Lafarge Africa, Nigerian Breweries, Stanbic IBTC, United Capital, and FTN Cocoa made the list of best-performing stocks in the third quarter of 2020 (July – Sept’20).

The third quarter of the year was a recovery period for the Exchange, as the All Share Index grew by 9.61% to close the gap caused by the negative performance it endured in the first quarter of the year – during the heat of the COVID-19 pandemic. It also recorded a 14.92% positive growth in the second quarter.

As Company stocks is one of the popular means of short-term investments in Nigeria and a look at persistent inflationary pressures; it is imperative to assess the performances of the stocks listed on the exchange during the covid era, to ascertain the profitability of investors in this period.

To determine the best-performing stocks, we looked at the stock prices as of the last trading day in June 2020 and compared to their prices as of the last trading day of September 2020. Here are the top 5:

Lafarge Africa Plc

The Cement manufacturing company grew its stock value by as much as 50% between July and September 2020. As at 30th June 2020, the stock of Lafarge was worth N10 per unit of share but grew to N15 as at the last trading day of September – with a market capitalization of N241.6 billion.

A cursory look at the Q2 2020 financial performance, shows a 5% year-on-year decrease in revenue generated. However, a reduced cost of sales helped improved the company’s gross profit by 10% and a subsequent 78% increase in profit before tax at N19.38 billion.

June 30th – N10

September 30th – N15

Return – 50%

Ranking – First

Nigerian Breweries Plc

The second on the list is the brewery giant, Nigerian Breweries – the makers of Star Lager, Fayrouz, Goldberg, and many other consumables. It grew its stocks by 35.73% from N36.1 as of 30th of June to N49 per share at the end of Q3 2020. The market capitalization also closed at N391.8 billion as at the review period, being the second most capitalized consumer goods firm – only behind Nestle Nigeria.

A look at the Q2 2020 financials, shows that the company endured a downturn, mostly affected by the COVID-induced lockdown, which halted all social gatherings, as it posted a profit before tax of N69.8 million – 99% decline compared to N7.95 billion recorded in the corresponding quarter of 2019.

However, with the lifting of lockdown nationwide, the outlook for the Q3 and Q4 2020 appears to be positive, as investors have shown confidence in the brand, which has translated into a positive stock performance in the quarter.

June 30th – N36.1

September 30th – N49

Return – 35.73%

Ranking – Second

Stanbic IBTC Plc

The third most capitalized bank on the stock exchange is also the third on the list of best performing stocks in Q3 2020, growing its stock by 33.88% from N30.25 per unit of share recorded as of June 30th to N40.5 at the end of trading in September – with a total market capitalization of N449.8 billion.

In the same vein, the Q2 performance of Stanbic IBTC indicates an 11% increase in gross earnings, which permeates into 32.2% increase in profit before tax – from N21.1 billion recorded in Q2 2019, as against N27.9 billion in the review period.

June 30th – N30.25

September 30th – N40.5

Return – 33.88%

Ranking – Third

United Capital Plc

The financial and investment service firm recorded a 30.59% increase in its stock value, as it moved from N2.55 per unit of share as at June 30th to N3.33 as at the end of September. This growth places United Capital in fourth position, as one the best performing stocks between July and September 2020.

The investment firm displayed firm resolve against the effects of COVID-19 in the second quarter of the year – as it posted a profit before tax of N1.5 billion, as against N1.2 billion reported in the corresponding quarter of 2019. This indicates a 22.9% increase in profit.

June 30th – N2.55

September 30th – N3.33

Return – 30.59%

Ranking – Fourth

FTN Cocoa Processors Plc

A unit of FTN Cocoa shares was valued at 20 kobo as at June 30th. However, it grew by 30% to N26 kobo as at the end of trading on 30th September 2020, leaving its total market capitalization at N572 million.

Data obtained from Nairalytics – the research arm of Nairametrics, showed that FTN Cocoa has not released its financials since Q1 2019. However, the cocoa processing company was able to post a positive stock performance in the third quarter of the year to sit fifth on the list.

The company was formerly registered as Fantastic Traders Nigeria Limited, a Limited Liability Company, which was incorporated in 1991. It commenced cocoa processing business in a third-party arrangement (Toll Processing) with Stanmark cocoa processing company limited in 1995. They converted cocoa beans into cocoa butter and cocoa cake/powder, and later extended their activities to Ile-oluji, Cocoa Cooperative etc.

June 30th – N0.20k

September 30th – N0.26k

Return – 30%

Ranking – Fifth

Bubbling Under

The following stocks make up the rest of the top 10 in descending order:

6. Guaranty Trust Bank Plc

7. University Press Plc

8. Eterna Plc

9. Unity Bank Plc

10. Fidson Healthcare Plc

Bottom line: With a double-digit growth in the following stocks, Investors who bought these stocks would be delighted to see their investments appreciate during this period and will look forward to gaining more in the subsequent periods.

Nigerian youths had been protesting for over 2 weeks, calling for an end to police brutality with the #EndSARS hashtag on numerous social media channels among which Twitter topped.

Nigeria has a median age of 17.9, and the Nigerian youths used their tech-savvy influence to draw international attention to the brutality on protesters. This escalated after reports of the Lekki shooting which has drawn widespread condemnation from international figures such as Rihanna, Kanye West, Joe Biden, Hillary Clinton, Lewis Hamilton, Pope Francis, and many others.

READ: #EndSARS: NBC fines AIT, Channels and Arise TV over use of “unverifiable” footages

The #EndSARS movement dates back to 2017, when Nigerian youths used the hashtag to share their experiences on violence and assault perpetrated by the defunct Special Anti-Robbery Squad (SARS). However, the movement only revived in early October, after a video emerged of police officers thought to be members of the SARS unit, allegedly killing an unarmed young man.

(READ MORE: Instagram tenders apology for flagging #EndSARS posts as fake)

This prompted Nigerian youths to troop to Twitter, calling on the Federal Government to dissolve the notorious police unit and effect police reform, with the hashtag, #EndSARS, #Endpolicebrutality, and many others. The hashtag trended continuously on Twitter as Nigerian youths aired their pains and experiences online.

As at the end of August 2020 and according to the Nigerian Communications Commission (NCC), subscriptions to broadband or high-speed internet services in Nigeria had increased significantly to a peak of 82.7 million. However, despite Facebook having over half of Nigeria’s social media usage, it has not had the pull of Twitter in championing the social justice causes. Why is that?

READ: Facebook’s new policy on political ads and threat to SMEs in Nigeria

Which social media platform has more Nigerians?

According to Emmanuel Dan-Awoh, SEO Analyst at Nairametrics, Twitter only commands 21% usage of Nigeria’s 82 million internet subscribers. Facebook is leading with 55.94% while Instagram and Youtube are at 5.02% and 3.72% respectively.

“The platforms are built for certain types of communication and psychological states,” Dan-Awoh says.

For Nairametrics, which social media platform provides the most news leads?

The #EndSARS protesters had a unifying motto that they had “no leaders,”. This was seen in the decentralized nature of the protests across the country due to the fast-moving nature of news spread mainly on social media platforms.

For Nairametrics, Twitter accounts for the most news leads from social media platforms despite more Nigerians using Facebook on a daily basis.

READ: #EndSARS: Despite scrapping SARS, why are Nigerians still protesting?

“Twitter is by far the most useful social media platform for Nairametrics accounting for more than 90% of page views and visits,” Dan-Awoh says.

Young Nigerians are consuming information larger than ever before, thanks to the internet, with Twitter being the main platform for news sharing despite having only 21% of Internet users in Nigeria. It’s no wonder that most of the Nigerian youths who championed the #EndSARS protests are also in the same demographic that consume news on Nairametrics.

(READ MORE:#EndSARS Protest: FG denies monitoring calls and social media accounts)

Where does the Nigerian government communicate more?

Dan-Awoh says, the Federal government still communicates with Nigerians through traditional media, however, the usage of technology to pass information to citizens is growing, which can be witnessed through the popularity of media aides on Twitter including Bashir Ahmaad, Tolu Ogunlesi, and others.

“Official communication still leans more towards traditional media, but the use of social media by government agencies is growing while the use of traditional media is stagnating,” Dan-Awoh says.

“Nigerians get the bulk of their news from social media channels and from google discover app” he adds.

(READ MORE:#ENDSARS Protests: Why this is different)

So why Twitter?

“Twitter is the most effective channel for social movements because relationships on the platform are not personalized to fit with the real-life connections of its users,” Dan-Awoh says.

He added that Twitter isn’t for very personal connections compared to Facebook, and also gives its users more powers to control what goes on their news feed through the democratization and localization of trending topics, this gives users more information on their surroundings.

READ: #EndSARS: A day by day timeline of the protest that has brought Nigeria to its knees.

“The feed isn’t dictated by personal interests or contacts to the same extent as other platforms. The user also has more control over his Twitter feed due to the democratization of popular topics.

“ Twitter achieved this through Its trending vertical where the most popular topics within a locality are ranked. This serves to draw more people into a digital version of marketplace chatter. This enables the platform to be better suited for the nurturing of a herd mentality within the society. This is why Twitter as a platform is more socially and politically significant than its counterparts,” Dan-Awoh adds.

(READ MORE: Lagos to support owners of looted, vandalised stores)

Bottom line

Despite more Nigerians on Facebook, the Twitter platform makes the localization of news easier to share through its trending platforms, which gives young Nigerians a “concert view” perception on growing issues in the country. With a young population eager for information, it’s no wonder that News Media gets a lot of their leads from Twitter compared to Facebook as the news would be better shared on Twitter.

READ: #EndSARS: We were not hacked – CBN

The increasing popularity of government media aides, especially on Twitter is a sign that we may be heading to a new way of government communication with citizens through the internet.

However, Facebook should not be ignored in this as more Nigerians are now aware of how changes can be brought to social justice and may use whatever platform where they are heard to discuss vital issues.

Guinness Nigeria Plc has started its 2021 financial year with a loss, just like the company did in 2020. However, this time, the value of the loss adds up to N841 million for the opening quarter. In 2020, it was N370 million, which set the tone for what eventually degenerated into a truly horrible and uninspiring financial year. A year that saw loss position in the aggregate 12 months period peak at N12.6billion.

READ: Brewery sector: A quarter to forget

READ: Guinness’ parent company expects alcohol sales to improve as restaurants and bars gradually reopen

Apparently, all that could possibly go wrong with Guinness, did go wrong. From what in retrospect, turned out to be an over-ambitious outlook at the start of the year, to the effects of not giving immense attention to controllable costs, rise in inflation with its resultant pressure in decreased consumer spending, and the crippling effects of the unprecedented COVID-19 pandemic; no company could have asked for worse.

However, the horrendous performance was not peculiar to Guinness Nigeria alone. The results from its competitors, such as the International Breweries Plc, and Nigerian Breweries Plc, amid appalling industry figures recorded, proved that 2020 has been a tumultuous year indeed for all companies operating in the brewery manufacturing sector.

READ: No trophy for International Breweries after bland Q2 results

The analysis of FY 2020

How poor was the 2020 FY performance of Guinness Nigeria and what can be inferred from its Q1 2021 reports? For a company in the habit of declaring dividends especially after the N5.5billion profit in 2019, how did the company move from that profit margin to a loss of N12.6billion just 12months after?

• Profit declined by 129.1% from N5.5billion Profit after Tax in 2019 to N12.6billion Loss after Tax in 2020. This Steep decline was evident in all arrears from top-line to bottom.
• Gross profit down by 16.9% to N33.33billion in 2020 as against N40.13billion reported in 2019
• Revenue plunged 21% to N104.41billion in 2020, from N131.5billion generated in 2019.
• Cost of sales did show some improvement, moving from the N91.4billion expended in 2019 to N71.1billion in 2020 – a 22% decrease.
• Administrative cost continued the rising trajectory to N14.3billion in 2020 from N9.9billion in 2019.
• Finance cost rose to N4.5billion from N2.6billion in 2019, while finance income declined from N750.9million to N301million in 2020.

READ: PZ incurs N1 billion in exchange rate loss 

Speaking on 2020 results, Mr. Baker Magunda, Managing Director/CEO, Guinness Nigeria Plc said,

“The last quarter performance of fiscal 2020 was significantly impacted by restrictions due to COVID-19, exacerbating the already challenging economic environment. Closures of on-trade premises (bars, lounges, clubs, and dine-in restaurants), which represents the major part of the consumption occasion for our products and bans on celebratory occasions, impacted sales.

“Demand was also impacted by reduced consumer income, unemployment concerns due to the shutdown of a large number of businesses, and increases of VAT and excise throughout the year.”

READ: R.T. Briscoe declares N618.9 million loss in H1 2020, as sales of vehicles fall 

Magunda further explained that, “Distribution was impacted by the ban of inter-state, and in some cases intra-state travel. Although, Management worked diligently with regulatory authorities to minimize the impact, this hampered our distributors’ ability to restock and have our brands available for purchase.”

The analysis of Q1 2021

In the 2021 financial year, the task before the company is to drive its strategic objectives to bring the company back to profitability. The Chairman, Mr Babatunde Abayomi Savage, recognizes that this would be no stroll in the park, as he affirmed that despite predictions that the coming year will be challenging globally due to the new normal, “we believe we have experienced our full share of the impact and are now geared to go back to profitability.”

READ: MTN, Airtel, Glo, other Telcos’ operating costs drop to N1.756 trillion in 2019

The opening quarter for 2021 (July-September) saw improvements in sales volumes on the back of eased restrictions from the COVID-19 necessitated lockdown.

• Revenue posted is N30.02billion, 11.64% increase from the N26.89billion recorded in the corresponding period of 2020.
• However, Cost of sales worsened by 21.1%, increasing from N18.9billion in Q1 2020 to N23.01billion in Q1 2021.
• Marketing and distribution expenses, as well as administration expenses, showed marginal reduction, depicting management interest in controlling these variables.

READ: Q1’20: Okomu Oil’s result is more proof that essentials always win

Bottomline

Generally speaking, results for the opening quarter show signs of improvement, but the tax component was the primary factor responsible for masking the progress obtained in Q1 and eroding promising signs.

With the gradual re-opening of its previously closed company buildings in Benin City, and the shift in focus from the largely underwhelming lager segment to investing more in spirits, it will be interesting to see how this impacts volumes and revenue in subsequent quarters, despite the apparent economic conditions.