Oando PLC Announces YTD September 2019 Results, Posts N13.1 Billion Profit-After-Tax

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Oando PLC Announces YTD September 2019 Results, Posts N13.1 Billion Profit-After-Tax

Lagos, Nigeria – Oando PLC (referred to as “Oando” or the “Group”), Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange, today announced unaudited results for the nine months period ended September 30, 2019.

Commenting on the results Wale Tinubu, Group Chief Executive, Oando PLC said:

“In the period under review, we made substantial progress on our top priority of operational growth and recorded an 8% increase in hydrocarbon production. In conjunction with our partners, we successfully completed an ambitious 6-well drilling program, the results of which have been positive, and are particularly excited about the discovery of a significant gas and condensate find at a field in OML 61 of our Joint Venture. This has had a major impact on our reserves and consequently future cash flows. Production has since commenced in October on the completed wells, and the gas will largely be channelled to feed the nation’s power sector through our Joint Venture’s Okpai Power plant, Nigeria’s first independent power plant. In addition, we achieved an 8% reduction in our debt levels, whilst growing free cash flows. Over the last quarter of the year, our focus will be on the completion of our drilling program as well as “tie-in” of the new discoveries.”

RESULTS HIGHLIGHTS

  • 8% Production increase, 43,045boe/day compared to 40,039boe/day (YTD September 2018)
  • 18% Turnover decrease, N413.8 billion compared to N505.1 billion (YTD September 2018)
  • 26% Profit-After-Tax increase, N13.1 billion compared to N10.4 billion (YTD September 2018)
  • 8% Total Group Borrowings decrease, N193.1 billion compared to N210.9 billion (FYE 2018)

OPERATIONS REVIEW

Upstream:

Production for the nine months ended 30 September 2019:

During the nine months ended September 30, 2019, production increased by 8% at 43,045boe/day, compared with 40,039boe/day in the same period of 2018. This was driven by an 11% increase in natural gas production (from 120,047mcf/day YTD September 2018 to 133,415mcf/day YTD September 2019) and an 8% increase in crude oil production (from
16,850bbls/day YTD September 2018 to 18,147bbls/day YTD September 2019).

Over the course of the year, we, in conjunction with our JV partners, have aggressively ramped up our drilling program towards increasing oil revenue and meeting our gas obligations. As at September 2019, we have successfully completed a sidetrack at OML 56, shoring up net production by ~1,500bbls/day, whilst also drilling and completing five wells across three rig lines at our joint venture operations on OMLs 60-63.

In September 2019, Oando Plc announced that the NNPC/NAOC/OANDO Joint Venture (“JV”) (of which Oando Energy Resources [OER] holds a 20% working interest) had made a significant gas and condensate find in the deeper sequences of the Obiafu-Obrikom fields in OML 61, onshore Niger Delta. Preliminary evaluation indicates that the find amounts to about 1 trillion cubic feet of gas and 60 million barrels of associated condensate in the deep drilled sequences. The well can deliver in excess of 100 million standard cubic feet/day of gas and 3,000 barrels/day of associated condensates. The discovery is part of a drilling campaign planned by the Joint Venture aimed at exploring near-field and deep pool opportunities as the immediate time to market opportunities. The JV started gas and condensate production from the Obiafu-41 discovery just 3 weeks after completion and the gas from this discovery will largely be channelled to the domestic market in order to feed the power sector. The full impact of this discovery will be determined and communicated to the market on the conclusion of the next annual independent reserves and resources evaluation.

Capital expenditure of $84.3 million was incurred in the nine months of 2019 compared to $59.3 million in the same period in 2018. This consists of $77.3 million at OMLs 60 to 63, $5.6 million at OML 56, and $1.4 million on other assets.

Downstream:

Traded volumes for the nine months ended 30 September 2019:

In YTD September 2019, Oando Trading traded approximately 9.3 million barrels of crude oil under various contracts with the Nigerian National Petroleum Corporation (NNPC) and delivered 317,649 MT of refined products.

FINANCE REVIEW

Profit-After-Tax
Profit-After-Tax for the period was N13.1 billion, an increase of 26% compared to the
the same period in 2018 (N10.4 billion).

Borrowings

Total Group Borrowings for the period stood at N193.1 billion, a 8% decrease from FYE 2018 (N210.9 billion) whilst in our upstream specifically, our borrowings reduced by 13% to $222.0 million compared to $255.6 million in FYE 2018.

LOOK AHEAD

Over the last quarter of the year, working with our JV partners, our focus will be on aggressively pursuing the completion of our drilling program at OMLs 60-63 whilst achieving cost optimization on our operations.

Is OPEC Doing Enough To Counter The Looming Oil Glut?

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Is OPEC Doing Enough To Counter The Looming Oil Glut?

Tuesday, October 29, 2019 – OilPrice Intelligence Report – Oil prices were flat in early trading on Tuesday as trade war hopes fade and markets await the API’s crude inventory report. The IEA’s bearish report on global oil demand and a looming supply glut was offset by reports that Saudi Arabia was ready to cut its production even further.

Vaca Muerta on edge with new Argentine President. The oil-friendly President of Argentina Mauricio Macri was ousted on Sunday. His efforts to put a Band-Aid on the crisis in the last few months – which included a fuel prize freeze and currency controls – have already cut drilling activity in the Vaca Muerta. But larger questions swirl around what the new president will do. Analysts say that price controls and rampant inflation may deter investment.

Trump’s vow to take Syrian oil denounced by legal experts. “What I intend to do, perhaps, is making a deal with an ExxonMobil or one of our great companies to go in there and do it properly … and spread out the wealth,” Trump said during a news conference. Legal experts said such a proposal would be illegal and also an ethical disaster. “It is not only a dubious legal move, but it also sends a message to the whole region and the world that America wants to steal the oil,” said Bruce Riedel, a former national security advisor told Reuters.

8 in 10 Americans say the U.S. should decrease or limit drilling. A nationwide poll from The Washington Post and the Kaiser Family Foundation finds that 8 in 10 Americans say the U.S. should “decrease” drilling or “stay as is.” 51 percent said oil and gas exploration on federal lands should be reduced, and 53 percent say the same thing about offshore. Less than 15 percent say drilling should expand on public lands or offshore.

Saudi Aramco struggling to achieve IPO valuation that it wants. Saudi officials have long said that Aramco should be valued at around $2 trillion, but analysts have long questioned that figure. Meanwhile, Saudi officials are scrambling to keep the IPO on track to launch before the end of the year. Some investors say the company is not worth more than $1.2 trillion, according to the FT. Aramco says that it earned $68 billion in the first nine months of 2019, making it the world’s most profitable company.

U.S. shale braces for brutal earnings season. The number of bankruptcies among North American E&Ps has been rising as of late, and access to capital has been closing off. With earnings season underway, there will be close scrutiny on the shale sector as companies come under pressure after a period of lower prices. “As yet, the decline in drilling activity is not reflected in lower production growth, but this is probably only a question of time,” Commerzbank said.

Lithium miners cut expansion plans on low prices. Albemarle Corp. (NYSE: ALB), SQM (NYSE: SQM) and other lithium producers are cutting expansion plans due to a down market and low prices, according to Reuters. Lithium demand is expected to more than triple through 2025 as demand for batteries in EVs soar. However, analysts say that lithium miners have boosted supply too quickly.

U.S. consumer health showing signs of weakness. Despite what some are calling a manufacturing recession, the American consumer has kept the economy growing. However, there are signs that consumers are becoming overstretched.

Fed to cut interest rates. Market watchers widely expect the U.S. Federal Reserve to again cut interest rates on Wednesday, most likely by 25 basis points. But GDP growth has slowed and the cuts are not showing signs of reigniting the economy.

Pemex reports first production increase in six quarters. Pemex said its oil output averaged 1.69 MB/d in the third quarter, up from 1.67 MB/d in the second, the first increase in six quarters. Debt also fell slightly. The company said the improvement came after it began drilling in shallow water fields.

Texas hit hard by slowdown. Employment and investment are slowing down as the shale industry gets hit by low oil prices and a pullback from investors and lenders.

GM, Toyota and Fiat Chrysler side with Trump. In a major split among major automakers, GM (NYSE: GM), Toyota and Fiat Chrysler side with the Trump administration on fuel economy standards, even as some of their major competitors agreed to work with California on stricter standards. The automakers said they want uniform federal regulations so that there is a certainty.

BP’s earnings drop by 41 percent. BP (NYSE: BP) reported third-quarter earnings that were slightly better than expected but were still down by 41 per cent from a year earlier. Part of the problem was not just lower oil prices, but also lower natural gas prices. “We don’t think this is going to get better over the next 2-3 years,” BP’s CFO Brian Gilvary said.

ConocoPhillips beats estimates. ConocoPhillips (NYSE: COP) posted higher-than-expected earnings and reported nearly $1 billion in free cash flow. Shale output was up 21 percent from a year earlier.

For best health and climate impact, put renewables in the Midwest. A new study from Harvard University finds that for every 3,000 megawatts of wind power put in the Upper Midwest, it would translate into $2.2 trillion in climate change and health benefits, or about $113/MWh. That compares to just $28/MWh of benefits in California. The Midwest is the region that stands to gain the most from renewable energy, largely because of the large concentration of coal-fired power plants that would be displaced.

VW ramps up EV factory in China. VW aims to produce as many as 1 million EVs in China by 2022, according to Reuters. The expansion would allow VW to surpass Tesla’s (NASDAQ: TSLA) capacity in the country.

5 most potential crypto currencies in 2020

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5 most potential crypto currencies in 2020

HANOI,
VIETNAM – Media
OutReach – 29 October
2019 – In recent years, the cryptocurrency industry has
been growing at a significant pace, offering some
quality projects with real use cases. Moreover, with tokenized sales, these
projects have also the tendency to be used as a direct investment opportunity
for people who is seeking potential projects. In the list below, we will show
several potential projects in the market that have the tendency to create
lucrative returns on investments.

 

BITCOIN

Bitcoin was born in 2008, until May
2010. Bitcoin is known as the first cryptocurrency, the father of all cryptos
with high dominance (68% in October 2019) and is recognized as a digital gold
in cryptocurrency.

 


Bitcoin Dominance


Bitcoin is the most popular “currency”
in the world and to be used as the main pair on all the exchanges in the world.
In fact, people like that Bitcoin is not controlled by the government or banks.
Inhabitants can also spend their Bitcoins fairly anonymously. Although all
transactions are recorded, nobody would know which “account number” was yours
unless you told them.

 

However, Bitcoin price is not stable,
on Oct 26th, after 2 hours, Bitcoin price goes up to 30% and then does down 10%
after a few hours.

 

LINA

LINA network is a subsidiary of Smart
Link Swiss, a multinational corporation, headquarters of which are based in
Zurich, Switzerland. It specializes in Artificial Intelligence (AI), Big Data,
and blockchain. The LINA network consists of protocols such as Identity, Supply
chain, Healthcare, and Review, details of which are available on the website.
Unlike traditional crypto offering, where the main focus is raising funds and
development part is left for post-funding, the Lina network offers two
outstanding products i.e. Lina.review and Lina supply chain.

 

LINA Ecosystem

 

The
solutions provided by LINA Network are:

1.    
LINA REVIEW: The current review system is broken and it is difficult to trust the
authenticity of an online review. LINA Review changes this by ensuring that
only genuine users can make reviews. Once reviews are made, they cannot be
removed by third parties.

2.    
LINA SUPPLYCHAIN: entails supply chain management on the
blockchain platform. The traceability of products at any stage of the supply
chain is one of most important aspects of efficient supply chain operation.
LINA supply chain platform enables transparent and secure way of tracking
information throughout the process from the production process, warehouse,
transportation, packaging, and sale. LINA was launched App Supply Chain in
Propak event in Thailand in June.

3.    
LINA IDENTITY: a blockchain-based digital identity that
ensures a secure and decentralized identity management system. This is already
being tested in countries such as Estonia and China. LINA blockchain solves
issues of the challenge of correctly verifying; lacking of a proper way of data
sharing; costs, data security. Smart contracts also ensure standardization,
enabling mechanism for data input and sharing in a transparent way eliminating
entry of wrong data. A user just needs to download the LINA app on play store
and enter the necessary information.

 

Why LINA?

LINA is already a working product with
LINA review and supply chain already available for download in the play store.
With a working product already in the market, user uptake is faster since the
onboarding process is less strenuous. As for LINA review and supply chain, a
working product means it has already been tested and already working. There is
less friction when users join the platform. This user uptake model has high
network effects and brings about viral adoption. In addition, it is an active
project that is listed on coinmarketcap with current market cap of $19M and
growing.

 

LINA price chart

 

The
LINA project consists of industry experts, which adds to the credibility, and
that is the reason why more than 40 corporations and governments have trusted
and signed partnerships with LINA in app-tech and also fin-tech.

 

In
2019, Laos Government also signed a contract to deploy digital identity using
LINA blockchain as well establishment of a research institute under the
Ministry of Science and Technology.

 

Moreover,
LINA has become the Platinum partner with GS1 Thailand. GS1 is a not-for-profit organization that develops and
maintains global standards for business communication in the world. The best
known of these standards is the barcode, a symbol printed on products that
can be scanned electronically. GS1 has
114 local member organisations and 1.5 million user companies.

 

In July 2019, LINA has also managed to acquire Gold
partnership with Microsoft, this bilateral co-operation with one of the world’s
leading software tech-organization adds to the credibility of the LINA project
and shows its potential of assisting otherwise industry corporation in their
quest for blockchaim implementation within their business operations.

 

The
LINA Network offers multiple innovative features and has established its
credibility in a short time in the market. Considering its experienced team,
strategic partnerships, innovative features, this project has the potential to
grow, which makes it one of the most potential opportunities in a bear crypto
market of today.

 

TERRA

Terra money is
one of the cryptocurrencies to watch in 2020 because it solves two main
problems that have limited widespread of cryptocurrencies: price volatility and
lack of usage as a medium of exchange.



Terra Project

 

Terra
has started by recruiting merchants that accept Terra money making it easier
for users to adopt the currency for payments. Already there are 15 e-commerce
services that have signed up such as WooWa Brothers, Pomelo, Tiki and Qoo10
boasting over 40 million customers and 425 billion in annual transaction
volume.


Terraform
labs, the company behind Terra Money, are a highly reputable company in Korea
with a strong interest in Southeast Asia market. The founding team is headed by
Daniel Shin who is founder of TicketMonster, a $3.5 billion e-commerce company
in Korea. The project is also backed by leading crypto companies such as
Binance Labs, OKEx, Huobi Capital, Kakaoventures and Dunamu among others.

 

BNB

Binance
has its own coin, Binance Coin, BNB which is currently the 7th most
valuable coin with a market capitalization of $2.6 billion. Since its launch in
2017, BNB has had a return on investment of >9000% making it one of the best
performing coins in the market. Its daily trade volume exceeds $200M because it
is used not only for trading but as a key medium of transacting on various
Binance related products.

 

BNB price chart

 

BNB
is being adopted as a means of payment by many online platforms. BNB is used in
various ways including as a means of payment. Some online merchants such as
TravelbyBit in Australia, crypto.com, lifestreaming platform Gifto, Pundi X
among others accept BNB.

 

BNB
powers the whole Binance ecosystem and adoption grow in 2020, BNB is expected
to continue to increase in value. Furthermore, expansion in USA is expected to
take shape in 2020. The USA is a major crypto market and this will increase BNB
usage significantly.

 

IOTEX

It
is estimated that by 2020, half of the new businesses will run
on IoT. IoTeX enables anyone to create their own IoT ecosystems in such a
manner that allows more innovation and growth in an open system rather than a
closed network. It is the foundational layer just like the internet’s TCP/IP
protocol that enables others to build applications on top of it. This means
that IoTeX will be able to capture some of the value while propelling
unprecedented innovation in new ways.

 

IOTEX price chart

 

As
the IoT industry continues to grow in 2020 IoTeX is strategically positioned to
drive that growth. IoTeX coin will gain significant growth. IoTeX is making
this vision a reality and has already partnered with various industry players.
IoTeX coin is also available on reputable exchanges such as Binance, Bittrex,
and KuCoin among others. It also received strategic investments from investors
such as HashKey Group, a leading tech conglomerate in Hong Kong among others.


Oi Wah Recorded an Increase of 5.2% and 10.5% in Revenue and Profit Respectively in FP2020

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Oi Wah Recorded an Increase of 5.2% and 10.5% in Revenue and Profit Respectively in FP2020

Plans to Launch an Online Pawn Loan Platform to Attract Customers and Will Continue to Adopt a Prudent Approach When Granting Loans

 

Financial
Highlights

                                                                                          
For the 6 months ended 31 Aug

HK$

2019

2018

Change

Revenue

117,838

112,010

5.2%

   Pawn Loan Business

36,608

33,132

10.6%

   Mortgage loan business

81,230

78,878

3.0%

Profit before taxation

70,793

64,319

10.1%

Profit attributable to shareholders of
the Company

59,271

53,646

10.5%

Earnings per share (HK cents)

3.1

2.7

14.8%

  

HONG KONG, CHINA – Media
OutReach – 29 Oct 2019 – The board of directors of Oi Wah Pawnshop Credit Holdings Limited
(HKEx stock code: 1319.HK, the “Group” or “Oi Wah”) announced
its interim
results and its financial position. For the six months ended 29
October 2019
(“FP2020”), the
Group recorded revenue of approximately HK$117.8 million (6 months
ended 31 August 2018
(“FP2019”): approximately HK$112.0 million), representing an increase of approximately
5.2%. During the
period, profit attributable to shareholders of the Company has
increased by 10.5%
and reached approximately HK$59.3 million (FP2019: approximately HK$53.6
million).

 

During the year,
earnings per share was HK3.1 cents (FP2019: HK2.7 cents). The Board of Directors
recommends an interim dividend of HK$1.07 cents.

 

Business Review

 

Mortgage loan business

 

For
the six months ended 31 August 2019 (“FP2020” or the “Period”）, the mortgage loan business remained as a major
source of income of the Group. During the Period, the interest income increased
by approximately HK$2.3 million or 2.9% from approximately HK$78.9 million for
the six months ended 31 August 2018 (“FP2019”) to approximately HK$81.2 million
in FP2020. Revenue generated from the mortgage loan business in FP2020
accounted for approximately 68.9% of the Group’s total revenue during the
Period. The gross mortgage loan receivables increased from approximately HK$1,223.3
million as at 28 February 2019 to approximately HK$1,269.1 million as at 31
August 2019, where the total amount of new mortgage loans granted was
approximately HK$306.6 million during FP2020. During the Period, there were 84
new cases of mortgage loan transactions while no bad debt was recorded.

 

In
FP2020, the Group continued to adopt a cautious and prudent approach when
granting loans, as well as maintain a higher proportion of first mortgage loans
in the Group’s portfolio to manage risk. During the Period, the loan-to-value
ratio for first mortgage was approximately 49.4%, while the overall
loan-to-value ratio for subordinate mortgage was approximately 52.6%, in which
the loan-to-value ratio of subordinate mortgage that the Group participated in
was approximately 13.6%.

 

Pawn Loan Business

 

Due
to an ongoing rise in gold price during the Period, the revenue generated from
the pawn loan business increased by approximately HK$3.5 million or 10.6% from
approximately HK$33.1 million in FP2019 to approximately HK$36.6 million in
FP2020. Interest income derived from pawn loan receivables increased by
approximately HK$3.7 million or 12.7% from approximately HK$29.2 million in FP2019
to approximately HK$32.9 million in FP2020, while revenue derived from disposal
of repossessed assets slightly decreased by approximately HK$0.2 million or
5.1% from approximately HK$3.9 million in FP2019 to approximately HK$3.7
million in FP2020.

 

During
the Period, the Group continued to channel resources to advertising and
promotion to enhance the Group’s brand exposure. Such effort has generated
demand for one-to-one pawn loan appointment services for pawn loans exceeding
HK$0.1 million. The number of pawn loan transactions granted with such amount
increased from 217 transactions in FP2019 to 274 transactions in FP2020. The
average loan amount also increased to approximately HK$9,200 per transaction (FP2019:
HK$7,700 per transaction).

 

Industry Overview

 

Due
to the uncertainties of the US-China trade conflict and Brexit, as well as risk
aversion among investors, gold price had increased sharply since the second
quarter of 2019 and reached a six-year high which was above the major
psychological level of US$1,500 per ounce. The Board believes that gold prices
will remain strong in the near future and will have a positive impact on the
Group’s pawn loan business.

 

Meanwhile,
the Hong Kong government announced the relaxation of mortgage restrictions to increase
the ceiling for mortgage financing scheme. It is an initiative that aims to
help first-time homebuyers who have sufficient income to cover monthly mortgage
repayments but do not have enough funds for the down payment. It is expected to
result in a boost of property prices in the short run. However, the recent
social unrest in Hong Kong and uncertainties of the global economy have
rendered the property market unpredictable. Homebuyers should be cautious of
the increase in leverage level and market risk.

 

Prospects

 

Looking
ahead, the Group plans to launch an online pawn loan platform in next financial
year that enables customers to obtain loans in a discreet, simple and efficient
manner. It is believed that online pawn loan services will appeal to the younger
generation, and help promote the Group’s pawn loan business at a lower cost.

 

For
mortgage loans, it is believed that the raise of the mortgage cap for
first-time property buyers in the “The Chief Executive’s 2019 Policy Address”
will stimulate property prices in the short run. However, given the potential
downturn in local economy, social unrest and uncertainties in the global
economy, the Directors are of the view that the Hong Kong property market
remains unpredictable. The Group will continue to implement a prudent strategy,
maintain its focus on high net worth customers and remain cautious when
granting mortgage loans.

 

About Oi Wah Pawnshop Credit Holdings Limited

Oi Wah is a financing service provider in Hong Kong, mainly providing
short-term secured financing, including pawn loans and mortgage loans. The
Group established its first pawnshop in 1975 and currently owns 11 pawnshops in
various locations in Hong Kong. Oi Wah diversified into mortgage loan business
in 2009. The Group is the first local pawn shop which successfully listed on
the Main Board of The Stock Exchange of Hong Kong Limited on 12 March 2013.

Seplat Petroleum Development Company Plc 9M’19 – Tax credit provides support for earnings

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Seplat Petroleum Development Company Plc 9M’19 – Tax credit provides support for earnings

CardinalStone Research

Seplat Petroleum Development Company Plc (SEPLAT: TP 757.74 – BUY) filed its 9M’19 earnings report today, announcing an EPS of N99.6/share (2x of 9M’18). The upsurge was mostly buoyed by tax credit as an effective income tax rate stood at 1.8% in 9M’19 (9M’18: 57.0%). The company proposed an interim dividend of $0.05.

Some positives:

  • The firm recorded N8.5 billion in other income (versus a loss of N2.5 billion in Q3’18). This includes gains derived from under lift (remeasurement on shortfalls between the crude oil lifted and sold to customers to the current market value) and tariffs charged from use of its pipelines by other firms.
  • Finance expense declined by 44.3% YoY in Q3’19, driven by a 34.4% decline in borrowings. This reflects management’s sustained intent to deleverage its balance sheet. For context, debt to equity declined from 27.8% as at FY’18 to 20.2% during the period. However, it is likely that the potential acquisition of Eland may require some debt financing. This could potentially weigh on interest costs in subsequent quarters.
  • Despite the 29.8% decline in PBT in Q3’19, EPS grew by 45.0% to N33.82/share likely due to tax credits recorded during the period. The effective tax rate was 3.0% in Q3’19 versus 53.4% in the corresponding quarter.

Some concerns:

  • Top line declined by 37.9% YoY in Q3’19, weighed by lower liquids production and falling oil prices. Management attributes the lower production levels to rig mobilisation delays due to higher levels of maintenance and asset integrity work carried out during the period. The average price of crude oil and gas in Q3’19 were $62.2/bbl (Q3’18: $75.9/bbl) and $2.8/MMscf (Q3’18: 3.1/MMscf) respectively.
  • Likewise, gross margin declined by 17.1 ppts YoY in Q3’19, weighed by the aforementioned jump in maintenance cost (+60.8% YoY) and rig related expenses (from N12.0 million in Q3’18 to N1.3 billion in Q3’19).

Please click here for the full result.

Five financial benefits of a strong brand

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Five financial benefits of a strong brand

By Nigel Hollis

In a previous post, I tried to define the word brand. In this one, I want to propose five financial benefits of a strong brand. Most people, I believe, would start with selling more, but given what I wrote in the last post I must start with commanding a higher price point.

1) Higher price

Often ignored or, worse, used as a lever to drive short-term sales volume, I believe that charging a higher price compared to competitors is the true benefit of a strong brand. The profit leverage of being able to increase price and not see a significant decline in volume is huge. When the iPhone can command a $430 premium over the similarly spec’d and rated OnePlus, that differential can fund more research and development, more marketing and more ecosystem.

2) New customers

A brand must gain new customers in order to grow. Additional sales to existing customers rarely result in incremental sales when analyzed over time. There are exceptions, of course, particularly when the brand extends to new needs and occasions but they tend to be few and far between.

3) Lower incentives

If people are predisposed to buy your brand – they are instinctively and deliberatively inclined to buy it – then our evidence suggests that not only will people search less and choose more quickly, they will need less incentivisation. For instance, when I compared how much car brands in the U.S. paid in incentives I found that the top third ranked on perceptions of meaningful difference paid out 45 percent less than the lowest third.

4) Better retention

You cannot grow your brand’s penetration if new customers are offset by the loss of existing ones. In our Mastering Momentum report, we refer to experience as the foundation on which a strong brand is built. Greater customer satisfaction (and greater willingness to forgive) is not just the result of the actual experience but how people’s interpretation of that experience is enhanced by the brand’s communications.

5) Better staff attraction and retention

It is well-documented that people are more attracted to work at well-regarded companies but in the same way that communications can influence the satisfaction of customers, so too it can increase satisfaction among staff. And, just as greater customer satisfaction is reflected in more positive word of mouth, greater staff satisfaction is likely reflected in better customer service and productivity.

So, what do you think? Am I missing anything important? Please share your thoughts.

Guaranty Trust Bank: Moderation in Earnings –Non-Interest Income Grows Y/Y.

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Guaranty Trust Bank: Moderation in Earnings –Non-Interest Income Grows Y/Y.

The Bank recently released its unaudited Q3 2019 to the Nigerian Stock Exchange. The bank recorded gross earnings of N324.15 billion in the period under review representing a 3.16% decline in earnings from N334.76 Billion in the corresponding period of 2018. This was as a result of a decline in interest income and trading income from the financial instrument by 5.62% and 51.93% respectively. Interest Expense declined by 23.39% from N66.90 Billion to N51.25 Billion in Q3 2019.

The decline in interest expense was driven by a drop in interest expense on deposit from customers and interest expense on borrowed funds by 20.45% and 10.32% respectively. Consequently, Net interest income improved by 1.35% in the period under review. The decline in interest income was cushioned by a larger decline in interest expense.

However, the increase in Non-interest income (other incomes, and fees and commissions) could not offset the drop in gross earnings.

Fees and commission grew by 19.90% driven by it E-business, income from foreign exchange deals and credit-related fees which spiked by 63.10%, 16.64% and 37.05% respectively.

The bank’s Profit Before Tax (PBT) increased by 3.90% from N164.24 Billion in Q3 2018 to N170.65 Billion in Q3 2019. Meanwhile, the Profit After Tax (PAT) increased by 3.35% y/y to stand at N146.98 Billion.

Our weighted average valuation of our Dividend discount model and our Residual Income Model (RIM) with a loan book expansion of 10% from FY 2018 guidance and a forward P/E ratio 4.15x.

Our target price for GUARANTY is at NGN41.30, a 57.03% upside from the current price, we recommend BUY for this counter.

Source: Company Filings, Greenwich Research

Greenwich Research

InterswitchSPAK 2.0 Begins Airing November 2

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InterswitchSPAK 2.0 Begins Airing November 2

Interswitch Group, a leading Pan-African integrated digital payment and commerce company, is set to begin the airing of the InterswitchSPAK 2.0 Television quiz competition on Saturday, November 2, 2019.

The transmission will feature the Television quiz show which is a segment of InterswitchSPAK Switch-a-future initiative, a CSR initiative of the company focused on driving increased interest in the study of Science, Technology, Engineering and Mathematics (STEM) subjects among Senior Secondary School students across Africa. The competition is focused strictly on SS2 (Year 11) students between the ages of 14-17 years.

The quiz competition will be premiered by Africa Magic channel 154 on Saturday, November 2, 2019, between 5 pm- 6 pm.  There will also be a repeat broadcast on Thursday, November 7, 2019between 2:30 – 3:30 pm.

Other television stations where the show will be aired are AIT Network, TVC Lagos, STV Jos, NTA Kano, EBS Edo, NTA Port-Harcourt, DBS Asaba and OSRC Akure. The show will also go live on  YouTube channel at InterswitchSPAK and on Facebook at InterswitchSPAK.

With a scholarship prize worth N12.5million available to all the winners, the overall winner will be awarded tertiary education (university) scholarship worth N7.5million which will be spread across 5 years of study.

Speaking on the project, Cherry Eromosele, Group Chief Marketing & Communications Officer at Interswitch, said: “We cannot over-emphasize the importance of STEM to the progress of our country. At this point in our country, we need young people who will create new things, invent solutions and thereby ultimately create entrepreneurial value and employment for themselves and others.  InterswitchSPAK is here to stay! We will continue to do our best in the area of STEM among Secondary School Students. InterswitchSPAK is perhaps the boldest corporate effort yet to actively promote STEM education, especially among Nigerian secondary school students”

InterswitchSPAK 2.0 began with a National Qualifying Examination from which the top 81 students out of 13,322 students from various private and public secondary schools across the 36 states of the federation, including the FCT, qualified to compete in the TV Quiz Show.

The TV Quiz Show was preceded by a Masterclass that held on the 19th of August in Lagos with knowledge sharing and engagement sessions from Mitchell Elegbe, Dr Ola Orekunrin-Brown, MD, Flying Doctors and Dr Jumoke Oduwole, Special Adviser to the President on Ease of Doing Business where relevant topics were discussed with the students.

Expert Advises Nigerians As Mouka ‘Walks For Wellness And Health’

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Expert Advises Nigerians As Mouka ‘Walks For Wellness And Health’

A medical practitioner, Dr Zubair Abdullahi has advised Nigerians to take the issue of their personal health seriously as Mouka, the nation’s leading mattress manufacturing company staged a health walk around Ikeja, Lagos on Friday, to sensitize its staff and Nigerians on wellbeing as part of activities marking its 60th anniversary in Nigeria.

Abdullahi explained that regular exercise and good sleeping habit are vital to healthy living which is critical to the nation’s economic productivity. He listed other impediments to good health to include poor personal hygiene and sanitation; improper diet, drinking unsafe water and abuse of alcohol among others.

While addressing the staff, Mr Raymond Murphy, Mouka’s Managing Director/Chief Executive Officer, maintained that the importance of health and good living cannot be over-emphasized, adding that a healthy workforce is a valuable asset to any company.

“Our company is sixty years old and you can see the impact of a healthy workforce in terms of growth, expansion and the quality of products we produce. This can only happen because all members of staff of the company are fit and healthy,” he said.

Ahead of the 60th anniversary, which started last week, Mouka was endorsed by the Nigeria Association of Orthopaedic Manual Therapists (NAOMT)

The endorsement comes on the back of consistency in quality delivery and innovative mattress production, which have characterized the brand’s health asset in Nigeria.

National President of the association, Dr Onigbinde Ayodele, described the endorsement of Mouka as an offshoot of a detailed assessment of the brand’s portfolio. “Good sleep at the beginning of good health and good sleep is a function of the good sleeping platform. All these are vital to productivity at home and at work,” he said.

The foundation for Mouka was laid 60 years ago in the historic city of Kano when the scion of the Faiz Moukarim family started the Moukarim Metalwood factory to manufacture furniture and iron beds.

Since then, Mouka has gone into the manufacturing of foam and spring mattresses, as well as other bedding products at its three production facilities across Nigeria.

The company has also developed an extensive distribution network with more than 1,000 branded sales outlets and over 300 third-party distributors across the country.

Stanbic IBTC Graduates 16th Batch Of Trainees

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Stanbic IBTC Graduates 16th Batch Of Trainees

As part of its youth empowerment and socio-economic drive, Stanbic IBTC Holdings PLC, a member of the Standard Bank Group, recently graduated the 16th batch of Graduate Trainees.

Stanbic IBTC’s Graduate Trainee Programme is a scheme which recruits talented young Nigerians, who are either straight out of school or have minimal work experience. They are then trained on the rudiments of banking with the aim of moulding them into future financial leaders. At the end of their stewardship, they are formally absorbed into the Stanbic IBTC workforce.

Yinka Sanni, Chief Executive, Stanbic IBTC Holdings PLC stated that the company’s Graduate Trainee Programme is a platform for providing career opportunities for young Nigerians.

He said: “One of the highpoints of my stewardship at the helm of Stanbic IBTC is the formal recruitment and induction of our graduate trainees every year. It’s an activity I look forward to annually because it is an opportunity to employ Nigerians who are young, bright and ready to contribute their quota to the development of our organization and Nigeria as a country.”

 L-R – Cross-section of graduate trainees with EXCO members.

The Stanbic IBTC Chief Executive urged the graduate trainees to brace up to the challenges of being employed in the organization. Mr Sanni added: “Stanbic IBTC Holdings PLC is a financial services group of eleven direct and indirect subsidiaries, many of whom are leaders in their sectors. Our Graduate Trainees will be formally joining our organization which currently employs about 4,000 Nigerians. I have no doubt that they must have experienced the Stanbic IBTC work culture, and are looking forward to taking on greater challenges.”

The Stanbic IBTC Graduate Trainees have the opportunity of acquiring a broad range of experience in Nigeria’s financial sector due to Stanbic IBTC’s status as a full-service financial services organization.

Sanni further urged them to imbibe the values of integrity, teamwork, mutual respect and excellence in service delivery, while discharging their duties.

L-R – Olufunke Amobi, Country Head Human Capital; Demola Sogunle, CEO Stanbic IBTC Bank PLC; Graduate Trainees; Funmi Agusto, Managing Director IBFC Alliance Limited and Bunmi Dayo-Olagunju, Executive Director Operations.
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