainers and losers of the previous week, as well as various analyst reports.
BOC Gases: HOLD
Recent Results: Results for the half year ended June 2019 show that revenue increased from N1.36 billion in 2018 to N1.48 billion in 2019. Profit before tax fell from N213 million in 2018 to N188 million in 2019. Profit after tax dropped from N147 million in 2018 to N128 million in 2019.
Price Information
Current Share Price: N6.12
Price to Earnings Ratio: 7.47X
Price to Book Ratio: 0.93
Year to Date: 45.4%
One Year Return: 60.83%
External View: None
Our View
BOC Gases is a HOLD in Nairametrics’ opinion. The stock is currently trading at a 5 year high outperforming the NSE All Share Index which is down 12.09% year to date. While H1 2019 results show a marginal decline (due to disruptions in gas supply), management was optimistic that gas supply would be much more stable in the second half of the year.
Zenith Bank: HOLD
Recent Results: Results for the half year ended June 2019 show that revenue increased from N322 billion in 2018 to N331 billion in 2019. Profit before tax rose from N107 billion in 2018 to N111 billion in 2019. Profit after tax also rose from N81.5 billion in 2018 to N88.8 billion in 2019.
Price information
Current Share: N18
Price to Earnings Ratio: 2.96X
Price to Book Ratio: 0.69
Year to Date Return: -21.9%
One Year Return: -8.57%
External View
Analysts at United Capital have a ‘Buy’ rating on the stock. They have a 12 month target price of N35. This represents a potential upside of 115.1%, from the stock’s price of N16.00, as at when the report was prepared.
Analysts at FBNQuest have an ‘Over perform’ rating on the stock. They have a target price of N36.4, which represents a potential upside of 119.5%, from the stock’s price of N16.60, as at when the report was prepared.
Analysts at SBG securities have a ‘Buy’ rating on the stock. They have a target price of N37. This represents a potential upside of 122% from the stock’s price of N16.60, as at when the report was prepared.
Our View
Zenith Bank is a HOLD in Nairametrics’ opinion. While the stock is trading at a PE ratio far lower than the average PE on the NSE, it has not shown sufficient year to date decline to warrant entry.
Unilever Nigeria: SELL
Recent Results: Results for the half year ended June 2019, show that revenue fell from N48.1 billion in 2018 to N42.6 billion in 2019. Profit before tax fell from N7.5 billion in 2018 to N4.6 billion in 2019. Profit after tax declined from N5.5 billion in 2018 to N3.5 billion in 2019.
Price Information
Current Share Price: N27
Price to Earnings Ratio: 16.36X
Price to Book Ratio: 1.99
Year to Date Return: -27.0%
One Year Return: -46.27%
External View
Analysts at FBNQuest have a ‘Neutral’ rating on the stock. They have a target price of N25.1, which represents a potential downside of 10.2%, from the stock’s price of N27.90, as at when the report was prepared.
Analysts at United Capital have a ‘Buy’ rating on the stock. They have a 12 month target price of N47.90. This represents a potential upside of 71.7% from the stock’s price of N27.90 as at when the report was prepared.
Analysts at SBG securities have a Hold recommendation on the stock. They have a 12 month target price of N36 per share. This represents a potential upside of 12.5% from the stock’s price of N32 as at when the report was prepared.
Our View
Unilever Nigeria Plc is a SELL in Nairametrics’ opinion. The company’s half year 2019 results show that the company’s results may come in much lower than the 2018 full year.
Trade receivables for the firm also spiked from N18.2 billion in H1 2018 to N24.2 billion in H1 2019, up 32.9% year on year. This could indicate the firm may be having difficulties collecting receivables.
The increase in trade receivables also came in much higher, than sales which were up 12.9% year on year to N48.1 billion in H1 2019.
While the same trend was noticed in Nestle Nigeria Plc (H1 revenues up 4.%, but receivables up 21.8%), Unilever was way higher. Nestle also had an increase in both topline and bottomline.
Red Star Express: SELL
Recent Results: Results for the first quarter ended June 2019 show that turnover increased from N2.3 billion in 2018 to N2.5 billion in 2019. Profit before tax increased from N164 million in 2018 to N198 million in 2019. Profit after tax also rose from N111 million in 2018 to N134 million in 2019.
Current Share Price: N4.66
Price to Earnings Ratio: 5.11X
Price to Book Ratio: 0.86
Year to Date Return: 1%
One Year Return: -19.56%
External Views
None
Our View
Red Star Express is a SELL in Nairametrics’ view. This week, the company had through its Stockbroker, APT Securities and Funds Limited, submitted an application to The Nigerian Stock Exchange for the approval and listing of a Rights Issue of 294,748,380 ordinary shares of fifty kobo each at N4.50 per share, on the basis of 1 new share, for every two held.
An impending rights issue will mean more shares in issue, and would lead to a lower share price.