Nigerian bourse closed today’s trading session on a negative note. The All Share Index dropped by -0.07% to close at 25,532.74 points as against -0.19% drop recorded on Wednesday.

• Its Year-to-Date (YTD) returns currently stands at -4.88%. Nigerian Stock Exchange Market capitalization presently stands at N13.344 trillion
• Nigerian bourse trading turnover printed market as at today’s trading volume gained by +9.15% as against the 13.59% plunge recorded in Wednesday’s trading session.
• FBNH, ACCESS, and ZENITHBANK were the most active to boost market turnover.
• Market breadth closed positive as INTBREW led 17 Gainers, as against 11 Losers topped by CAVERTON at the end of today’s session, an improved performance when compared with the previous outlook

READ: Sells-Offs in GTBank, Zenith Bank stocks intensify, investors lose N42.8 billion

Top gainers

INTBREW up 10.00% to close at N3.3
NPFMCRFBK up 8.33% to close at N1.3
CADBURY up 4.23% to close at N7.4
FLOURMILL up 1.54% to close at N19.8
GUARANTY up 0.20% to close at N25

READ: Top NSE30 Stocks you should consider buying

Top losers

CAVERTON down 8.60% to close at N1.7
DANGSUGAR down 5.88% to close at N11.2
CUSTODIAN down 5.21% to close at N4.55
ETI down 2.47% to close at N3.95
FBNH down 1.01% to close at N4.9

READ: GTBank, Zenith Bank, MTN record gains, investors up by N50 billion

Outlook

Nigerian bourse ended Thursday’s trading session on a bearish note. It should be noted that its the third consecutive trading session of losses recorded at Nigeria’s Stock Market.

• Falling oil prices and higher inflation(13.22%) continue to suppress the urge for foreign investors to take large junk in Nigeria’s stocks
• NSE30 stocks like Dangote Suger, Ecobank, and FBN Holdings neutralized the gains recorded by GTBank, Flour Mill, and Cadbury.

Nairametrics expects you to invest on the longer horizon, amid strong fundamentals from many NSE30 stocks showing they are greatly undervalued.

Nestlé S.A, Switzerland, the parent company of Nestlé Nigeria Plc, has increased its stake in the Nigerian subsidiary with the purchase of 229,697 additional units in the shares of the company.

This was disclosed by the company in a notification sent to the Nigerian Stock Exchange, which was seen by Nairametrics.

The purchase according to the notification signed by the Company’s Secretary, Bode Ayeku, was made on the bourse in a single transaction on 11th, September.

This disclosure is a regulatory requirement that must be reported to the Nigerian Stock Exchange, especially when a major shareholder or director of a publicly quoted company purchases or sells shares in the company they own.

The breakdown of the transaction, shows that the purchase consideration for the 229,697 additional units of Nestlé Nigeria shares at an average price of N1,249.65 per unit is put at N287 million.

This purchase and previous purchases strengthen Nestlé S. A’s status as the parent company of the subsidiary. So far, the company has accumulated a total of 977,744 additional shares worth N1.165 billion since 20th August.

(READ MORE: GTBank, Zenith Bank, UBA record losses, investors down by N12.2 billion)

As of June 30th, in line with the shareholding analysis of Nestlé Nigeria in its half-year financial results, the company had exactly 792,656,252 shares outstanding, with Nestlé S.A being the majority shareholder with 524,559,457 units, which amount to 66.18% of the total shares of the company outstanding.

Hence, with the purchase of 229,697 additional units, and previous purchases from 20th August till date, which amount to 977,744 units. Nestlé S. A’s ownership percentage of Nestlé Nigeria is now put at 66.30%.

What it means: Insider transactions, both sales and purchases, are often a sign of how shareholders perceive a company’s valuation. It could also mean a possible capital raise or that the major shareholders are strengthening their existing holdings.

The purchase of the shares of Nestlé Nigeria by Nestlé S.A has reduced the volatility of the company share price, with the parent company consistently mopping up stray volumes on the bourse.

READ: GTBank, Zenith Bank post gains, as market liquidity weakens 

About the company

Nestlé Nigeria PLC is one of the largest foods and beverage companies in Africa, and the largest consumer goods company by market capitalization. Nestlé Nigeria Plc engages in the manufacturing, marketing and distribution of food products including purified water. It also exports some of its products to other countries within Africa.

It has three product segments: Food, Beverages, and seasoning. The Food segment engages in the production and sale of Cerelac, Nutrend, Nan, Lactogen and Golden Morn. The Beverages segment engages in the production and sale of Milo, Chocomilo, Nido, Nescafe and Nestlé Pure Life. While the seasoning segment engages in the sale of Maggi cubes.

The NSE30 Stocks Index are weighted by adjusted market capitalization, meaning the number of listed shares of a firm, multiplied by its closing price, and a capping factor.

It should be noted that only fully paid common stocks are included in the NSE30 index.

The NSE 30 index is usually rebalanced on a semi-annual basis, on the first working day in January and in July.
The companies presently listed on the NSE30 Index include:

• Banks: Guaranty Trust Bank Plc, Zenith Bank Plc, Stanbic IBTC Holdings Plc, Access Bank Plc, United Bank for Africa Plc, FBN Holdings, Union Bank of Nigeria Plc, Ecobank Transnational Inc, Fidelity Bank Plc, FCMB Group Plc, Sterling Bank Plc

• FMCGs: Nestle Nigeria, Nigerian Breweries Plc, Dangote Sugar Refinery Plc, Unilever Nigeria Plc, Guinness Nigeria Plc, International Breweries Plc, Flour Mills of Nigeria Plc

• Oil & Gas: Seplat petroleum Development Co. Plc, Mobil Oil Plc

• Telecommunications: MTN Nigeria Communications Plc, Airtel Africa Plc

• Building Materials: Dangote Cement Plc, BUA Cement Plc, Lafarge Cement, WAPCO Plc

• Agro-Industrial: Presco Plc,

• Agro-Allied: Notore Chemical Plc

• Agriculture: Okomu Oil Palm Co Plc

• Hospitality: Transcorp Hotels Plc

READ: Airtel, Nestle, NB lead the Bulls to a home win, investors gain N106.3 billion 

In a mail to Nairametrics, Equity Analyst, CardinalStone Research, Khalil Woli, gave vital insights on the top NSE30 stocks, that investors and stock traders should consider buying.

“Although domestic equities have delivered broadly negative returns in H12020 against a backdrop of weakening growth, currency concerns, and depressed earnings releases, we identify historically resilient names among the NSE 30 index that are likely to outperform peers over the next 12 months.

READ: Airtel Africa receives NCC approval to acquire 10 MHz spectrum for $94 million

“Specifically, we like stocks with track records of high profitability, low financial leverage, and less margin volatility,” he said.

These stocks also have attractive upside potential for 2020 based on our target prices, and are relatively consistent with dividend payments.

Notably, ZENITH and UBA have dividend yield that exceeds inflation levels.

READ: CBN allows banks to pay winnings, salaries for 7 banned betting & gaming companies

GUARANTY and STANBIC are also likely to offer dividend yield that are higher than the return on one-year T-Bill, going by their first-half performances.

These banking names all announced interim dividends for the first half of the year.

In the cement space, WAPCO and DANGCEM are currently trading at attractive prices in the market, despite strong earnings expectations for FY20.

READ: Access Bank posts Profit Before Tax of N74.31 billion in H1 2020

Both companies delivered impressive growth in profit after tax (DANGCEM, +5.8% YoY; WAPCO, + 60.0% YoY) in H1 2020, despite the COVID-19 impact on sales (principally noticed in April).

DANGCEM and WAPCO, are trading at 23.6% and 35.8% discounts respectively, to their 5-year average P/Es, despite expectations of higher ROEs in 2020.

There is also a strong investment case for PRESCO and OKOMUOIL, as oil palm companies historically thrive during currency liquidity crisis in Nigeria.

READ: BUA Cement Plc posts impressive unaudited H1, 2020 financial results

Recall that OKOMU and PRESCO grew profits by over 100.0% YoY and 82.0% YoY respectively in 2016. The border closure and potential FX-induced increase in domestic patronage are other arguments in favor of the sector

Lastly, NESTLE is an obvious pick from the consumer goods space. The company has demonstrated high defensive attributes of consistent dividend payments and superior ROE (73.9% compared to a sector average of 27.6%), amidst the macro headwinds of the last few years. Its healthy reliance on locally sourced raw materials, makes an additional case for the stock, given recent naira pressure.

In addition, Silas Ozoya, Managing Partner, SUBA Capital, in a chat with Nairametrics, used the prevailing macros in selecting his favorite NSE30 stocks.

READ: Analysis: Sterling Bank, where are the returns? 

“My personal favorites are in the financial sector and consumer goods. This is because transactions happen every day and humans must consume house hold items.
So, my first pick would be Zenith Bank, GTBank, and Sterling Bank

“They are the stock to hold in my portfolio, because of pond standing stability in the case of Zenith Bank and GTBank, and rapid growth in the case of Sterling Bank,” he said.

READ: GTBank, Access Bank, 11 others pay workers N271.64 billion in H1 2020

Also, the consumer goods market is the next on his list. “Unilever, Flour Mills of Nigerian Plc, and Nestle would top my list here, because of the market and consumer behavior towards their products, which translates to a healthy bottom, capitalization, and dividend,” he added.

Overall, the leadership of these companies, and their response to the ever-changing policies have shown how much longer they’re willing to keep the business running, which is a priority for any investor holding shares in their portfolio.