Market data for the week ended 9th April 2021 revealed that the Nigerian Equity space closed on a negative note, as the All-Share Index and the market capitalization depreciated by -0.66%, to close the week lower at 38,866.39 and N20.335 trillion respectively.
This bearish move has been linked to the conclusion of an impressive annual reporting season, as this leaves few incentives to bet on slightly higher returns from equities, with the rising yields in the fixed-income market.
Some industrial, mining, and consumer goods stocks delivered decent returns during the week
Despite the prevailing bearishness in the market which impacted the performance of some key consumer and industrial good stocks on NSE last week, shares of the following industrial, mining, and consumer goods companies delivered decent returns for their holders during the week.
The gains were driven by buying activities on the exchange as some analysts and investors consider them to be trading at discounts, with tremendous value. This made bargain hunters scamper for the shares of these companies during the week ended 9th April 2021.
Japaul Gold and Ventures Plc (JAPAULGOLD), W-o-W gains: 40%
The rebranded and restructured mining company with a key focus on gold exploration was the best-performing stocks on NSE last week. The company also maintained the status of the best performing mining stocks.
The shares of the gold exploration company surged by an impressive 40% last week driven by buying pressures in the shares of the company.
The company’s relatively low price driven by the recent sell-down in its shares prompted bargain hunters to accumulate additional stakes in it, in a bid to capitalize on the upward swing in its share price.
This move saw the shares of the company increase from N0.41 to N0.63 per share, representing a whopping 40% gain in just a week.
Meyer Plc (MEYER), W-o-W gains: 19.51%
The shares of the key player in the paint and decorative industry increased from N0.41 per share at the market open last week, to N0.49 per share, to print a gain of 19.51% at the close of trading activities for the week ended 9th April 2021.
Prior to this move, the shares of the company declined by 24.07%, from N0.54 at the open of trade this year, to N0.41 per share on the 9th of March 2021.
At this price, buying activities in the shares of the paint manufacturer and marketer surged owing to the actions of bargain hunters. This led to the move up to N0.49 during the week.
Flour Mills Nigeria Plc (FLOURMILLS), W-o-W gains: 6.90%
Shares of Flour Mills Nigeria Plc, one of the biggest brands in the food and agro-allied industry in Africa, surged by 6.9% last week, as the shares of the consumer goods company increased from N29.00 per share to N31 per share during the week ended 9th April 2021.
The impressive N2 per share or 6.9% gain in the shares of Flour Mills last week was driven by the buying interest in the shares of the flour miller, as investors anticipate an impressive financial performance ahead of the company’s earnings season.
This bullish move in the shares of Flour Mills pushed the market capitalization of the miller up by more than N8.2 billion on the exchange from N118.9 billion at market open to N127.1 billion at the close of the market last week.
What you should know
Ayodeji Ebo, head of retail investment at Chapel Hill Denham in Lagos, in a conversation with Bloomberg revealed that the market will be bearish in the first half of 2021.
He added that after the result season, the investing public should expect a further depression because there will be no further catalysts to drive the market.
Ayodeji suggested that the growing yield in the fixed income space will continue to be a major issue as investors will become more inclined to get a one-year Treasury bill at 7% now, than taking a risk of 8 or 9%.
Guinness announces retirement of Chairman, appoints former Minister as replacement
Guinness Nigeria Plc has announced the appointment of Dr Omobola Johnson as the new Chairman of its board, with effect from July 1, 2021.
Guinness Nigeria Plc has announced the appointment of Dr. Omobola Johnson as the new Chairman of its board, with effect from July 1, 2021.
This follows the retirement of the current Chairman, Babatunde Savage, from the position, with effect from June 30, 2021.
The announcement is contained in a notice sent to the Nigerian Exchange Limited, investing public, and other stakeholders on May 4, 2021, and signed by the Company Secretary, Rotimi Odusola.
Johnson, who has over 30 years of experience from both the private and public sectors of the Nigerian economy, was a former Minister of Communications Technology and a former Country Managing Director in Accenture.
While commenting on her appointment, Johnson who has been serving on the board of Guinness, said, “Guinness Nigeria is an excellent company with tremendous value creation opportunities, and I believe the refreshed board and management team remain committed to maximizing shareholder value.”
In his letter addressing the board in compliance with the applicable corporate governance regulation, Savage expressed his pleasure at the opportunity to have been a part of the Guinness story over the last four decades.
He thanked the board of Guinness Nigeria and Diageo UK for the opportunity to have served in several capacities, first as an employee who held various strategic senior roles, then as an Executive Director, and later as Chairman of the board, a role that he held for almost 12 years.
He said, “After almost 40 amazing years, my journey with Guinness Nigeria is coming to an end. Guinness Nigeria is and will always be family to me.”
How Honeywell intends to paydown its First Bank loans
Honeywell intends to repay its loans via a corporate bond issuance which it announced back on March 18th 2021.
Honeywell Nigeria Plc has been in the news lately over its indebtedness to First Bank Plc. The Central Bank issued a query to the bank last week asking that it recover the loans within 48 hours while also divesting from its equity interest in the company.
Honeywell in turn issued a press release claiming that its First Bank loans are being serviced and that it has paid down the loans by 30% over a two-year period.
“Honeywell Group has continued to meet all its obligations on its facilities with the Bank according to agreed terms and has reduced its exposure by nearly 30% in 2.5 years. The facilities were charged at market rates and the Bank continues to earn significant interest therefrom.”
As of December 2020, Honeywell reported total loans of N59.4 billion out of which N23.5 billion are non-current loans and the balance N35.8 billion, current loans. The current loans are also designated for Import Finance Facilities.
In its full-year results for the period ended March 2020, Honeywell explained its N58.2 billion loans (at the time) were divided into term loans and overdrafts (N2.9 billion). The list of banks who have lent money to Honeywell includes First Bank, Fidelity Bank, Bank of Industry, and Polaris Bank. The totality of First Bank’s loan to Honeywell was not reported explicitly in its annual or interim reports, however, it did disclose that the current portion of its loans to First Bank was about N13.5 billion including the overdraft facility of N2.9 billion.
How Honeywell intends to repay its FBN loan
Nairametrics gathers Honeywell intends to repay its loans via a corporate bond issuance which it announced back on March 18th 2021. In a press release, the company stated that its Board of Directors had approved “the initiation of a Commercial Paper Program and a Medium-Term Note Program for the purpose of refinancing/restructuring the Company’s debt profile,” which suggests this is how it plans to repay the loans.
Debt issuance will typically take 3 to 6 months to consummate which might put the company on a collision course with the central bank. The CBN in its letter to First Bank demanded that Honeywell repay its loans to First Bank within 48 hours (from April 26th) failing which it (CBN) would “take appropriate regulatory measures against the insider borrower and the bank” which means it could send AMCON to make a move on the company in order to recover the loans for depositors of the bank.
Despite the debacle, Nairametrics analysts expect an amicable solution to the disagreements over the next few days and weeks as tempers cool off. Honeywell will likely tap into the thriving bond market to raise enough funds to repay the loans.
While CBN pressures remain an immediate concern, its next challenge will be to convince potential bond buyers that it can generate enough cash flows to service the bonds in a timely manner. Honeywell generates an operating profit before finance cost of about N5.5 billion and generates around N4.8 billion in free cash flow according to details of its third-quarter results.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- 2021 Q1 Results: FTN Cocoa Processor Plc reports loss after tax of N162.21 million
- Tantalizers Plc reports a loss after tax of N97.75 million in FY 2020 in Q1 2021.
- Courteville Business Solutions Plc proposes final dividend of 3 kobo per share for FY 2020.
- 2020 FY Results: UPDC Real Estate Investment Trust records over 500% growth in Profit after tax.
- Sovereign Trust Insurance records a 43% surge in profit after tax to N392.1 million in Q1 2021.