Investors in Nestle, NB, Stanbic IBTC, 7 Others Lose N122.2bn in January

Kayode Tokede

The value of Nestle Nigeria Plc, Nigerian Breweries Plc, Stanbic IBTC Holdings Plc and seven others stocks depreciated by N122.2 billion on the Nigerian Exchange limited (NGX) following investors profit-taking in anticipation of weak corporate earnings, among other factors.

Other stocks that performed poorly in January were; Cutix Plc, Berger Paints Plc, C&I Leasing Plc, Unilever Nigeria Plc, University Press Plc, UACN Plc and NEM Insurance Plc.

THISDAY analysis of market activity during the period revealed that the companies lead top 10 losers in January 20221 amid significant growth in the stock market in the month under review.

Nestle Nigeria Plc, which is on the main board of the NGX witnessed aggressive profit taking by investors, followed by NEM Insurance Plc and Nigerian Breweries Plc.

The value of Nestle Nigeria dropped by N96.31 billion in January when its stock price depreciated by N121.50 to N1,435 at the end of January trading on the bourse.

It means if an investor invested N1 million in Nestle Nigeria shares at the beginning of 2022, he has lost N78,000 investment as the Fast-moving Consumer Good (FCMG) company’s stock depreciated by 7.8 per cent in value.

Similarly, investors’ investment in Nigerian Breweries dropped by N12.5billion as its stock price depreciated by 3.1 per cent to close January at N48.45 per share from N50 per share it opened for trading in 2022.

Among notable stocks that recorded decline in value were NEM Insurance with a decline of N4.06 billion, Stanbic IBTC Holdings and Unilever Nigeria Plc which dropped by N3.24 billion and N2.87billion, respectively in January 2022.

Analysts told THISDAY that most highly capitalised stocks like Nestle Nigeria, among others, often record decline not because anything is happening to the company.

The CEO of Wyoming Capital & Partners, Mr. Tajudeen Olayinka said: “It might be related to liquidity challenges that impacted negatively on price. Most of these stocks are not liquid in terms of investors demanding for them. Investors might be willing to exit due to one reason or the other.”

He maintained that Stanbic IBTC Holdings nine months unaudited result and accounts sent a wrong signal, leading to profit taking by investors.

He said, “Many investors were not impressed with the bank’s nine months result and accounts. So, they decided to take profit, leading to downward movement in the stock price of Stanbic IBTC Holdings. However, the downward movement of Stanbic IBTC Holdings stock is temporarily.”

Stanbic IBTC Holdings had announced 40 per cent drop in profit in its nine months ended September 30, 2021 unaudited result and accounts.

The Group’s result made available by the Exchange showed a Profit after tax of N39.9 billion in nine months of 2021 as against N66.2 billion reported in nine months of 2020.

Also, Profit before tax closed nine months of 2021 at N45.3 billion, down by 41 per cent from N76.9 billion reported in prior nine months unaudited results.

On the gainer side, the value of 14 highly capitalised stocks on the NGX gained N2.11trillion, impacting on the stock market performance in the month under review.

The 14 companies contributed 82.2 per cent or N20.65 trillion to overall market capitalisation of N25.13trillion the stock market recorded in January.

Ecobank Transnational Incorporated leads the gainers chart in terms of percentage, while Airtel Africa contributed significantly in terms of value added.

ETI recorded N3.80 or 43.68 per cent increase in its stock price to add N69.73billion to its market value, while market value of Seplat Energy added N82.38billion when it stock price gained 21.54 per cent or N140 to close at N790 from N650 it opened for trading.

Airtel Africa gained N1.19 trillion in market capitalisation when it stock price gained N316 or 33.09 per cent to close at N1, 271 per share.

Notably, BUA Foods Plc, which was recently listed on the Exchange, added N439.2 billion in market capitalisation when it stock gained N24.40 or 61 per cent, while BUA Cement Plc gained N125.3billion in January.

In early January 2022, BUA Foods was approved by the management of the NGX to list on the Main Board a total of 18 billion units at N40.00 per share and Dangote Cement announced the commencement of the second tranche of its share buyback programme.

The cement manufacturing company said it would be repurchasing 170 million ordinary shares of 50 kobo each, representing one per cent of the company’s issued shares.

According to the company, this includes 40.2 million shares held as treasury shares, following the conclusion of Tranche I of the share buyback programme. The public offer by MTN Nigeria enhanced investors taking position in the telecommunication giant stock price in January. MTN Nigeria stock price inched up by N0.50 or 0.25 per cent to close January at N197.50 per share.

Commenting on the stock market performance, the chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion said: “The market had a strong bull run in midst of selloffs and profit booking in Dangote Cement and others.

“But investors buying interest in blue Chip companies and dividend paying stocks that had supported rallied so far in the face of impressive unaudited earnings hitting the market. Recently, MPC retained rates and NTB primary market auction rates declining in the short and long tenor.

“This should make equity space more attractive for fund managers especially as the presence of foreign investors in our market has declined in the past two years of Covid-19 experience, which might not affect the market even with the normalization monetary policy in the mature economics.

“As rallying oil prices, positive corporate earnings and economic data. The high cap stocks price appreciation, listing of BUA Foods and Dangote cement share buyback program supported the market as January patterns repeat itself after December had suffered loss due absence of Santa Claus rally.”

A capital market analyst, Mr. Rotimi Fakeyejo maintained that a one per cent gain or decline in Dangote Cement and MTN Nigeria stock price is expected to affect the capital market movement.

He added that the fundamentals of both companies attracted foreign investors in taking position.

On his part, the vice president, Highcap Securities, Mr. David Adnori noted that increase in macro economy liquidity following a successful bid in bond market in December inflated some of these companies stock price appreciation in January.

According to him: “Towards the end of 2021, a lot of investors subscribed to the debt market that was oversubscribed. These funds are invested in the stock market, a major reason we are witnessing appreciation in market performance.

“Also, we have seen activities that have attracted investors into the stock market. The BUA Foods listing, the transactions by Airtel in East Africa and Dangote Cement share buyback have impacted on market in the last three weeks.

“Overall, the market is driven by information as regards anticipation towards 2021 full-year result and accounts. Investors are investing in stocks with good fundamentals and dividend-paying stock on NGX.”

Responding also, the Chief Executive Officer, APT Securities & Funds Limited, Mallam Garba Kurfi attributed the growth to various activities by listed companies on the NGX.

He said, “We have seen the issue of Dangote Cement share buyback, the BUA Foods listing. We have also seen many investors trying to balance their portfolio and it has contributed to the volume of transactions recorded in the last three months.”

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