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Riding the pandemic wave: Time to stock up

Nestle Nigeria reported Revenue growth of 6.7% y/y to N284.0 billion for FY 2019 from N266.3 billion and post-tax profit growth of 6.2% y/y to N45.7 billion.

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Why Nestle Nigeria’s return remains strong - EFG Hermes, Nestle Nigeria Plc appoints new Director, Nestle Plc: FY 2019 Revenue beats estimate; but profit underperforms

Nestle Nigeria reported Revenue growth of 6.7% y/y to N284.0 billion for FY 2019 from N266.3 billion and post-tax profit growth of 6.2% y/y to N45.7 billion from N43.0 billion in FY 2018. On a q/q basis, Revenue growth was down 4.7% to N72.7 billion in Q4 2019.

The company’s reported Revenue of N284.0 billion for FY 2019 beats our FY 2019 estimate of N278.2 billion while Net profit missed our estimate of N50.3 billion.

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In our view, the impact of the coronavirus outbreak will have a mixed effect on Nestle’s FY 2020 performance. We see a positive impact in H1 2020 as consumers have stocked up and continue to stock up ahead of expectations of lockdown in various parts of the country. Nestle, with several essential consumables in its product portfolio, is a prime beneficiary of such bulk purchases.

However, post-COVID-19 is filled with uncertainties as possibilities of a possible recession grows, which implies a possibly bleak H2 that could smoothen out any gains from H1. Overall, we forecast a Revenue growth of 5.2% y/y to N298.9bn and Net Income growth of 15.3% y/y to N52.7bn in FY 2020.

[READ MORE: FCMB Group records N188bn revenue, grows Profit to N20.1billion)

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Higher cost of equity reflecting the high-risk environment explains the marginal cut in our target price for Nestle to N1,323.27/s from N1,356.97/s. We note this implies a 73.0% upside to last Friday’s (2nd Apr 2020) closing price of N765/s.

On a forward basis, Nestle trades at a PE ratio of 11.52x, which is a steep discount to our peer average of 27.68x despite superior Revenue growth, Return on Equity, EBITDA margin and low leverage. In lieu of this, we review our recommendation to a BUY from a HOLD recommendation previously.

Riding the pandemic wave: Time to stock up

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CSL STOCKBROKERS LIMITED CSL Stockbrokers,

Wealth.ng

Member of the Nigerian Stock Exchange,

First City Plaza, 44 Marina,

PO Box 9117,

Lagos State.

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Economy & Politics

Lagos to shut down Marine Beach bridge for emergency repairs

The closure will allow the Federal Ministry of Works to carry out emergency repairs on the bridge, in line with the government’s vision of providing a better transportation system in the state.

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Lagos state government has announced that the Apapa Marine Beach bridge will be closed for five months, from Wednesday 27th May, to Wednesday 21st October, 2020.

The closure will allow the Federal Ministry of Works to carry out emergency repairs on the bridge, in line with the government’s vision of providing a better transportation system in the state.

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In a statement from the Lagos state Ministry of Transportation, the Commissioner, Dr. Frederic Oladeinde, noted that the repairs were long overdue, and necessary to ensure safety of Lagosians, given the number of motorists that use the route.

The Commissioner noted that the repairs included bearing and expansion joint replacement and would be executed in two phases, taking one lane of the bridge at a time.

The first phase will involve handling the lane inbound Apapa while the second phase will be designated to work on the lane that conveys vehicles outside the axis,” he said.

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Alternative routes

Oladeinde noted that alternative routes around the bridge had been improved to make them motorable, and ease movements for road users.

To manage the construction period, the statement noted that Traffic Management Authorities would be hard at work to ameliorate the expected traffic issues and supervise other arrangements.

“Motorists inwards Wharf road will be diverted to the other section of the bridge outwards Apapa, a contraflow of 200metres has been put in place for vehicles to realign with a proper direction inwards Ajegunle or Wharf road, Apapa, while Motorists descending to Total Gas under bridge will drive without any hindrance,” it read.

The Commissioner called for the understanding and cooperation of motorists and road users during the period to ensure a smooth flow of plans.

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Economy & Politics

Fayemi set to activate digital economy with N5billion broadband infrastructure

Governor Fayemi plans to activate Ekiti state’s digital economy, this would help generate healthy competition within the ICT sector

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Fayemi set to activate digital economy with N5billion broadband infrastructure in Ekiti state

Ekiti state government has concluded plans to create a digital hub, with the laying of a 606-kilometer broadband infrastructure.

The project is expected to lift the state from 16% internet penetration to 90% and is estimated to be worth N5 billion, with the Federal Government contributing N1.1 billion of the total sum.

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This plan is part of the memorandum of Understanding (MoU) which the state Governor signed with O’odua Infraco Resources Limited, a consortium that develops high speed and efficient Fibre Optic Cable (FOC) Open Access Network (OAN) across the South-West region of Nigeria.

According to the Managing Director of O’odua Infraco Resources Limited, Mr Sammy Adigun, the project will be officially flagged off in October and completed within 14 months.

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(READ MORE: What Nigeria stands to gain from new National Broadband Plan)

This decision is a follow-up to the recent crash of Right of Way charges from N4,500 to N145 per meter for broadband infrastructure, and in line with one of the five pillars of Governor Kayode Fayemi’s development plan for Ekiti state.

The Governor noted that these decisions would help generate healthy competition within the ICT sector, thus activating Ekiti state’s digital economy and digital education.

Fayemi noted that the project execution, as well as the broadband policy in the state would be coordinated and supervised by a Digital Infrastructural Committee, made up of various relevant government institutions critical to the implementation of the project.

“For us the roadmap is first the fibre connectivity itself, the second is the adequate data center infrastructure, the third is the e-learning programme which will cover our educational institutions, then our safe city, our security programme will also be included.

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“With our geographical land information system (GIS), we would digitalize all our land records, and of course, commercial investment as well as digitalisation of our government assets and our health education initiative,” Fayemi explained.

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Economy & Politics

NCC reacts to claims that minister chased Diaspora Commission’s staff from office complex

The NCC denies claims of the video on social media, pointing out that the staffs of NIDCOM were not sent packing from the digital economy complex

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NCC orders immediate suspension of USSD charges by telcos, 5G Network to undergo 3 months trial before approval - NCC , NCC licenses 20 new Internet service providers amidst challenges , 150 million Nigerians risk being defrauded – NCC , NCC warns telcos against cyber fraudsters , NCC rolls out new regulations on drone use, NCC licenses 10 new VAS providers as it projects market to hit $500 million , NCC, Infracos set to develop broadband infrastructure with N265 billion raise , Telecommunications: Broadband penetration set to grow, Telecoms operators fined N2.9 billion over infractions , NCC reacts to claims that minister chased away diaspora commission staff from office complex

The Nigerian Communications Commission (NCC) has reacted to claims by the Chief Executive of Nigeria Diaspora Commission (NIDCOM), Abike Dabiri-Erewa, that her staff members were chased out of its premises by armed men on the orders of the Minister for Communication and Digital Economy, Isa Pantami.

The NCC, through a press statement on May 24, 2020 signed by its Director, Public Affairs, Dr. Henry Nkemadu, has said that nothing of such happened as it denied claims in a video making rounds on social media that the staff of NIDCOM were sent packing from the digital economy complex.

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According to the press statement from NCC:

Following the completion of the NCC building at Mbora, Abuja designated as NCC Annex and the acute shortage of accommodation space for the staff of the commission in the NCC head office at Maitama, Abuja, the Board of the commission directed the decongestion of the Head office building. Some of the departments of the NCC had started moving to the new office complex of 5 floors when discussions were held between the NCC and the Diaspora Commission to enable the Diaspora Commission also utilize any free offices within the complex.

“The fifth floor allocated to them had to be used to accommodate other departments from the NCC headquarters to ease the congestion. NCC’s offer to house the Nigeria Diaspora Commission was predicated on the long held position of the NCC that agencies of government will achieve more through strategic collaboration, partnership, synergy and sharing to the extent allowed by relevant laws.”

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(READ MORE: PenCom dissolves interim management committee for First Guarantee Pension, appoints new board)

NCC disclosed that it had secured approval for the commissioning of the office complex by President Buhari, and also the launching of 4 important projects of NCC, together with the renamed Ministry of Federal Ministry of Communication and Digital Economy.

It also stated that the offer to NIDCOM had not been withdrawn, but had only hit a bump arising from the preparation for the visit of President Buhari to launch the projects and inaugurate the complex. It said that the Board and Management of NCC took a decision to ensure that every activity in the building was in line with the Federal Government’s agenda.

Going further, the statement reads:

“Incidentally, after the offer of the office spaces to the Diaspora Commission, the Director General, Mrs. Abike Dabiri-Erewa had not visited the complex to take possession of any of the offices and also the commission had not started using any of these spaces as offices.

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‘’As is usual in ensuring security and accountability before, during and after presidential visits, the building had to be cleared to allow for only known and identifiable persons to have access within the complex. Therefore, the Honourable Minister of the Federal Ministry of Communications and Digital Economy Dr. Isa Ali Ibrahim Pantami could not have sent armed men to drive the staff of the Diaspora Commission out of the Communication Economy Complex.”

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The statement also pointed out that as at that time, only NCC staff were accredited to have access within the premises and that all properties belonging to NIDCOM were safely warehoused in some of the offices within the complex.

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