The shares of Nigerian Breweries Plc, the largest brewer by market capitalization on NSE, have gained a whopping 58.06% since August, almost two months ago.

This was discovered by comparing the market opening price of the company’s stock on the 3rd of August (N31.00), with the market closing price of the shares after September 28’s trading session, which was N49.00. This is a whopping N18.00 difference or 58.06% increase in the value of Nigerian breweries shares, in 56 days.

However, the increase in the share price of Nigerian Breweries is quite surprising, considering the fact that the earnings of the company were affected by the COVID-19 pandemic.

According to the figures contained in its half-year results, the brewer suffered a 10.8% decline in revenue in the first half of the year, as a result of a material decline in beer volumes, following the restrictions to movements and gatherings directed at limiting the spread of the coronavirus.

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The restrictions placed on bars, restaurants, and night clubs impacted the sales of the company, as approximately 64% of beer and alcoholic drink sales come from on-premise demand.

In like manners, pressures from the cost of sales, marketing & distribution expenses, and administrative expenses severely kept the profit of Nigerian Breweries down in H1 2020, this led to a 58.03% decline in profit after tax, when compared with the profits the company reported over the same period last year.

Despite the earnings challenges the company faced in H1 2020, the confidence of Nigerian Breweries’ major shareholder Heineken Brouwerijen B.V (Heineken Breweries), in the long-term fundamentals of Nigerian Breweries, and its relative valuation as of 3rd August, inspired the Dutch brewer to spend N439.2 million, to accumulate 11,697,324 additional units of Nigerian Breweries shares, at an average price of N37.55, in just 39 days.

Heineken Brouwerijen B.V investment of N439.2 million into the company, has led to an unrealized gain of N133.96 million in just 45days.

It is important to note that the purchase of the shares of Nigerian Breweries, by Heineken Brouwerijen and other majority shareholder, has mopped up stray volumes on the bourse, and this could be one of the factors that had pushed the shares of brewer higher.

Shares of Nigerian Breweries at the end of the trading session closed at N49.00, and this is 6.76% lower than the market opening price for the day, 8.09% higher than the market opening price a week ago, and 32.43% higher than the market opening price for the month. While the YTD gains stand at -16.95%.

Relative Strength Index indicates that Nigerian Breweries shares are currently trading in the overbought zone, although approaching the neutral zone, given the 6.76% decline today. While other Momentum Indicators, like the William Percentage Range and the stochastic variant of the Relative Strength Index, indicate that the shares of the company are currently trading in the neutral zone.

Outlook for Q4 and H2 2020 

The performance of Nigerian Breweries is subject to seasonal fluctuations, as a result of weather conditions and festivities. The Company’s full-year results and volumes are dependent on the performance in the peak-selling season, especially the festive seasons, and this typically results in higher revenue and profitability in the last quarter of the year.

The impact from this seasonality is also noticeable in several working capital related items, such as inventory, trade receivables and payables, and as such the overall profitability of Nigerian Breweries is expected to be beefed up in Q4 2020.

Nigerian bourse continued its bullish run to the first trading session of this week. The All Share Index gained 0.72% to close at 26,507.84 points as against +1.28% appreciation recorded on Friday.

• Its Year-to-Date (YTD) returns currently stands at -1.25%. Nigerian Stock Exchange market capitalization presently stands at N13.853 Trillion. Investors’ gain stood at N98.51 billion.
• Nigerian bourse trading turner on Tuesday printed positive with volume gaining 0.32% as against -6.56% plunge recorded on Friday ZENITH BANK, STERLING BANK and UBA were the most active to boost market turnover.
• Market breadth closed positive as TOTAL led 22 Gainers as against 7 Losers topped by UAC-PROP at the end of today’s session – an improved performance when compared with the previous outlook.

Top gainers

• TOTAL up 10.00% to close at N88
• WAPCO up 6.31% to close at N16
• BUA CEMENT up 4.80% to close at N40.4
• OKOMU OIL up2.56% to close at N80
• MTNN up 2.02% to close at N126.5

Top losers

• UAC-PROP down 10.00% to close at N0.9
• UPL down 6.34% to close at N1.33
• CAVERTON down 5.98% to close at N1.73
• MAYBAKER down 5.54% to close at N2.9
• SEPLAT down 0.50% to close at N398

Outlook

Nigerian bourse began its first trading session on an impressive note amidst strong gains recorded across global markets notable at the Dow 30, S&p 500 Index, and Tech dominated Index, the Nasdaq.

• The rally was partly attributed to Nigeria’s major export earning product (Crude oil) surging higher at the U.S trading session on Monday, and significant buying pressures in NSE30 stocks like MTN Nigeria, Total, Okomu oil, and BUA Cement.
• Nairametrics recommends you seek the advice of a certified stockbroker when buying stocks, despite the bullish run ongoing at West Africa’s largest equity market.

The market capitalization of NASD OTC Securities Exchange Market, gained about N9.22 billion in value, from N528.90 billion recorded in the previous week to N538.12 billion at the close of trading session, Friday September 25, 2020.

The index closed on a positive note YTD, gaining 5.02%, as the market recorded an increase in performance. 

On a weekly basis, the NSI gained 1.74% from 720.02 points last week to 732.57 points this week. 

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The improved performance of the NSI over the week is partly attributable to the impressive performance of UBN Properties Plc, both in terms of trade volume and trade value. 

There was an appreciation of the share price of Central Securities Clearing System Plc, which leaped by 9.63% from N13.5 in the previous week to N14.8 this week. CSCS Plc, currently holds a Market Capitalization of ₦74 Billion. 

Source: NASD OTC Market report

In terms of Week-on-Week basis, mixed results were recorded, as the total value traded declined by -75.99%, from N108.40 million to N26.03 million in the period under review.

But trade volume appreciated by 275.69%, from about 3,246,505 units to 12,196,894 units. On a Year To Date (YTD) basis, a total of 7,838,995,186 units have been traded so far for the year. 

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Top traded securities by Value 

In the top five position, UBN Properties Plc led the chart with N12.6 million, in terms of the trade value for the week, followed by NIPCO Plc with N8.13 million, Niger Delta Exploration and Production Plc with N1.91 million, WAMCO Plc with approximately N1.80 million, and Food Concept with N1.35 million 

The summary of the top five securities by value is depicted in the chart below. 

Source: Nairametrics’ computation

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Top traded Securities by volume 

UBN Properties Plc also led the chart, registering 10,000,000 units, followed by Food Concept Plc with 2,000,000 units. Also, in the top five position is NIPCO Plc with 125,091 units, while Afriland Plc recorded 23,650 units. Geo-Fluids Plc made it to the elite list with 15,000 units. 

In summary, the chart below shows the top five securities in terms of volume.

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Key Highlights  

• Total volume traded Year-to-Date stands at 7,838,995,186 units in 1171 deals. 
• Total Value traded is ₦10,881,948,526.39.            
• Market capitalization current stands at N538.12 billion 

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