The Nigerian Stock Exchange finished the week trading flat; recording losses in four of the five trading sessions. Tuesday witnessed a strong uptick with the market advancing by 1.26%, leaping the ASI over 28,000 points, spurred by strong gains in Dangcem and Nestle. However, a sharp retraction returned the broad index below the psychological threshold. Consequently, the All-Share Index (ASI) closed unchanged at 27,918.59 points, while YTD performance stands at -11.2%.
The week was replete with earnings releases across listed stocks, which also influenced trading patterns, although insufficient in driving trading activity which remained lukewarm, as value traded for the week printed at N11.4 billion, 15% below the previous week.
TOP STORIES DURING THE WEEK
THE MONETARY POLICY COMMITTEE (MPC)
The Monetary Policy Committee (MPC) meeting held on 23rd and 24th of July, 2019, decided to leave the monetary policy rate as well as all other monetary policy variables unchanged; Monetary Policy Rate (MPR) at 13.5%, Cash Reserve Ratio (CRR) at 22.5%; and Asymmetric corridor at +200bps and -500bps around the Monetary Policy Rate, while the liquidity ratio remains at 30%.
The Bank’s decision was prompted mainly by the persistent price pressures. Although inflation moderated to 11.22% in June from 11.4% in May, the committee expressed its intention to monitor the effect of the previous rate cut in the economy.
PRESIDENCY RELEASE MINISTERIAL LIST
Nigeria’s President, President Muhammad Buhari, submitted the much-awaited list of cabinet nominees to the Senate for his second term, 40 days after the swearing-in. The list comprises 43 nominees coming from across all 36 states and Federal Capital Territory.
Despite high anticipation from investors and market participants seeking clarity on fiscal and executive policy direction for the new tenure, the news had a muted impact on market activity.
MARKET EXPECTATION / STOCKS TO WATCH
In compliance with the Exchange’s regulation regarding quarterly earnings filling, we expect a flurry of earnings in the week ahead, just as seen in the tail end of the previous week. Particular to our interest are earnings from the banking companies and Dangote Cement. We envisage market activity to be largely driven by earnings, as investors digest and revalue their positions.
ZENITH BANK: Despite sustained sell-off, we still consider the lender a strong BUY. We expect interim dividend payment to fuel some buying interest.
LAFARGE AFRICA: The cement manufacturer is potent with high capital appreciation in the long term, supported by its recently released Q2 2019, which paints a more vivid picture of its recovery from headwinds experienced in previous years.
ACCESS BANK: Upon consolidation with Diamond Bank, the expected Q2 2019 financials stand to reveal the reality of the merger, hence pervasive anticipation. Although the stock trades at a marked discount to peers, informing a BUY recommendation, we emphasize cautious optimism, factoring possible earning shock.
OANDO H1’19: Revenue: N315.9bn vs N297.3bn (+6.1%); Profit After Tax: N7.2bn Vs N8.5 (-15.6%)
TOTAL H1’19: Revenue: N150.8bn Vs N156.3bn (-3.5%); Profit After Tax: N0.20bn Vs N8.6bn (-98%)
OKOMU H1’19: Revenue: N8.6bn Vs N12.9bn (+33.8%); Profit After Tax: N2.52bn Vs N5.9bn (-57.4%)
LAFARGE H1’19: Revenue: N160.3bn Vs N162.3bn (-1.2%); Profit After Tax: N9.3bn Vs -N6.3bn
CCNN H1’19: Revenue: N32.1bn Vs N12.1bn (+166%); Profit After Tax: N7.3bn Vs N2.6 (+179%)
UNILEVER H1’19: Revenue: N42.7bn Vs N48.1bn (-11.2%); Profit After Tax: N3.5bn Vs N5.7bn (-38.6%)
MTNN H1’19: Revenue: N566.9bn Vs N505.7bn (+12.1%); Profit After Tax: N98.9bn Vs N73.4bn (+34.8%). Interim Dividend: N2.95 – Closure of Register: 9 – 12 Aug 2019; Payment Date: 16 Aug 2019.
MOBIL H1’19: Revenue: N92.8bn Vs N85.9bn (+8.0%); Profit After Tax: N4.2bn Vs N5.4 (+23.4%)
FLOUR MILLS Q1’20: Revenue: N134.7bn Vs N133.0bn (+1.3%); Profit After Tax: N4.2bn Vs N3.6 (-16.7%)
FLOUR MILLSFY’19: Dividend: N1.20 per share; Closure of Register: 15 – 21 August 2019, Payment Date: 6 September 2019
AIRTELAFRI Q1’20: Revenue: $795.9mn Vs $744.5mn (+10.2%); Profit After Tax: $132.mn Vs $150.6mn (-12.2%)
NESTLE H1’19: Revenue: N70.9bn Vs N67.8bn (+4.5%); Profit After Tax: N13.4bn Vs N12.9bn (+3.9%)
FCMB H1’19: Gross Earnings: N89.8bn Vs N83.9bn (+7.0%); Interest Income: N70.4bn Vs N64.3bn (+9.4%); Non-Interest Income: N19.4bn Vs 19.61bn (-1.0%); Profit After Tax: N7.53bn Vs N5.73bn (+31.4%)