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.
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.
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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.
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.
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.
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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.
Market Views
GTBank, Dangote Cement keep Bulls roaring high
Market breadth closed positive as NASCON led 20 Gainers as against 6 Losers topped by NNFM at the end of today’s session.
Nigerian stock market ended its last trading session on an impressive note. The All Share Index gained 0.47% to close at 28,697.06 points as against +0.40% appreciation recorded on Thursday.
Nigerian Stock Exchange market capitalization now stands at N14.99 Trillion. Its Year-to-Date (YTD) returns currently stands at +6.91%.
- However, the Nigerian bourse trading turnover fell short of expectation as volume moved dipped by 9.11% as against -4.67% downtick recorded on Thursday. ACCESS, GUARANTY, and UBA were the most active to boost market turnover.
- AFRINSURE leads the list of active stocks that recorded an impressive volume spike at the end of today’s session.
- Market breadth closed positive as NASCON led 20 Gainers as against 6 Losers topped by NNFM at the end of today’s session – an improved performance when compared with the previous outlook.
Top gainers
- NASCON up 10.00% to close at N14.3
- PZ up 7.32% to close at N4.4
- ZENITHBANK up 1.69% to close at N21
- GUARANTY up 1.50% to close at N30.45
- DANGCEM up 0.67% to close at N151
Top losers
- NNFM down 9.89% to close at N4.19
- NPFMCRFBK down 4.29% to close at N1.34
- HONYFLOUR down 4.21% to close at N0.91
- UNIONDAC down 3.70% to close at N0.26
- VITAFOAM down 3.23% to close at N6
Outlook
Nigerian bourse continued its bullish run amid a shutdown of economic activities at Nigeria’s economic nerve center Lagos and Rivers amid ongoing curfew put in place in order to calm hostilities prevalent in some areas.
- Bulls seem to be rallying high amid soaring crude oil prices, and high buying pressure noticed in some Nigerian blue-chip stocks like Dangote Cement and GTBank.
- However, Nairametrics expects you to seek the advice of a certified stockbroker when choosing stocks to buy, as some of these stocks exhibit cyclic returns in principle.
Market Views
#EndSARS Bull return to Nigerian Stock Market amid Looting
The market breadth index was positive with 20 gainers against 10 losers.
ENDSARS
#EndSARS: NSE lost N113 billion Market Capitalization on Wednesday, October 21
The NSE Market Capitalization shed N113 billion from N14.983 trillion to N14.870 trillion on Wednesday
As at close of trading on Wednesday, the NSE Market Capitalization shed N113 billion from N14.983 trillion to N14.870 trillion.
The demand for Equities drastically reduced on the trading floor of the NSE, as the market reacted to the prevailing tensed security situation arising from the hijacked #EndSARS protests in Lagos, resulting in the loss of lives and vandalization of private and public owned properties.
READ: #EndSARS protests dampen market liquidity at Nigerian Stock Market
The lull in the market, undoubtedly, was not unconnected with the disposition of most investors, who rather than investing, showed more concern about the safety of their investments, as well as observing the government’s next line of action in handling the lingering security situation.
The NSE All-Share Index also declined by 0.75% from 28,665.82 points to 28,449.49 points.
READ: #EndSARS: Those responsible for human rights violations must be held accountable – Canadian Govt
What they are saying
According to the Director-General of NECA, Mr. Timothy Olawale, “Protest is legal and a fundamentally guaranteed right of Nigerians to draw government’s attention to the need to take drastic action as regards reforms in all areas of our national life. However, it is important that the economy should not be brought to its knees in the process. The economy is in tatters, facing the threat of a second recession and unemployment rising to an unmanageable level, the need to stop the slide is not only urgent, but important. A consequential effect of the hindered capacity of businesses to function is the higher unemployment rate, further reduction in disposable income of those left in employment, heightened insecurity with the risk of hoodlums hijacking the peaceful protest among others.”
READ: #EndSARS Protest has cost Nigeria N700 billion in 12 days – LCCI
The Lagos Chamber of Commerce and Industry (LCCI) estimated that the protests has cost the economy over N700 billion (about $1.8bn in losses). According to the President of LCCI, Mrs. Toki Mabogunje, her group was concerned about the negative impact of the development on business activities and said, “These actions have been at great cost to the economy and the welfare of Nigerian citizens. It should be noted that our economy is still reeling from the shocks of the COVID-19 pandemic and struggling to recover from its devastating effects.”
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