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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.

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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.

(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.

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.

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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%.

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

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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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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. He is a business owner and a stern advocate of Financial literacy, who believes in the huge economic prospect of the Nigerian Payment channels and Fintech space.

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Stock Market

Flour Mills Nigeria gain N28 billion on NSE in 10 trading days

Flour mills gained N28 billion on the Nigeria Stock Exchange in just ten trading sessions, as the share price rose by 26.15%.

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Flour Mills makes one of the largest contributions to COVID-19 relief fund

Shares of Flour Mills Nigeria Plc, Nigeria’s leading food business company, have gained N28 billion on the Nigeria Stock Exchange, in just 10 trading days this year.

After a preview of the performance of the shares of Flour Mills, Nairametrics discovered its shares increased by 26.15% within the review period.

The increase witnessed in the company’s share price was triggered by renewed buying interests among investors for the shares of Flour Mills, on the back of its robust fundamental strength, and the impressive financial results the food and agro-allied company delivered in 2020.

Checks by Nairametrics also revealed that the company has gained N27,882,581,314.00 on the NSE so far this year. This is logical as the buying interest in the shares of the company saw the market capitalization increase from N106.61billion on the 4 January 2021, to N134.49billion at the close of trade on the exchange today.

What you should know

  • The impressive valuation and the current price of the company, which some investors see as under priced given the solid fundamental strength of the company, spiked buying interest in its shares.
  • Former GMD of Flour Mills, Paul Miyonmide and the Vice-Chairman of the Company, Chief Emmanuel Ukpabi, acquired additional shares of the company worth millions of naira since the company released its Q2 Financial Report on 27 October 2020.

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Stock Market

Access Bank shares gain N44.4 billion in first 10 days of trading

Market capitalization moved from N300.36 billion as at the 4th of January, 2021 to N346.57 billion.

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The shares of Access Bank Nigeria Plc have gained N44.4 billion since the commencement of trading at the Nigerian Stock Exchange (NSE) market on the 4th of January 2021 – 10 days of transaction.

This was uncovered by Nairametrics after tracking the performance of the shares of the bank on the floor of the NSE.

This is sequel to efforts by the group to further expand its territory and consolidate on its growth potentials, evident by its obtaining of regulatory approval to operate as a holding company and completion of the Cavmont Bank Limited deal, as reported by Nairametrics.

Nairametrics learnt that a combination of impressive financial performance by the group, evident by its 9M 2020 results, and the increased buying interest in its shares, all contributed to the upward movement of the bank’s market capitalization, from N300.36 billion to N344.79 billion, indicating a gain of 14.8% in the review period.

What you should know

  • Access Bank Plc had earlier reported a Profit After Tax of N102.3 billion for 9M 2020, up by 15.7%
  • At the time of this report, Access Bank Plc shares traded at N9.7, compared to an opening price of N8.45, indicating an increase of 14.8%.
  • The outstanding shares of the firm currently stand at 35,545,225,622 units.

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Spotlight Stories

MTN, NB keep Nigerian stocks up, investors gain N112 billion

UACN (+10.00%) led the gainer’s chart today, while ARDOVA (9.84%) was the top loser.

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Nigerian bourse extended its positive rally at Friday’s trading session, appreciating further by N112 billion, amid increased buying interest. Specifically, the market capitalization inched higher by 0.52% to close at N21.530 trillion from N21.418 trillion on Thursday.

In the same vein, the All-Share Index garnered 0.52% to close at 41,176.14 compared with 40,963.14 on Thursday.

Consequently, the market breadth remained positive with 42 gainers relative to 12 losers. UACN (+10.00%) led the gainer’s chart today, while ARDOVA (9.84%) was the top loser.

  • Also, the total volume of shares transacted improved with an exchange of 666.60 million shares worth N6.39 billion in 6,980 deals.
  • JAPAULGOLD was the most traded shares by volume with 115.8million units, while GUARANTY and ACCESS topped by value at N1.27b and N461 respectively.

Top Gainers

  1. UACN up 10.00% to close at N8.25
  2. FLOURMILL  up  9.33% to close at N32.8
  3. NB up 3.36% to close at N60
  4. PRESCO up 2.78% to close at N74
  5. MTNN up  1.19% to close at N170

Top Losers

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  1. ARDOVA down 9.84% to close at N19.7
  2. MAYBAKER down 5.71% to close at N3.63
  3. STERLNBANK down 1.96% to close at N2
  4. ZENITHBANK down 0.38% to close at N26.3
  5. UNILEVER down 0.37% to close at N13.45

Outlook

Nigerian Stocks ended the trading session on an impressive note.

  • The uptrend was driven by price appreciation in large capitalized stocks among which are; UACN, Flourmill, MTN Nigeria Communications, NB and PRESCO.
  • Nairametrics, however, envisages cautious buying as the COVID-19 crisis seems to be getting out of hand in Nigeria’s key international markets that include Western Europe and the United States.

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