The Nigerian bourse closed transactions for today (Friday) positively to halt the three days consecutive trading losses, as the NGX-ASI expanded by 0.21%.
The positive sentiment was impacted to investors’ buy interest in banking and oil & gas stocks like SEPLAT, STANBIC, GUARANTY, ACCESS, and ZENITH, and 20 others. However, the market breadth closed positively, recording 25 gainers against 15 losers.
In summary, the All-Share Index (ASI) increased by 84.02 absolute points, representing a growth of 0.21% to close at 39,198.75 points. While the overall Market Capitalization value lost N39.05 billion, representing a decrease of 0.19% to close at N20.43 trillion due to the delisting of 11Plc (formerly Mobil Plc) from the NGX.
LINKASSURE emerged as the joint-top gainers (by percentage points) for today, with a maximum price appreciation of 9.52%, while NEM emerged as the top loser (by percentage points) with a maximum price depreciation of -9.50%.
Today’s market gain was driven by price appreciation in large and medium capitalized stocks amongst which are; UBN(+9.09%), ROYALEX(+8.33%), CHIPLC(+8.33%), CADBURY(+7.69%), REGALINS(6.90%), LIVESTOCK(+4.05%), HONYFLOUR(+3.48%), FCMB(+3.45%), OANDO(+3.33%), SEPLAT(+2.58%), STANBIC(+2.40%), MANSARD(+2.27%), ZENITH(+1.14%), GUARANTY(+0.86%), DANGSUGAR(+0.85%), ACCESS (+0.62%) and UCAP(+0.34%).
Anheuser-Busch InBev (AB InBev), the world’s largest brewer, said its revenue grew by 17.2% with revenue per hl growth of 3.7%, driven by ongoing premiumization and revenue management initiatives.
The company said the total volumes grew by 13.3%, with own beer up by 14.9% and non-beer up by 4.0% in which combined revenues of our global brands, Budweiser, Stella Artois and Corona, increased by 29.5% and by 46.4% outside their home markets.
Healthy revenue growth translated to an EBITDA increase of 14.2%. Positive brand mix and ongoing cost discipline were somewhat offset by anticipated pressures from transactional FX and commodity headwinds, channel and packaging mix, and an increase in our SG&A as a result of higher variable compensation accruals, which are recorded by a quarter at the zone level depending on operational performance.
Underlying profit (normalized profit attributable to equity holders of AB InBev excluding mark-to-market gains and losses linked to the hedging of our share-based payment programs and the impact of hyperinflation) was 1 099 million USD in 1Q21 compared to 1 015 million USD in 1Q20. Normalized profit attributable to equity holders of AB InBev was 1013 million USD in 1Q21 versus -845 million USD in 1Q20.
Underlying EPS (normalized EPS excluding mark-to-market gains and losses linked to the hedging of our share-based payment programs and the impact of hyperinflation) was 0.55 USD in 1Q21, an increase from 0.51 USD in 1Q20. Normalized EPS in 1Q21 was 0.51 USD, an increase from -0.42 USD in 1Q20.
Africa outside of South Africa:
Underlying consumer demand remains resilient in many of our markets, though the operating environment remains challenging due to ongoing COVID-19 related restrictions.
In Nigeria, Ab InBev delivered mid-single-digit beer volume growth, though growth was held back by supply chain constraints. The brewer also grew volumes in Mozambique and Zambia, although volumes were lower in Tanzania and Uganda.
Carlos Brito, CEO commented,
“Our business is off to a very strong start in 2021. We delivered top-line ahead of pre-pandemic levels, as beer volumes were up by 2.8% versus 1Q19 with healthy revenue per hl growth. EBITDA increased by 14.2% year-over-year, even in the context of ongoing COVID-19 related restrictions.
Today, we announced that I will be stepping down from AB InBev after 32 incredible years, effective July 1st when Michel Doukeris will succeed me as AB InBev’s next CEO. My proudest moments during these years have been to watch our people grow and our company develop.
Together, we built the leading and most profitable global brewer, with the best brands, and more importantly, the best people. It has been a privilege and an honour to be part of this team of 164 000 inspirational colleagues around the world. I am very excited about the future of our business under Michel’s leadership and congratulate him on the appointment as CEO of this amazing company.”
The fund is also backed by AfricaGrow, Kuramo Capital, European Investment Bank, SIFEM, and Finfunnd.
Commitment from Uhuru’s partners will provide the vital capital to support local businesses’ economic revival from the COVID-19 pandemic and boost trade across the continent.
Having forged a partnership over the years, CDC has supported Uhuru in mobilising DFI and commercial capital and has worked with the GP to improve governance and implement Business Integrity and Environmental and Social (E&S) best practice.
Benson Adenuga, Head of CDC Nigeria Office and Coverage Director, said:
“Despite the challenging fundraising climate, Uhuru is well-positioned to deliver on a shared objective to provide critical private capital to help finance businesses and promote resilience and long-term growth in markets across the West African region.”
“Our commitment will provide critical support in the economic recovery from the ongoing COVID-19 crisis, by providing growth capital and value addition to SMEs and mid-cap companies with a primary focus on consumer staples, healthcare and fintech across West Africa. CDC recognises that SMEs are the lifeblood of Africa’s economies and Uhuru’s ambition aligns with our 2021 commitment to support promising enterprises and drive inclusive growth and job creation across the continent, by investing over $1bn in Africa.”
Given Uhuru’s unique position in the market and competitive grasp of the fastest-growing economies across the ECOWAS region, the firm expects to unlock further capital for deployment as it evolves as an institution.
UGF will leverage the expertise of Uhuru Investment Partners’ indigenous-African team, track record of investments in the region, their robust local networks and extensive knowledge of West Africa’s markets.
“We are delighted to reach the first close of our fund. We are immensely grateful for the unwavering support of our investors in what has been a challenging fundraising environment. We look forward to positively impacting the growth of West Africa’s economies by supporting local companies in our target sectors, helping them grow into regional champions, and creating new, high-quality jobs.”
Nana Adow Dankwa, Partner of Uhuru, said:
“The launch of our fund shortly after the commencement of the African Continental Free Trade Area is auspicious because it allows us to capitalise on new opportunities for our portfolio companies to access regional markets. We are excited about the prospects for deepening intra-regional trade across our markets.”
To address the challenge of unemployment in Africa, it is imperative that governments across the continent tackle factors responsible for impeding youth engagement in agribusiness.
There has been much controversial discourse about whether the youth population surge across the African continent is a ticking time-bomb or a blessing in disguise. A study under the IFAD-sponsored IITA–CARE project explores the significant impact of agricultural training programs on youth agripreneurship performance, using the case of the Fadama GUYS program in Nigeria.
According to Dolapo Adeyanju, a young researcher under the CARE project, the Fadama GUYS program is one of the existing support programs in Nigeria, targeting unemployed youth between the ages of 18 and 35 years.
The study was carried out in Abia, Ekiti, and Kebbi states to represent the Southeastern, Southwestern, and Northwestern regions of the country, respectively. It identified major barriers that affect youth engagement in agripreneurship, such as lack of access to finance, lack of information, high-interest rates and outrageous collateral demanded by financial institutions, and lack of mentorship and follow-up after the training program.
“These barriers can be strategically addressed as a means to reduce youth unemployment, encourage the adoption of agripreneurship as a valuable means to create jobs, and improve the economic independence of young people,” states Adeyanju.
Adeyanju recommends incorporating post-training mentorship programs into the program designs, which would entail coaching and timely field visitations. Also, giving relevant guidance at the early stages for young people who are venturing into agribusiness was identified as a strategy that can lead to positive economic outcomes.
As part of the project objectives, IITA-CARE is sponsoring 80 young researchers across 10 countries in Africa studying youth engagement in agribusiness and rural economic activities. The project seeks to enhance the understanding of the poverty reduction and employment impact and the factors influencing youth engagement in agribusiness and rural farm and non-farm economy.
Africa’s first social and video commerce platform, Rabawa, has raised $163,000 from Aptive Capital, a VC firm in the USA that is focused on supporting early-stage startups.
RABAWA’s social and video commerce solution offer resellers the opportunity to leverage social media for curating, promoting, and selling products from Manufacturers / Distributors to end-users.
Chief Operating Officer of Rabawa, Olayinka Akinkunmi | Brand Spur
The platform gives resellers access to a virtual shop and thousands of products from trusted suppliers.
Through the use of social and video commerce, heavily discounted prices, and a streamlined logistics chain, Rabawa provides the lowest prices to online shoppers in the continent.
It gives African housewives, students, youths & aspiring entrepreneurs the opportunity to quickly and easily launch their online businesses with ZERO capital investment or inventory.
Rabawa connects resellers and business owners to top manufacturers and wholesalers across Africa, Asia, the USA and UK.
Since the official rollout of the Pilot model on 1st April 2021, Rabawa has caught the attention of key players in the local e-retail industry and continues to attract the best of talents to take its business model forward.
Over 5,000 resellers and 1,000 suppliers are currently registered on the platform.
According to the Chief Operating Officer of Rabawa, Olayinka Akinkunmi, the company’s pace is too promising to be unnoticed.
In her words “the pace at which Rabawa has grown within one month in Nigeria, we will be able to deploy social and video commerce to other African markets”.
She further noted that in line with the United Nations Millennium Development Goal, Rabawa hopes to empower at least 1 million unemployed or underemployed Africans by the year 2023 with their own businesses.
The Managing partner of Aptive Capital, Paul Brandon Gilpin, spoke excitedly about the recently secured investment: “At Aptive, we are out to identify talents and business models that work and then we invest. We are very impressed with Rabawa’s deep knowledge of the market and their planned approach to solve the challenges of unemployment, poor product availability, high cost of logistics, access to market issues, and poverty across Africa.
Since the fund commenced, Aptive Capital has invested in about 8 Startups with Rabawa being the 7th and biggest ticket size ($163,000) disbursed so far” he stated.
Aptive Capital’s portfolio investments include startups like One Kiosk, Skyfire Digital, MimiMoney, Emmnoch Farms, Statesman, and Slabdeck who have received between $10,000 and $50,000 from the funds.
Although unconfirmed, several business moves now hint at Aptive Capital’s interest in participating in a currently undisclosed round of One Kiosk.
With its new funding round of $163,000, Rabawa has officially positioned itself to be become a key player in Africa’s e-commerce space by utilizing social and video commerce to build a sustainable business model that impacts Africa socially and economically.
The global economy expanded strongly in April 2021 – the tenth consecutive expansion – as growth in output and new business orders was sustained. Notably, new business and new export orders indexes expanded to 56.3 points and 52.4 points respectively (from 54.4 points and 50.2 points in March).
Input cost index also rose to 64.9 points (from 64.1 points) and was transferred to consumers as the output price index rose to 56.9 from 55.9. Expansion in business activity was partly spurred by increased business confidence amid the increased rollout of Coronavirus vaccines which allowed for an easing of lockdowns in several countries.
In the global energy market, the latest statistics from the U.S. EIA showed that world crude oil consumption upped m-o-m by 0.04% to 96 million barrels per day (mbpd) while world crude oil supply increased by 1.64% to 93.5 mbpd in March.
Meanwhile, world rig count fell by 3.07% to 1,231 in March. In the month of April, however, global crude oil prices generally moderated – Brent crude oil spot price mellowed m-o-m, on average, by 0.92% to USD64.81 a barrel – partly perturbed by rising new cases of coronavirus in India that upset confidence in the global crude oil markets.
Nigeria’s business activity remained in expansion territory as the IHS Markit-Stanbic IBTC headline PMI remained at 52.9 points in April. Expansion in new orders and output was suggestive of higher demand requiring higher staffing and inventory purchases. Backlogs also reduced.
Meanwhile, despite the aggressive rise in inflation rate, net savers earned little as the average savings deposit rate remained less than 2% while 3- and 12-month deposit rates fell to 3.03% and 4.94% (from 3.13% and 5.36% in February) respectively.
The local bourse rebounded in April amid a number of positive first-quarter financial performance announcements by corporates as well as cum-div purchases based on 2020 corporate actions. This was also against the backdrop of the rising yield environment (stop rates of auctioned government securities trended higher) which continued to allure “risk-off” investors.
According to the report, the sum of N496.39bn was generated as VAT in Q1 2021 as against N454.69bn generated in Q4 2020 and N324.58bn generated in Q1 2020 representing a 9.17% increase Quarter-on-Quarter and 52.93% increase Year-on-Year.
The NBS stated,
“Other Manufacturing generated the highest amount of VAT with N49.41bn generated and closely followed by Professional Services generating N42.50bn, State Ministries & Parastatals generating N26.96bn while Mining generated the least and closely followed by Pioneering and Textile and Garment Industry with N48.36m, N77.01m and N289.41m generated respectively.”
Out of the total amount generated in Q1 2021, N224.85bn was generated as Non-Import VAT locally while N171.66bn was generated as Non-Import VAT for foreign. The balance of N99.88bn was generated as NCS-Import VAT.
Sterling Bank’s gross earningscontracted to N31.0 billion primarily due to an 11.0% dip in interest income. This was however moderated by a 27% growth in non-interest revenue.
The bank recorded a 15.6% decline in interest expense. This delivered an 80 bps drop in the cost of funds as the yield on earning assets declined by 210bps.
Consequently, the net interest margin stood at 7.2%.
Moderated operating expense further by 4.5% driven by the reduction in administrative and depreciation expenses as we continued to optimize our investments across the board.
Customer deposits grew by 9.3% while maintaining a healthy deposit mix of 70.5% in low-cost funding.
Loans & advances increased by 6.0% YTD to N632.5 billion as the cost of risk increased marginally by 10 bps to 0.9%. NPL ratio remained stable at 1.9%.
Overall the Bank grew its balance sheet by 7.3% to N1.39 trillion and delivered a profit after tax of N2.40 billion in the first quarter of the year
Other non-financials highlights
Sterling Bank’s digital commodity exchange platform, SABEX is live. This platform is designed to facilitate the exchange of agro-commodities by building an ecosystem of players in the agricultural space
Chief Executive’s Remarks
“During the quarter, the campaign to vaccinate the global population against COVID-19 gained ground, bolstering consumer and investor confidence. At the macro level, treasury yields, and oil prices retraced towards their historical averages, contributing to reserves accretion and easing the pressure in the foreign exchange markets.
Chief Executive Officer of Sterling Bank Plc, Mr. Abubakar Suleiman – www.wordpress-1516176-5827464.cloudwaysapps.com
Riding on the improved operating environment, the bank recorded year-on-year double-digit growth in profit after tax in the first quarter, aided by a 9.3% rise in customer deposits and a 15.6% decline in funding cost.
In furtherance of our transformation agenda, we formally launched our digital commodity marketplace, SABEX. This is a product of three years of experimentation and extensive consultation with all key stakeholders and an important component of our strategy to use technology to improve productivity for players across the HEART sectors.
Overall, we closed with a profit after tax of N2.40 billion in the first quarter of the year, a 16% improvement on the corresponding period in 2020.”
In the just concluded week, the Federal Government (FG) as part of measures to reduce the cost of governance amid its dwindling revenue, announced plans to reduce payrolls, cut down recurring project costs and merge some of its Ministries, Departments and Agencies (MDAs).
According to the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, the President stated that the Salaries Committee should work together with the Head of Service to review salaries and payroll of federal institutions in order to step down on cost.
She stated that FG would also review the mandates of some of its Agencies and Ministries with similar functions with a view to merging them. Federal Government’s move to cut cost, especially recurrent expenditure, appears to be a good one given its budget deficit of N5.92 trillion in 2021 – it planned to spend N13.9 trillion with a view to earning N7.98 trillion in 2021.
In a similar development, one of the Federal Government capital projects, the USD1.3 billion Zungeru hydroelectric power in Kaduna State, was reported to have reached 88% completion level. The new power project is expected to inject 700 Megawatt (MW) of electricity into the national grid when it becomes functional in December 2021.
According to the Minister of Power, Mr. Sale Mamman, the power project which is expected to generate 2,630 GWH annually, comprises a composite dam roller-compacted concrete, asphaltic core rockfill dam, diversion work, spillway and plunge pool, power intake and penstocks, as well as tall race channels.
In addition, the Zungeru works has 330/132 transmission lines evacuating power to the existing grid connecting Jebba and Shiroro power plants.
The project which is being handled by Messrs CNECC Sinohybrid Consortium is being funded by a counterpart financing mechanism, with the Federal Government fully paid up its share of USD309.25 million – having so far collected USD984.30 million from the Exim Bank of China to revamp the country’s power infrastructure.
Elsewhere, the CEO, Pension Fund Operators Association of Nigeria (PenOp) stated that the continued decline in Pension Funds’ Assets since the beginning of the year was mainly due to the falling prices of Fixed Income Securities (FISs) amid rising yields.
He noted that PFAs are currently eyeing other alternative investment options aside from government bonds and treasury bills to boost returns on investment. However, he mentioned that currently, the fund administrators cannot invest in foreign bills as there are regulations to be approved by the government.
According to the National Pension Commission’s (PENCOM) report, the total value of Pension Fund Assets fell month-on-month by 0.41% to N12.25 trillion in February 2021, from N12.30 trillion printed in January 2021.
Further break down of the report showed that most of the pension fund assets were invested in FGN Securities – both bonds and treasury bills; as their share of the total assets rose to 66.37% (or N8.13 trillion) in the month under review, from a 65.92% (or N8.11 trillion) recorded in January 2021.
However, total funds invested in bank placements and commercial papers moderated m-o-m by 1.81% to N1.62 trillion in February 2021 (lowering its share of the total assets to 13.22%), from N1.65 trillion in January 2021 (or 13.40% of total assets) while invested fund in Corporate Debt Securities as a percentage of total pension fund assets stood at 7.10% (or N0.87 trillion) from 6.80% (N0.84 trillion).
While we commend the Federal Government on its move to cut cost amid reducing frivolous expenditures in its budget and merging MDAs with similar functions, it is also imperative for FG to lead by example by reducing its salaries and allowances including that of the Legislatures. With this, we note that more funds would be freed up for capital projects, such as power and road infrastructure that are critical for economic growth.
The delisting of the entire issued share capital of 11 Plc followed its shareholders’ approval to delist from the Exchange.
At the close of trading on Friday, May 8th, 2021, the NSE-ASI closed positive with a +0.21% gain while Market CAP moved in the opposite direction with a -0.19% loss which represents about N39.05bn drop in Market CAP from N20.47trn on Thursday, May 7th 2021 to N20.43trn on Friday, May 8th 2021.
As at the closing of trading on Friday when the shares of 11 Plc were delisted, its Market CAP stood at N82.22bn.
It is pertinent to state that the delisting of the 360.59mln units of shares of 11 Plc led to the negative closure and drop recorded in Market CAP on the last trading day of the week.
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