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.

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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:

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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.

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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.

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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.

READ: Heineken scoops more Nigerian Breweries shares in insider disclosure

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.

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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.

READ: Nigeria’s manufacturing sector contracts for 5th consecutive month – CBN 

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.

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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

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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.

Nigeria recorded a whopping 52% drop in exports proceeds in the quarter ending June 2020 mostly due to the effects of Covid-19. This is contained in the Current Account Deficit numbers published by the Central Bank of Nigeria. The current account deficit for the quarter fell to $3.2 billion compared to first-quarter data of $5.6 billion, the latest report indicates.

Explore Data on the Nairametrics Research Website

Export drop

According to the data, total exports in the second quarter of the year fell to $6.3 billion from $13.8 billion in the first quarter of 2020 before the Covid-19 lockdown grounded the economy. Crude Oil inflows which Nigeria relies on for 85% of its export proceeds went from $11.2 billion in the first quarter to just $5.2 billion in the second quarter of the year.

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Crude Oil prices fell to as low as $20 per barrel in April as markets panicked as the Covid-19 lockdown spread globally. OPEC members also decided to cut crude oil output with Nigeria’s quota falling from 1.8 million barrels per day to just 1.4 million barrels per day. This culminated in lower export proceeds for Nigeria piling pressure to devalue the currency after the first devaluation in late March.

READ: Nigeria’s forex devaluation timeline – 2020

Non-oil revenues also fell sharply from $2.1 billion in the first quarter of the year to $1.1 billion in the second quarter of the year revealing how damaging the pandemic has been on the economy. Nigeria earned an average of $2.6 billion per quarter from non-oil exports in 2019, the highest since 2008 when the CBN started publishing figures.

Imports also fall

Nigeria’s dollar outflow for imports also fell from $14.7 billion in the first quarter of 2020 to $10 billion in the second quarter of the year. The fall was also driven by a drop in oil imports falling to just $307 million from $3.7 billion. Non-oil exports which is a major driver of dollar outflows from Nigeria $11 billion to $9.7 billion. This was also due to the impact of the lockdown as most goods imported into the country from other parts of the world fell.

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Despite several import substitution policies of the current government, Nigerians spent an average of $12.7 billion on the importation of goods into the country in 2019 compared to $7.3 billion a year earlier. The country’s main non-oil imports are boilers, machinery and appliances gulping over 27% of imports. Vehicle parts are also a major source of dollar outflows with over 12.8% of the value of what is imported into the country.

READ: Nigeria’s worsening current account deficit piles pressure on exchange rate

The government has focussed its ban on accessing forex for the importation of listed items which they believe can be made in Nigeria. Most of these items are food-related.

Why this matters: Nigeria’s exchange rate is mostly determined by how much dollars the country can attract compared to outflows.

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• With exports proceeds down by over 50% pressure was on the central bank to devalue the naira.
• However, the CBN also had the option of managing the demand side of the deficit culminating in a drop in current account deficits.
• The more Nigeria earns from exports compared to imports the higher the chances that the exchange rate will remain stable.
• For example, in 2018 when the exchange rate was stable at N360/$1, Nigeria earned about $15.3 billion in dollar inflows or exports (mostly from crude oil sales) compared to $10.1 billion in imports.
• Thus Nigeria will need to either earn more from exports or cut some of its reliance on imports if it is to maintain a stable exchange rate for the country.

Nigerians continue to grapple with the persistent increase in prices of household food items as rice, vegetable oil, flour, tomatoes, onions and frozen food items recorded significant increase in price at the end of September. This was contained in the latest Household Market Survey conducted by Nairalytics, the research arm of Nairametrics.

Major food items continue to jump across Lagos markets as sustained structural issues affecting food production and supply were further exacerbated by the lockdown measures implemented by the Government in response to curbing the spread of the COVID-19 pandemic.

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According to the latest survey conducted by Nairalytics, a big bag of round shaped tomatoes spiked by 16.7% to sell for an average of N14,000 compared to N12,000 recorded a fortnight ago. Also, a cartoon of frozen Chicken that was initially sold for an average of N13,000 now sells for N14,000.

On the flip side, a 50kg bag of Mama Gold Flour which endured a sudden increase two weeks ago to N16,500 now sells for an average of N14,125.

The report contains information on items that witnessed price increase, price decrease, as well as information on special markets, and insights.

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Items that witnessed price increase 

Listed below are the items that recorded significant price increase:

• A 50kg bag of Mama’s Pride rice increased by 3% to sell for an average of N25,500 compared to an initial average of N24,750.
• Also, a 50kg bag of foreign rice (Mama Gold) rice sells for an average of N29,750. This indicates a 3% increase compared to N28,875 recorded earlier in September.
• A 50kg bag of Royal Stallion (Foreign rice) also increased by 1.1%. selling for an average of N30,333 as against N30,000 earlier reported.
• A 70g carton of Golden Penny noodles recorded an 8.47% increase in price to sell for an average of N1,600 compared to N1,475 recorded two weeks ago.
• A 5 litres gallon of local vegetable oil that was sold for an average of N2,750 two weeks ago now sells for N3,100 indicating a 12.7% increase in price.
• Also, a 25 litres gallon increased by 4.84% to sell for an average of N14,625 from initial average N13,950.
• A big basket of round shaped tomatoes increased by 16.7% to sell for an average of N14,000 as against N12,000 recorded two weeks ago.
• A medium-sized basket of round shaped tomatoes also increased by 21.4% to sell for an average of N8,500 compared an initial average of N7,000.
• A big basket of oval-shaped tomatoes now sells for an average of N16,000 representing an 100% increase in price.
• A carton of full chicken sells for an average of N14,000 compared to an initial average of N13,000. The frozen food item increased by 7.7%.
• While the price of a carton of chicken laps, also increased by 7.7% to sell for an average of N14,000.
• A big bag of dry onion now sell for an average of N37,500, increasing by 7.9% from an initial average of N34,750.

Items that witnessed price decrease

Some of the items that recorded slight decrease in prices include:

• A 50kg bag of white beans recorded a decline in price of 6.3% to sell for an average of N29,750 as against N31,750 recorded earlier in the month.
• A medium-sized tuber of yam now sells for an average of N638, representing 10.5% reduction in price.
• Mama Gold flour (50 kg) that was sold for an average of N16,500 two weeks ago, is now being sold for an average of N14,125.
• A big bag of pepper currently sells for an average of N15,500, decreasing by 3.1% from an initial average of N16,000 while a medium bag size decreased by 7.1% to sell for an average of N6,500.
• The price of a big bag of yellow maize dipped by 14.5% to sell for an average of N17,667 while that of white maize also reduced by 15.7% to sell for an average of N17,000.
• Bush mango seed (Ogbono) that was sold for N105,000 earlier in September, now sells for an average of N95,000 representing 9.5% reduction in price.

Items that maintained initial prices

• Items whose prices remained the same, compared to two weeks ago include:
• A big bag of new onions continues to sell for an average of N25,500, same as recorded two weeks ago
• A crate of raw egg still sells for an average of N1,200 across the four markets.
• Refilling of 12.5kg cylinder of household cooking gas still cost average of N3,275 while 5kg cylinder costs an average of N1,375.
• Dangote and Honeywell flour still sell for an average of N14,333 and N14,375 respectively.
• A big basket of sweet potatoes continues to sell for an average of N14,000 while Irish potatoes of the same size, still sell for an average of N30,500
• 50kg bag of beans (Oloyin) still sell for an average of N20,375.

Special markets/items

• Recall that, Nairalytics earlier reported a significant surge in the price of flour across major markets in Lagos State. A visit to Oyingbo market revealed that the price of flour is still very much on the high side as most traders sell a 50kg bag of flour between N13,500 and N14,500 depending on the brand of the product.
• According to Mrs. Esther who bakes cake at Oyingbo market, “the increase in the price of flour, is really affecting us seriously, we bought a bag of flour for N11,000 before lockdown, now we are forced to buy for as high as N14,000 while we also buy 25 litres gallon of vegetable oil for an average of N15,000 despite the fact that we cannot increase the price of our goods so as not to discourage buyers”. She stated further that the increase in price of flour is affecting their ability to make profit and grow their businesses.
• Below are the prices of various brands of rice, sighted at Daleko market; Mama Gold (10kg) – N4,500, Royal Stallion (50kg) – N29,000, Rice Master (10kg) – N5,000, Mama Gold (50kg) – N29,500, Caprice (50kg) – N29,000, Mama’s Pride (50kg) – N25,500, Umza (50kg) – N24,500, Labana (50kg) – N25,000, Alamzat (50kg) – N23,500, Big Bull (50kg) – N25,000, Mama’s Choice (50kg) – N24,000.

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Market insights

• Nigerians have been hit with persistent increase in prices of most food items despite the easing of lockdown in the country. Nairametrics visited some tomatoes sellers at Mushin and obtained some insightful responses as to cause of the recent spike in the price of tomatoes.
• According to Mrs. Alomaja, Northerners bringing in the items to the market are complaining of rain spoiling their harvests, which has, in turn, affected the price of the commodity. “this year, it did not rain as much as anticipated, and now when it is time to harvest heavy downpour of rain is now destroying the harvest in the farm” she said. This implies that the heavy rainfall has destroyed most of the harvest, hereby limiting the quantity of goods available for sale.
• Mr Yaya, on the other hand told Nairametrics that the increase in price of tomatoes is due to seasonal fluctuations, considering that the year is gradually getting to the end, a period characterized by increase in price of food items.
• Meanwhile, the price of a big bag of dry onions increased by 7.9% to sell for an average of N37,500. The increase has been attributed to scarcity of the commodity in the market. Mr. Kelechi, a trader at Mile 12 told Nairametrics that there have been limited quantity of the commodity coming into the market in recent times, which has caused the price of the item to surge.

READ: Smuggling of imported rice hits Lagos major markets, as residence brace for shutdown

About Nairametrics Food Price Survey

Nairametrics Food Price Watch, is a bi-weekly Household Market Survey that covers the prices of major food items in Nigeria, with emphasis on five major markets in Lagos – Mushin market, Daleko market, Oyingbo market, Idi-Oro market, and Mile 12 market.