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Stock Market

Nigerian Breweries stock up by 58% since August 

Despite being affected by the COVID-19 pandemic, Nigerian Breweries share price has increased in value. 

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Jordi Borrut Bel, Nigerian Breweries Plc

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.

READ: Brewery sector: A quarter to forget

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.

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.

(Read Also: FG discloses how the problem of the power sector was created)

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.

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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.

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

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%.

READ: Access, GTBank, two others pay PWC & EY N1.5 billion as Audit fees in H1 2020 

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.

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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.

READ: How foreign exchange risks and others affect the Nigerian pension industry 

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.

 

Omokolade Ajayi is a graduate of Economics, and a certificate holder of the CFA Institute’s Investment Foundation Program. He is a business analyst, and equity market researcher, with wealth of experience as a retail investor.

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Markets

Nigerian stock market soars as UNITYBNK and JAPAULGOLD plummet

The All-Share Index increased by +0.29% to close at 39,312.74 from 39,198.75.

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Nigerian banking stocks remain most liquid stocks, as investors gain N25.1 billion, DANGOTE CEMENT, OKOMUOIL and GUINNESS drag Nigerian Stock market down,  SEPLAT, GUINNESS, Breaks Nigerian Bourse Support Levels, Investors Lose N49 Billion  

The Nigerian stock market maintained a bullish recovery as the trading session began this week. This surge was bolstered by gains made by UBN and AFRIPRUD amongst others. The All-Share Index increased by +0.29% to close at 39,312.74 from 39,198.75.

  • The Nigerian stock exchange market value currently stands at N20.44 trillion. Its Year-to-Date (YTD) returns currently stand at -2.38%.
  • The market breadth closed positive with the bulls as REGALINS led 28 Gainers and UNITYBNK topped the chart of 15 Losers showing a hint of consolation.

Top gainers

1. REGALINS up +9.68% to close at N0.34

2. ABCTRANS up +9.68% to close at N0.34

3. UBN up +9.26% to close at N5.90

4. LINKASSURE up +8.70% to close at N0.75

5. MBENEFIT up +8.11% to close at N0.40

Top losers

1. UNITYBNK down -8.33% to close at N0.55

2. JAPAULGOLD down -6.67% to close at N0.56

3. NEIMETH down -6.04% to close at N1.71

4. FLOURMILL down -4.84% to close at N29.50

5. NAHCO down -4.55% to close at N2.10

Outlook

The stock market maintained the recovery as Union bank and LINKASSURE made an appearance for the second consecutive time, pushing the NGX ASI upwards at the end of the trading session today.

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  • Market sentiments were bullish as the NGX ASI closed with 28 Gainers and 15 Losers.
  • Nairametrics advises cautious buying in this era of growing uncertainties.

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Markets

Dow hits all-time high as energy stocks surge

The DOW gained 7.5 points, or 0.02%, to open at 34785.27 Index points.

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U.S stocks futures rebound , cryptocurrency, ExxonMobil, JP Morgan Chase, MasterCard Up by over 10%

At the opening bell, the Dow Jones Industrial Index (DOW) hit an all-time high as the commodity and energy markets are bullish.

The DOW gained 7.5 points, or 0.02%, to open at 34785.27 index points. The S&P 500 fell 4.3 points, or 0.10%, to open at 4228.29, while the Nasdaq Composite dropped 64.6 points or 0.47% to open at 13687.595.

This represents an optimism that interest rates would remain lower for longer, while a surge in commodity prices lifted shares of miners, energy and steel companies.

 

More details soon…

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