Guinness Nigeria Plc, on Wednesday, informed the public in a statement to the Nigerian Stock Exchange, about the material circumstances that will impact its full-year financial results for 2020.
Excerpts of the report are as follows;
- The adverse impact of the sharp contraction in economic activities and the knock-on effect of the COVID-19 lockdown took a toll on the on-trade segment of the business across all our markets. Production and revenues have thus been negatively affected.
- Guinness Nigeria carried out a comprehensive review of its asset base and made a strategic decision to impair a certain category of assets, which were generating suboptimal returns. This is in line with the company’s long-term strategy of delivering value to shareholders.
- Due to a combination of the impact of COVID-19 and the asset impairment, we expect the profitability of the Company for the Financial Year to 30th June 2020 to be impacted. The Company’s balance sheet however remains strong, and this gives the Board the confidence that the Company has the right resources to continue to deliver the strategy.
Recall that Guinness Nigeria Plc reported revenue of N96.08 billion for the nine months that ended March 31, 2020, showing a fall of 5.3% compared with N101.40 billion recorded in the corresponding year of 2019.
In addition, financing cost rose by 97% to N3.582 billion compared to N1.817 billion recorded in 2019. Guinness Nigeria PLC ended the period with a profit after tax of N1.672 billion, plunging by 60% from N4.252 billion recorded in 2019.
This report has further dampened investors’ moral as its share price plunged to an all-time low of N14.20. As at the time this report was drafted, the company’s market capitalization was N32.199billion, with earnings per share standing at 1.18.
However, its price to book ratio, which is valued at 0.3571 and a dividend yield valued of 10.38% showed the stock was highly undervalued and had great potential in the long term.
You may download Guinness Nigeria’s notification of material circumstances by clicking here.
Sterling Bank’s earnings to remain pressured but valuations still attractive
We project Pre-tax Profit of N9.0bn (down 15% y/y) and we estimate ROAE of 6.9% in 2020e (FY 2019; 9.8%).
Sterling Bank’s Q1 2020 numbers were largely impacted by the regulatory-induced fee cut on e-banking transactions resulting in a decline in Net Fee and Commission (down 16% y/y) and weak operating efficiency given the higher growth in OPEX (up 8% y/y) compared with the increase in operating income (up 3% y/y). Net Interest Margin (NIM) however improved to 7.7% in Q1 2020 (Q1 2019; 7.4%) on the back of lower funding cost (5.1% in Q1 2020 compared with 6.6% in Q1 2019).
Sterling bank’s NPL ratio declined to 2.0% in Q1 2020 from 8.9% in Q1 2019 following the declassification of exposures in stressed sectors. We do not expect asset quality issues to crystallise in the short term, as we expect the bulk of the loans in the Oil and gas upstream/midstream (c.27% of gross loan) to be restructured. We however expect earnings to weaken in 2020, due to low asset yields amidst weak loan creation and the downward adjustment in fees on e-banking transactions. We Project Pre-tax Profit of N9.0bn (down 15% y/y) and we estimate ROAE of 6.9% in 2020e (FY 2019; 9.8%).
Following the downward revision to our 2020 earnings forecast, we have revised our target price downwards to N1.67/s from N2.84/s previously. We however maintain our BUY recommendation due to attractive valuations (P/E; 3.7x and P/B; 0.3x) and the 34% upside from the last closing price of N1.25/s. We note that the steep decline in the stock price (down c.37% since the start of the year) presents an attractive entry point.
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Conoil Plc releases FY financial result for 2019, profit up by 11%
The Revenue for Conoil as of December 31 2019 was N139.76 billion as against the N122.21 billion recorded for the corresponding period for 2018
The Nigerian petroleum marketing giant, Conoil Plc, has released its audited financial statement for the full year 2019, which shows improvement in some key performance indicators. The result released by the oil company shows an 11% increase in profits.
This was disclosed in a notification that was sent to the Nigerian Stock Exchange (NSE) and made available to the investing public and stakeholders.
The highlight of the report shows that the Revenue for the oil firm as of December 31 2019 was N139.76 billion as against the N122.21 billion that was recorded for the corresponding period for 2018. This represents a 14% increase.
The Cost of Sales as of December 31, 2019, was N126 billion as against the N109.44 billion that was recorded for the corresponding period for 2018. This represents a 15% increase.
The Gross Profit as of December 31, 2019, was N13. Billion as against the N12.8 billion that was achieved for the corresponding period for 2018. This shows an increase of 7.4%.
The Profit Before Tax for full-year 2019 was N2.78 billion as against the N2.57 billion that was achieved for the corresponding period for 2018. This shows a modest 8% increase.
The Profit After Tax for the oil firm shows an increase of 11% as it recorded N1.99 billion as of December 31, 2019, when compared to the N1.8 billion that was recorded for the corresponding period for the previous year.
The Earnings Per Share for full-year 2019 was N2.86. This is more than the N2.59 that was achieved for full-year 2018 and shows an increase of 11%.
You can download the full report here.
Berger Paints declares dividend of 25k per share, announces 6% increase in revenue
This was announced to shareholders during the 60th AGM which was held virtually on Wednesday.
Berger Paints Nigeria Plc has recorded N3.59 billion in revenue for the financial year ended December 31, 2019, 6% up from the N3.3 billion recorded in 2018.
Gross profit for the year also grew by 12% to N1.66 billion from N1.48 billion in 2018, while the profit for the year grew by 40% from N320 million to N448.7 million.
The Chairman, Mr. Abi Ayida, announced this to shareholders during the 60th Annual General Meeting (AGM), which was held virtually on Wednesday.
In addition, the company’s operating profits rose by 196% between 2017 and 2019, with an upward trend seen in all key performance indicators during the period.
Ayida attributed the results to internal efficiency and a re-refocusing on the production of its primary products, corporate foresight and innovativeness and huge investment in an automated factory.
This, according to Ayida, was not without its challenges.
“The board and management faced an increasingly hostile business-operating environment in 2019. However, due to your company’s growth strategy, we’re able to deliver an impressive performance. A review of financial results shows improved performance across all financial indices.
“The moderate growth in revenue was intended as deferred scale achievement to maintain our focus on operational efficiency. We believe the numbers justify this approach. Indeed, operating profit improved by 196% between 2017 and end of 2019,” Ayida said.
In spite of the impressive results however, the management decided to declare a modest dividend of 25k per share, to make funds available for guarding against global market uncertainties.
“The lockdown has brought significant level of uncertainties to the global business environment. We have analysed COVID-19 and determined to brace up; our first approach is preservation of capital. This informed our decision to declare a modest dividend of 25k per share for the review period. Our position is that it is better to err on the side of prudence,” Ayida explained.
NAN reports that Shareholders commended the company’s performance in the tough operating environment, while also raising issues to be addressed.
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One of the requests made by shareholders was for the company to increase the dividend of 25k per share in subsequent years while mapping out a long-term strategy to cope with the impacts of COVID-19.
One of the shareholders, Mr. Egunde Moses, also advised the company to address the issue of unclaimed dividend and impacts of adulterated products on the business of paint manufacturers.