Market Review for the week ended November 24th, 2017.
The market opened the week on Monday with a marginal growth of 0.24% as the news of Q3 GDP data filtered in.
- UBA Plc has emerged one of 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
- The bank has a good Capital Adequacy Ratio (CAR) in the sector and continues to leverage on its stringent risk assessment framework to mitigate capital erosion.
- In a recent Q3 2017 results, the Company grew gross and net income by 25.8% and 23.04% respectively.
- It has a current book value of N13.99 and P/BV of 0.66x. The bank has a higher capacity of meeting short-term obligations with acid test ratio at 0.75%.
- UBA currently trades at 6.06% premium above our target price of N10.50.
- Transcorp Group is a diversified conglomerate with interests in four major business sectors: Power, Oil & Gas, Hospitality, and Agriculture.
- The Q3 2017 result was impressive with a 35.4% topline improvement and a healthy 141% expansion in the bottom line.
- The FX stability also aided the strong bottom-line performance of the company due to its FX loan exposure.
- The effort of the federal government to stabilize the power sector will boost the company’s performance going forward and sustain the current earnings
- We place a BUY rating on Transcorp as a result of its long-term prospects which may crystallize in the short to medium term due to the market resurgence.
- Our target price is 90.8% above current market price.
Dangote Flour Mills Plc
- In the Company’s recent unaudited Q3 2017 results, both sales revenue and net income grew by 101.2% and 393.7% respectively.
- A streak of improved business operations lately supports positive outlook going forward.
- It continues to leverage on the parent company’s potent distribution network which we think would boost more sales going forward.
- Q3 EPS now at 261 kobo and represents 357.9% growth against comparable period of 2016.
- Book value is currently at N7.08 and closest to its market price.
- Improved return on equity (ROE) at 37.0% compared to 2016 17.0% points gradual accretion on shareholders’ funds and an improved tendency for dividend payment soon.
- Premium over our target is 11.59% above current market price
Zenith Bank Int’l Plc
- Zenith Bank has emerged one of most reputable banks in Nigeria business landscape.
- Its improved branch networks within the country have positioned it for improved income sources.
- The bank has one of the strongest Capital Adequacy Ratio (CAR) at 21% and provides ample buffer above the regulatory minimum of 15%.
- Its balance sheet size is a major incentive for us at this time considering that it has a book value per share of N24.33 resulting in a price to book ratio
1.07x relative to its closest peer of 1.58x.
- The liquidity ratio of the group as at Q3 ‘17 was 55%, thus above the regulatory minimum of 30%.
- Upside potential to our target price and 52-Week high is 20.05% and 10.42% respectively.
Dangote Sugar & Refinery 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 the firm to continue to post this streak of decent performances going forward.
- The Company is an income and growth stock. Final dividend for FY 2017 is highly anticipated.
- It is currently trading at 10.21% premium to our target price of N19.00.
Unilever, UCAP, Fidson, Flour Mills, DangCem.