Fidelity Bank reported broadly flat earnings in Q1 2020, largely due to weaker Net Fee and Commission Income (-25% y/y) and double-digit growth in OPEX (up 30% y/y) which completely offset the robust growth in Net Interest Income (up 49% y/y). Annualised RoAE moderated to 9.8% in Q1 2020 compared with 12.0% in Q1 2019.
Get the Nairametrics App
Following three consecutive years of growth in earnings (growth in EPS averaged 45% between 2017and 2019), we expect Fidelity’s earnings to weaken in 2020e. We expect pressure on Interest Income due to the low yield environment and slower growth in loan book considering subdued macro conditions, making us forecast 5% growth in loan book (compared to 3 Year average of 16%). We also expect the downward adjustment in fees on e-banking transactions and weaker trading activities due to the slowdown in economic activities to halt the growth in Net Fee and Commission Income, making us forecast Non-Interest Income of N25bn (down 13% y/y) in 2020
Despite the substantial growth in loan book in 2019 (up 33% y/y) amidst frail macro conditions, we do not envisage a significant deterioration in asset quality, as we expect management will restructure these loans particularly those in the upstream oil and gas sector. We estimate a COR of 0.55% for FY 2020e. We have revised our target price slightly downwards to N2.25/s from N2.97/s previously. However, we maintain our BUY recommendation due to attractive valuations (P/E; 1.8x and P/B; 0.2x) and the 25% upside potential based on our target price.
CSL STOCKBROKERS LIMITED CSL Stockbrokers,
ABC Transport to raise N1.4 billion through rights issue
ABC Transport Plc has secured the approval of its shareholders to raise additional capital through a rights issue.
The Board of Directors of ABC Transport Plc has secured the approval of its shareholders to raise additional capital through a rights issue from existing shareholders.
This disclosure was made by the board of ABC Transport in a notification issued by the Company’s Secretary, Onyekachukwu C. Chigbo, after announcing shareholders’ resolutions at its 27th Annual General Meeting (AGM), held on Friday 27th November 2020.
According to the information contained in the notification, the rights issue is N1.4billion, which could be raised via the issuance of shares and debt securities as determined by the Directors of the firm.
However, the rights issue is subject to the approval of regulatory authorities.
What this means
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. This type of issue gives existing shareholders the “rights” to purchase new shares at a discount to the market price on a stated future date.
However, shareholders are not obligated to exercise this right.
In this regard, the company may decide to use the additional capital raised from these offerings to existing shareholders to acquire assets, make a take-over, repay debts or save itself from bankruptcy.
This is expected to strengthen the company’s balance sheet, free up capital for the management to execute revenue, and profit optimizing projects, plans, and strategies.
What you should know
- It is important to know that the board decided to raise additional capital after it had secured shareholders’ approval to increase the company’s authorized share capital from N1billion to N2.5billion by the creation of 3billion additional shares of 50 kobo each, ranking pari-passu in all respects with the existing shares in the Company’s equity.
- In this regard, clause 6 of the Company’s Memorandum of Association and clause 5 of the Articles of Association respectively, will be amended to reflect the increase in the Authorized Share Capital.
- This amendment will be done by deleting the words, “the authorized Share Capital of the Company is N1billion divided into 2billion ordinary shares of 50 kobo each,” and substituting therewith the words “the authorized Share Capital of the Company is N2.5billion divided into 5billion ordinary shares of 50 kobo each.”
Dangote Cement market capitalization increased by 28% to cross N3 trillion mark in November
Dangote Cement Plc increased market capitalization by 28% to N3.49 trillion at the close of trade on the 30th of November.
The market capitalization of Dangote Cement Plc increased from N2.73 trillion at the open of trade on the 2nd of November 2020, to N3.49 trillion at the close of trade on the 30th of November.
Further checks revealed that the market capitalization of Dangote Cement Plc increased by 28.13% during the period under review.
The drive behind the gains
It is important to note that the increase in Dangote Cement’s market capitalization was driven by the renewed buying interests by investors in key Nigerian stocks with huge values and impressive fundamentals.
This hunt for value on the bourse led to a wild increase in the share price and also the market capitalization of key companies on the Nigerian Stock Exchange in the month of November.
However, the renewed buying interest can be attributed to the strong performance which Dangote Cement displayed in the third quarter of 2020, despite the challenging macroeconomic environment.
Given the strategic positioning of the cement producer in the industry,
- Dangote cement reached a record high EBITDA margin of 24% in the third quarter of 2020.
- Group net profit of N82 billion, which is 135.1% higher than the profit reported by the Group in the third quarter of 2019.
This strong performance made analyst review their models, and also the Group’s valuation, this however triggered buying pressures in the shares of Dangote Cement, with its market capitalization increasing by 28.13% in the period under consideration.
What you should know
- Market capitalization is the aggregate valuation of a company based on its current share price and the total number of outstanding stocks.
- Market capitalization tells how much investors value a company, and gives an idea of what a company is worth on the stock exchange, as well as investors’ perception of a company’s future prospects.
Unilever announces the completion of its Group legal structure
Unilever PLC has announced the completion of the unification of its Group legal structure
Unilever, the parent company of Unilever Nigeria Plc, has announced the completion of the unification of its Group legal structure under a single parent company, Unilever Plc.
According to the press release issued by the company, from today, 30th November 2020 and for the first time in its history, Unilever now trades with one market capitalisation, one class of shares, and one global pool of liquidity, whilst also maintaining the Group’s listings on the Amsterdam, London, and New York stock exchanges.
What they are saying
Nils Andersen, Chairman of Unilever, said: “This is an important day for Unilever and we would like to thank our shareholders for their strong support of our Unification proposals, which gives us greater flexibility for strategic portfolio change, remove complexity, and further improve governance.
“There will be no change to the operations, locations, activities or staffing levels in either the Netherlands or the United Kingdom as a result of Unification. The headquarters of Unilever’s Foods & Refreshment Division will continue to be based in Rotterdam and the Home Care and Beauty & Personal Care Divisions will continue to be headquartered in the United Kingdom.”
What to expect
This development has no impact on the going concern of Unilever Nigeria Plc, the shareholding structure, as well as the free float shares of the company on NSE, which totals 1,491,985,247 — representing 25.97% of the ordinary shares of the company issued and fully paid for by investors.
However, upon the completion of the unification of the Group’s Legal Structure, Unilever overseas under this structure remains in control of the 74.03% ordinary shares of the Nigerian subsidiary.
What you should know
- For investors on the London Stock Exchange, Euronext Amsterdam, and the New York Stock Exchange, dealings in new Unilever Plc shares commenced today, as the new Unilever Plc shares will be admitted to the Premium Listing segment of the Official List of the UK Financial Conduct Authority (“FCA”) and to trading on the London Stock Exchange’s Main Market for listed securities, with the ticker “ULVR”.
- Unilever Plc shares will also be admitted to listing and to trading on Euronext in Amsterdam under the ticker “UNA” today. It is expected that Unilever Plc ADSs will be admitted to trading on the New York Stock Exchange this afternoon.
- Following the issue and allotment of 1,460,713,122 new Unilever Plc shares pursuant to Unification, which represent 55.56% of the total number of Plc shares, Unilever Plc’s total issued ordinary share capital today consists of 2,629,243,772 ordinary shares of 3 1/9 pence each.
- As part of Unification, Unilever NV ceased to exist yesterday, 29 November 2020, which means there has been no dealings and there will be no further dealings in any Unilever NV securities (including Unilever NV shares on Euronext in Amsterdam).