Stocks on our Buy/Sell/Hold list are picked from the gainers and losers of the previous week, as well as opinions from various analysts’ reports. Here are Buy/Sell/Hold picks for the trading week ending August 10, 2018.
Cutix Plc: SELL
Latest Results: Results for the financial year ended April 2018 show that revenue increased from N3.6 billion in 2017 to N5.0 billion in 2018. Profit before tax also increased from N370 million in 2017 to N661 million in 2018. Profit after tax also jumped from N257 million in 2017 to N440 million in 2018.
Pricing
Price to earnings ratio: 8.43X
Price to book ratio: 2.44
Year to date return: 117.90%
One year return: 122.50%
Latest information
The company, in a notice released this week, stated the qualification date for its bonus and dividend payment is October 12, 2018. The company’s shareholders’ register will be closed from October 15 to October 19, 2018. The company’s Annual General Meeting will be held on October 26.
Payment date is November 6, 2018.
External View: NONE
Our View
Cutix Plc has been on a tear in the past few weeks, driven largely by news of a one for one bonus. The stock appreciated by over 40% last week and is one of the top 3 best performing stocks, year to date. Cutix is a SELL in Nairametrics’ opinion, as the bonus would lead to a dilution of the company’s earnings per share in the medium term.
The stock has also outperformed the Nigerian Stock Exchange which is down 4%, year to date. At this stage, investors would be better off selling, to re-enter after the bonus shares are admitted.
Diamond Bank Plc: SELL
Latest Results: Results for the half year ended June 2018 show that gross earnings increased from N97.8 billion in 2017 to N98.5 billion in 2018. Profit before tax, however, fell sharply from N9.5 billion in 2017 to N2.9 billion in 2018. Profit after tax also dropped from N8.0 billion in 2017 to N1.7 billion in 2018.
Pricing
Price to earnings ratio: *None as Diamond Bank had a negative FY 2017 result.
Price to book ratio: 0.13
Year to date return: -18%
One year return: -2.34%
External View
Analysts at FBNQuest have an underperform rating on the stock. They have a target price of N1.30, which is 6.9% of the bank’s share price of N1.40 as at when the report was prepared.
Analysts at Afrinvest have a SELL rating on the stock. They have a one-year target price of N1.24, which is 19% below the stock’s price of N1.53 as at when the report was prepared.
Our View
Diamond Bank is a SELL in Nairametrics’ opinion, though the stock is trading close to a year low. The bank’s H1 2018 results show a marked decline year on year, and there is currently no reason for upside. Investors would be better off selling and re-enter if Q3 results show a marked improvement.
PZ Cussons: HOLD
Latest Results: Results for the 9 months ended February 2018 show revenue increased from N57.1 billion in 2017 to N63.2 billion in 2018. Profit before tax dropped from N2.3 billion in 2017 to N1.9 billion in 2018. Profit after tax fell from N1.6 billion in 2017 to N1.3 billion in 2018.
Pricing
Price to earnings ratio: 13.26X
Price to book ratio: 1.35X
Year to date return: -32%
One year return: -42.80%
External View
Analysts at Afrinvest have an accumulate rating on the stock. They have a one-year target price of N22.15, which is an expected upside of 11.26% from the company’s price of as at when the report was prepared.
Analysts at FBNQuest have an underperform rating on the stock. They have a target price of N19.1 which indicates an expected 26.1% upside from the stock’s price of N15.2 when the report was prepared.
Our View
PZ is a HOLD in Nairametrics’ opinion. The stock is currently trading at its one-year low and could dip further due to current market sentiments. Investors would be better off waiting till when it releases its full year results sometime in September, if interested in taking a position.
