Equities Market Closes Higher on Bargain Hunting

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WEEKLY REPORT

 By Goddy Egene and Nosa Alekhuogie 

Bargain hunting in consumer goods stocks assisted to halt three weeks decline recorded at the stock market as the Nigerian Stock Exchange (NSE) All-Share Index (NSE ASI) closed in the green zone. The market had remained bearish since the beginning of February as investors remained quiet. However, a renewed demand for stocks of consumer goods, especially Nigerian Breweries and Guinness Nigeria Plc bolstered the market performance last week.  Consequently, the NSE ASI closed 0.34 per cent higher at 25,250.37.

The market gained in three of five sessions with the biggest appreciation, 0.63 per cent was recorded on Thursday, but was almost erased by a 0.62 per cent loss in the following session.  But the   increase in the prices of high-capped consumer goods stocks-Nigerian Breweries, Guinness and PZ Cussons- helped to lift   market to a positive close. Apart from the NSE ASI that appreciated.

 Daily Market performance

After losing 0.69 per cent the previous week, the market opened last week on a positive note on Monday. The NSE ASI appreciated by 0.34 per cent to close at 25,249.49. Activities of bargain hunters contributed to the positive performance on the first day of the week, engendered by gains recorded in the shares of in the share prices of Nigerian Breweries, Diamond Bank, Oando, Guinness and PZ Cussons among others.

Investors traded 110.01 million shares valued at N985.67 million. The most actively traded sectors were: Financial Services (80.51million), Consumer Goods (11.43 million), and Oil and Gas (4.66 million), while the three most actively traded stocks were: United Capital (16.69 million), Zenith Bank (16.09 million) and Fidelity Bank (11.39 million).

An analysis of the sector performance showed that the NSE Consumer Goods rebounded, rising by   2.2 per cent on account of bargain hunting in Nigerian Breweries (+4.2 per cent) and PZ (+9.0 per cent).  However, on the flip side, the NSE  Banking  Index and NSE Insurance indices shed 0.2 per cent and 0.1 per cent respectively on the back of decline in Access Bank (-1.6 per cent), UBA (-0.8 per cent) and NEM (-2.5 per cent). In the same vein, the NSE Oil & Gas Index fell 0.6 per cent as investors took profit in Forte Oil (-5.0 per cent) just as the  NSE Industrial Goods Index closed flat.

 The market closed flat on Tuesday with the NSE ASI recording a marginal rise of 0.01 per cent to close at  25,251.63.  Nigerian Breweries was the major driver as investors reacted positively to the final dividend recommended by the company for the year ended December 31, 2016.

According to stock traders, some investors are impressed with the final dividend recommended by the company despite a decline in profit for the year.

The directors of Nigerian Breweries   recommended a final dividend of N20.457 billion, which translate to N2.58 per share, bringing total dividend to N28.386 billion or N3.58 per share.

Besides, the directors of the company have also made a recommendation to the shareholders to receive new ordinary shares of in the company instead of the final dividend.

Following the huge forex loss, Nigerian Breweries Plc ended the year with profit before tax of N39.675 billion, down from N54.514 billion in 2015 and PAT of N28.416 billion as against N38.05 billion in 2015.

Company Secretary/Legal Adviser of Nigerian Breweries Plc Mr. Uaboi Agbebaku, explained in a statement that the 100 per cent dividend payout is coming at a time the results of the company were impacted by high inflation and scarcity of foreign exchange in the macro-economic environment.

 He explained that the company was able to end the year with a positive result due to its twin agenda of cost leadership and market leadership supported by innovation.

“Although the operating environment in 2017 is expected to be similar to 2016, the company remains confident that it is well positioned to adapt to the operating environment as required, and stay committed to delivering a good return on investment to shareholders,” Agbebaku said.

The market shed marginal gain recorded  the previous day on Wednesday, causing the NSE ASI close at 25,249.74. Similarly, market capitalisation fell to N8.7 trillion as investors lost N655.9 million.

The negative performance stemmed from continuous depreciation in Consumer Goods bellwether – Nestle (-4.0 per cent) – and decline in GTBank (-1.6 per cent) which offset the gains in Nigerian Breweries  (+4.0 per cent).

However,  price gain by Nigerian Breweries(+4.0 per cent) and Guinness Nigeria Plc(4.6 per cent) lifted the NSE  Consumer Goods Index by 0.9 per cent.

 Similarly, the NSE Oil & Gas Index rose 0.1 per cent as a result of the appreciation in Oando Plc (+2.3 per cent). Contrarily, the NSE Industrial Goods Index (-1.0 per cent) led sector decliners, owing to sell pressures on Lafarge Africa Plc (-2.3 per cent) and Cement Company of Northern Nigeria  (-3.0 per cent).

Similarly, the NSE Banking and NSE Insurance indices trended southward, declining by -0.4 per cent and 0.5 per cent respectively.

The market rebounded on Thursday as Nigerian Breweries, once again halted the bears. The NSE ASI rose 0.63 per cent to  close at 25,409.06.. Market capitalisation added  N55.1 billion to close higher at  N8.8 trillion.  All sector indices appreciated except for  the NSE Insurance Index which closed flat. The Banking Index rose 1.4 per cent as a result of renewed appetite in GTBank (+3.9 per cent) and UBA (+3.2 per cent). Similarly, the NSE Consumer Goods Index rose by  1.4 per cent due to  sustained bullish sentiment for Nigerian Breweries  (+3.1 per cent) and GUINNESS (+4.8 per cent).  Mobil Oil appreciated by 3.3 per cent to drive the  NSE Oil & Gas Index to add 0.3 per cent to a positive close.

Similarly,  the NSE  Industrial Goods Index gained 0.05 per cent following  owing to bargain hunting in CCNN that lifted the equity by 3.1 per cent.

The market ended the last day of the week on negative note with the NSE ASI, depreciating by 0.62 per cent, following losses recorded in the share prices of Forte Oil, Nigerian Breweries, GTBank, FBN Holdings and Nestle. As a result, the year-to-date decline posted by index stood at 6.04 per cent as at Friday.

Market turnover

At close trading last week, investors traded 765.656 million shares worth N9.717 billion in 12,468 deals as against 1.073 billion shares valued at N8.608 billion that exchanged hands  in 14,486 deals the previous week.

As usual, the Financial Services Industry   led the activity chart with 575.290 million shares valued at N3.470 billion traded in 6,738 deals; thus contributing 75.14 per cent and 35.71 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 53.812 million shares worth N3.470 billion in 2,572 deals. The third place was occupied by Conglomerates Industry with a turnover of 48.961 million shares worth N229.411 million in 622 deals.

Trading in the top three equities namely – Zenith Bank Plc, AIICO Insurance Plc, and United Capital Plc   accounted for 280.563 million shares worth N1.867 billion in 2,438 deals.

Price Gainers and Losers

Meanwhile, 18 appreciated in price last week, lower than 29 equities of the previous week, while 34   equities depreciated in price, higher than 25 equities of the previous week. Nigerian Breweries Plc led the price gainers with 13 per cent to close at N130 per share. Guinness Nigeria Plc trailed with an appreciation of 11.5 per cent. NPF Microfinance Bank rose by 9.2 per cent just as Beta Glass Plc, Custodian and Allied Plc, and Berger Paints Nigeria Plc gained 4.9 per cent apiece. Other top price gainers included: Axa Mansard Insurance Plc (4.6 per cent); PZ Cussons Nigeria Plc(4.4 per cent); Stanbic IBTC Bank Plc(3.6  per cent) and Caverton Offshore Support Group Plc (3.3 per cent).

Conversely, Unilever Nigeria Plc led the price losers with 16.1 per cent to close at N28.50 per share. Forte Oil Plc trailed with a decline of 14.9 per cent, followed by Vitafoam Nigeria Plc with 14 per cent. UAC of Nigeria Plc, Honeywell Flour Mills Plc shed 9.1 per cent, just as The Initiates Plc went down by 8.9 per cent.

Other top price losers included: AIICO Insurance Plc (7.9 per cent); African Prudential Registrars Plc (7.9 per cent); Dangote Flour Mills Plc (7.3 per cent) and Lafarge Africa Plc (7.1 per cent).