BREAKFAST REPORT: THE WEEK AHEAD, STOCK WATCH & RECOMMENDATIONS FOR THE WEEK

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According to the Bureau of Public Enterprises, Nigeria is looking to raise ₦400 billion ($1.3 billion) via asset sales to fund the 2018 Budget. The federal government reportedly has eleven assets it plans to sell or lease, ranging from power assets to sports stadiums.

The government has also highlighted plans to sell part of its stake in the Nigerian Reinsurance Company through an Initial Public Offer in November. We note that these proposed asset sales are in line with the principles of the 2018-2020 Medium-term Expenditure Framework, in which the government intimated its willingness to fund near-term expenditure through strategic asset sales. However, we are yet to see much traction on this front, a situation not helped by the delayed passage of the 2018 Budget.

Equity:

Bears returned to the NSE at week close as the ASI closed Friday under (-96bps) albeit closing in the green for last week (+503bps), supported by stronger earlier gains. It was the first positive w/w close in six weeks, with all but one sector closing in the green for last week. After a week of positive trading, bears resurfaced at the close of the week. We expect profit taking observed on Friday to persist today and thus foresee a mildly negative close today.

Stock Watch:

DANGSUGAR has gained 21% over the last nine sessions. The stock currently trades at ₦20.00, below our target price of ₦23.30. DANGSUGAR is flat YTD, a favorable performance compared to the 6% YTD decline for the Consumer Goods sector.

Fixed Income:

We expect healthy system liquidity (₦368 billion) to support some positive trading this week, barring any CBN liquidity mop up.

 

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