Market Review for the week ended January 26th, 2018… 

Nigeria’s equity market during the week under review closed in the negative territory for the very first time this year. Recalled that the market had earlier witnessed three straight weeks of upward rally leading to 17.91% year-to-date return and equally ranked as the world’s best performing bourse

Week-on-week (WoW), the All-Share Index (ASI) shed a total of 1,319.07 absolute points, representing a decline of 2.93% to close at 43,773.76 points. This lead to a dip in the year-to-date’s (YTD) return at 14.46
Thirty (30) equities appreciated in price during the period, lower than forty (40) recorded in the previous week. Forty-four (44) equities depreciated in price, higher than thirty-two (32) of the previous week, while ninety-eight (98) equities
GTI TOP-5 WEEKLY STOCK PICK FOR THE PERIOD 29/01/2018 – 02/02/2018
UBA Plc: UBA Plc remains one of the most reputable banks in Nigeria business landscape.
  • Its improved branch networks within the country and developed presence in prominent Africa Countries has positioned the Pan African bank with improved income sources.
  • In a recent Q3 2017 results, the Company grew gross and net income by 25.8% and 23.04% respectively.
  • We expect these stellar performances to be consolidated into FY 2017.
  • It has a current book value of 13.99x and P/BV of 0.66x. In terms of meeting short-term obligations, the Bank is firm with acid test ratio at 0.75%.
  • Our target price is N15.00, representing a premium of 17.2% returns against the market price of N12.80.
United Bank for Africa Plc
Target PriceN15.00
Investment Horizon12-Month
IndustryFinancial Service
Price (N)N12.80
Shares Outstanding (Mn)34,199
Expected Return 52Week High 52Week Low17.2% N13.50 N4.60
Dangote Sugar Plc: Dangote Sugar Plc is a subsidiary of Dangote group.
  • It refines raw sugar into edible sugar.
  • It controls over 60% of the sugar market in Nigeria.
  • Its backward integration strategy has helped to bring down its input cost considerably in recent years.
  • Her extensive, fast and reliable distribution network covers over 80% of the country.
  • The company has outperformed its full-year 2016 net income as at half-year 2017 by 18.79%.
  • It grew its revenue and net income in Q3 ‘17 by 41.5% and 156.2% against comparable period of 2016.
  • We expect this streak of decent performances to be consolidated into FY 2017.
  • The Company is an income and growth stock. Final dividend for FY 2017 is highly anticipated.
  • Our target price for the stock is N25.00, representing a 13.9% upside potential.”
Dangote Sugar & Refinery Plc
Target PriceN25.00
Investment Horizon12-Month
IndustryConsumer Goods
Price (N)₦21.95
Shares Outst (Mn)12,000
Expected Return 52Week High 52Week Low13.90% N23.50 N5.71

Lafarge Africa: Lafarge Africa has an installed cement capacity of 12 million metric tonnes (MMT) across its major installations in Nigeria.

  • It has in the pipeline plans to ramp up this capacity to 18mmt by 2020.
  • It has a strong presence in the south-south and south-east Nigeria through its operations of Mfamosing and Atlas Plants.
  • The infrastructure inadequacies in Nigeria is a major incentive to hold the stock of Lafarge Africa for medium to long-term objective.
  • In her recent 9M ’17 results, revenue and PAT grew by 38.9% and 102.5% respectively.
  • It recently raised a capital of N131.7 billion through Rights Issue with the aim of reducing its debt obligation and strengthening bottom-line.
  • Our target price for Lafarge is N70.00, representing a 34.6% premium to current market price of N52.00″
Lafarge Africa (WAPCO) Plc
Target PriceN70.00
Investment Horizon12-Month
IndustryIndustrial Goods
Price (N)₦52.00
Shares Outst (Mn)5,576
SymbolFlour mill
Expected Return 52Week High 52Week Low34.60% N66.99 N34.47
Zenith Bank: Zenith Bank ranks on the list of the few banks with the low non-performing loan.
  • Lower impairments and interest expenses are expected to boost the company’s bottom line going forward.
  • The bank equally boosts one of the firmest Capital Adequacy Ratio (CAR) at 21% and provides ample buffer above the regulatory minimum of 15%.
  • Its current balance sheet size is a major bolster for the firm going concern.
  • The liquidity ratio of the group as at 9M ‘17 was 55%, thus above the regulatory minimum of 30%.
  • In the bank’s 9M ’17 results, it reported a revenue and PAT growth of 39.8% and 35.5% respectively.
  • Our target price on Zenith bank is N37.00, representing an upside potential of 19.35% to the closing price of N31.00 as at Friday, January 26, 2018.”
Zenith Bank Int’l Plc
Target PriceN37.00
Investment Horizon12-Month
IndustryFinancial Service
Price (N)N31.00
Shares Outst (Mn)31,396
Expected Return 52Week High 52Week Low19.35% N34.20 N13.10
Flour Mills: Flour Mills is a market leader in the food and agro-allied products in Nigeria.
  • The company has continued to build on works on backward integration in core value chain; sugar sweeteners, edible oils, feeds & proteins and cassava starches.
  • It recently concluded the merger of Golden Penny Rice Ltd to its operations. This is expected to boost the company’s profitability.
  • The backward integration strategy will help bring down its input cost considerably in years ahead.
  • It has a good and reliable distribution network across the country.
  • In her recent 6M ’17, revenue and PAT were grown by 17% and 44.9% respectively, resulting to an EPS of 317 kobo and a PE ratio of 9.46x against and industrial PE ratio of 15.2x.
  • Our price target for Flour Mills is N42.00, representing 33.7% upside potential to the current market price of N31.42.”
Flour Mills of Nigeria Plc
Target PriceN42.00
Investment Horizon12-Month
Price (N)₦31.42
Shares Outst (Mn)2,624
Expected Return 52Week High 52Week Low33.7% N35.76 N16.58
Outlook for the new week ending February 2nd, 2018
Though this is the first week of February, it is equally the week that will see through the last trading days of the month of January. We expect volatility to be strong this period as portfolios’ managers close their book for the month of January. As such, we expect to see some element of profit taking amidst re-positioning activity towards…
The market is also expected to be impacted by existing positive economic data which has continued to resonate investors’ confidence (especially, foreign investors)…
Our Watch List
In the meantime, the following stocks listed below fall into our watch list this week. Access Bank, Dangote Cement, Honeywell Flour, Fidelity Bank and PZ Cussons.
Have a fantastic trading week.