Market Review for the week ended February 7th, 2020 Last week, the Nigerian equity market extends bearish run to second successive week as the overall market performance indicator, NSE-ASI fell in four out of the five trading days. This performance may not be unconnected with investors\u2019 concern on the possible impact of the new CRR increase on banks\u2019 earnings in the near term, improved yield environment in the fixed income market, and the uninspiring earnings results released (so far) by many of the listed companies. In summary, the All-Share Index (ASI) shed 776.44 absolute points, representing a 2.69% decline to close at 28,843.53 points. Also, the Market Capitalization lost \u20a6239.06 billion, representing a 1.61% decrease to close at \u20a614.62 trillion, following the listing of additional 18.27 billion and 2.26 billion ordinary shares of International Breweries Plc\u2019s Rights Issue at \u20a69.00 per share and Abbey Mortgage Bank Plc\u2019s placement at \u20a61.05 per share to VFD Group Plc respectively. The downturn was impacted by losses recorded in medium and large capitalized stocks, amongst which are; CILEASING (-26.53%), CADBURY (-16.28%), ETERNA (-10.42%), CONOIL (-10.00%), NEM (-10.00%), and FO (-9.95%) Outlook for the week ending February 14, 2020 We expect the local bourse to see a modest recovery this trading week as the current valuation many of the fundamentally viable stocks hold the potential for bargain-hunting. Nonetheless, we expect market breadth, as measured by the difference between the number of appreciating and depreciating stocks to remain negative. Wema Bank Plc \tWema Bank Plc remains one of the most popular tier-II lenders in Nigeria with an operating network of over 150 business offices across the country. \tThe bank operates with an asset of \u20a6721.36bn and a customers deposit of \u20a6583.07bn as at FY 2019. \tIn its recent FY 2019 financial report, the bank grew both its Gross Earnings and Net-Income by 27.97% and 32.46% to \u20a691.5bn and \u20a64.4bn respectively, compared to the corresponding period of 2018. Also, the bank in FY 2019, grew in its Earnings per Share (EPS) by 33% to \u20a60.11 as against \u20a60.08 in FY 2018. \tIt has a Book Value of 1.40x which is twice its current market price. \tOur target price for WEMABANK is \u20a61.00, representing a premium of 40.85% returns over the closing market price of \u20a60.71 as at Friday, February 7th, 2020. Zenith Bank Plc \tDespite the numerous challenges posed by Nigeria's unstable macro-environment in the last five to six years, Zenith bank plc has continued to set the pace in terms of posting strong gains year-in, year-out. \tIn its recent Q3 2019 financial report, Zenith bank Gross and Net-Income grew by 3.51% and 4.54% respectively compared to the corresponding period of 2018. \tBesides, Zenith bank ranks in the list of the few Nigerian banks with Liquidity (74%) and Capital Adequacy (25%) Ratios settling above the prudential levels of 30% and 15% respectively. \tThe bank has a Current Ratio of 1.17:1, which signifies that it can easily meet all its short term liquidity obligations. \tZenith bank has a Non-performing loan ratio of 5.7% as of Q3 2019, which is one of the very lowest in the Nigerian banking industry. \tAlso, the bank boast of a strong Return on Equity (RoE) of 17.3% compared to the industry average of 15.8%, and its current Book Value of 27.77x shows that its share is currently trading at a discount of around 46% given the current price of \u20a619.80. \tOur target price for Zenith Bank is \u20a624.70, which represents an upside the potential of 24.75% to the closing market price of \u20a619.80 as at close of the transaction for 2019. Dangote Cement Plc \tDangote Cement is Africa\u2019s leading cement producer with three plants in Nigeria and operational facilities in 9 other African countries. \tThe group has a total installed capacity of 45.6Mta across the 10 African countries where it operates, with the Nigerian arm (29.3Mta) accounting for 64.25% of its total production capacity. \tDespite a modest 1% decline in revenue as reported in its recent 9M 2019 financial results, the group still boast of an attractive 18% Return on Equities (RoE), which is 2.5x higher than the industry average of 6.9%. \tNonetheless, we believe the recent move by the management of the group to repurchase 10% of its current issued shares (which is subject to shareholders ratification in early 2020) from the market over the next 12-months (if approved) holds positive for existing investors, as this will help improve long term shareholders value. \tOur target price for DANGCEM is \u20a6210.00, which represents an upside potential of 23.53% given Friday\u2019s closing price of \u20a6170.00. Nigerian Breweries Plc \tNigeria Breweries (NB) is the market leader of the brewing industry in Nigeria with about 59% market share as of Q3 2019. \tDespite threats of increasing competition, high-cost operating environment, and weak consumer purchasing power, NB has continued to sustain a positive growth performance through a strategic partnership with several ancillary industries which provides it with cost-effective raw and packaging materials for its production processes. \tNB has varieties of products brands that can serve the needs of any income class, and its reliable distribution network across Nigeria and other West African regions give it an edge over competitors. \tAccording to its Q3 2019 earnings result, NB grew its revenue by 1.93% to \u20a6259.92bn but saw a 17% decline in PAT to \u20a612.28bn owing mainly to the effect of excise duties on its alcoholic products. \tDespite the impact of this knee-jack development, the current share price of the firm which is just about 2.78x its Book Value signals its current cheap valuation, given that historically, the share price of the firm average about 4.5x its Book Value in the last six years. \tHence, with the expectation of improvement in consumer purchasing power in the current year (as minimum wage implementation gained traction across states), there is a high likelihood for the earnings and price of the firm\u2019s share to see reasonable improvement. \tOur target price for NB is \u20a685.00, representing an upside potential of 65.05% of the current price of \u20a651.50 Fidelity Bank Plc \tFidelity Bank is a leading tier-II lender in Nigeria with presence in major cities and commercial centres across Nigeria. The bank currently services over 4.2 million customers across its 231 business offices and various digital banking channels. \tThe bank enjoys a good credit rating from top credit rating agencies such as Global Credit Rating (GCR) Company and Fitch, with both assigning a \u201cStable\u201d outlook on the bank\u2019s short-term and long-term credit position. \tIn its recent FY 2019 financial statements, the bank grew both its Gross Earnings and PAT by 15.05% and 28.51% to \u20a6217.31bn and \u20a629.46bn respectively compared to the corresponding period of 2018. Sequel to this, the bank\u2019s FY EPS rose by 29.11% to \u20a61.02 as against 79K in FY of 2018. \tFidelity bank has a book value of \u20a68.07. This implies that the stock is currently trading at a discount of over 375.20% given its current price of \u20a62.15. \tThe bank also has an attractive RoE and P\/E ratio of 12.61% and 2.11x respectively, compared to that of many of its industry peers. \tOur target price for Fidelity is \u20a62.80, which represents an upside potential of 29.03% given the current market price of \u20a62.17.