As the Nigerian equities market maintained its positive performance in November, a total of 18 out 161 companies contributed about 90.4 per cent or N23.46 trillion out of the overall N25.959 trillion market capitalisation in the month of November 2022.
THISDAY had reported that the stock market in November appreciated by N2.08trillion following investors renewed interest in large-medium cap companies on the bourse.
Despite severe macro economic challenges, the 18 large-medium cap companies comprise of two telecommunication giants; seven financial institutions; three cement manufacturing companies; four Fast Moving Consumer Goods (FMCG); one petroleum marketing company and one power generating company have maintained stronger performance and declared an interim dividend.
These companies drove the stock market performance by N3.66trillion in 11 months of 2022 amid foreign and High Network investors exiting to fixed income instruments.
The stock market in 2022 has faced a sustained hike in Monetary Policy Rate (MPR) by Central Bank of Nigeria (CBN) due to the global inflation rate and tension towards the 2023 that has forced foreign investors exit.
THISDAY analysis of market activity revealed that Airtel Africa Plc, followed by Dangote Cement and MTN Nigeria still led others in most capitalised stocks on the bourse as of November 2022.
As Airtel Africa is the only company with over N5trillion in market capitalisation, Dangote Cement and MTN Nigeria remained at a threshold of N4trillion in market capitalisation as of November 30, 2022.
Specifically, Airtel Africa added N657.67billion in market capitalisation to close November at N5.45trillion.
On the backdrop of 2.18 cents per ordinary share interim dividend payout to shareholders, the pan-African provider of telecommunications and mobile money services witnessed N175 per share gain in stock price to N1,450.00 per share in November from N1,275.00 it opened for trading.
Airtel Africa in its half year ended September 30, 2022 reported $2,565million in revenue, representing an increase of 12.9 per cent from $2,272million reported in half year ended September 30, 2021. The company closed the period with 9.1 per cent decline in profit before tax to $516 million as against $567milllion reported in corresponding period.
The chief executive officer, Airtel Africa, Segun Ogunsanya in a statement said, “Airtel Africa continued to deliver strong results as its purpose of transforming the lives of people across sub-Saharan Africa through digital and financial inclusion gained further momentum, with growth accelerating in the second quarter.
“Whilst we are not immune to the current macro-economic challenges and currency devaluation risks, I am pleased to report double-digit reported revenue growth in the period, largely driven by customer growth of 9.7per cent and ARPU growth of 7.2 per cent, as we increased penetration and usage through our affordable service offerings.”
Closing November at N220.50 per share, Dangote Cement hits N4.47trilion in market capitalisation as of November 30, 2022. The cement manufacturing company had reached N5.11trillion in market capitalisation this year when its stock price appreciated to N300.00 per share on the NGX.
Among leading company on the Exchange, MTN Nigeria accounted for N4.45trillion in market capitalisation as of November 30, 2022.
The stock price of MTN Nigeria closed November 2022 at N218.50 per share, representing 10.97per cent increase from N196.90 per share it opened for trading.
With about N4.4trillion in market capitalisation, MTN Nigeria is more valuable than all banks listed on the NGX combined.
The share spike, which is also largely driven by MTN Nigeria’s impressive nine months ended September 30, 2022. MTN’s share price has risen 51.38 per cent in the last year.
While Airtel, valued at over N5 trillion is also more valuable than all the financial services firms, MTN Nigeria is more significant as the company’s financials represent income generated from Nigeria alone, excluding other African countries.
Apart from fundamentals, Nigerian banks also have billions in outstanding trading shares with much higher liquidity when compared to telecommunication companies.
For example, Zenith bank with about 31,396,493,786 outstanding shares compared to MTN Nigeria’s 20,354,513,050 as of the end of November 30, 2022 has a market capitalisation of N687.58billion.
Other key notable banks that contributed to the 90.4per cent market capitalisation are: Guaranty Trust Holding Company (GTCO)-N588.62billion; FBN Holdings- N402.03billion; Stanbic IBTC Holdings- N395.84billion; Access Holdings- N302.13 billion; United Bank for Africa – N247.95billion and Ecobank Transnational Incorporate – N185.33billion.
Commenting on the stock market performance in November, Capital market analyst, Mr. Rotimi Fakeyejo, explained that one per cent gain or decline in Airtel Africa, Dangote Cement and MTN Nigeria tend to impart on capital market movement in a day.
He added that the fundamentals of both companies attracted foreign investors in taking position.
On his part, the vice president of Highcap securities, Mr. David Adnori explained that foreign investors’ participation in the trading of Dangote Cement, MTN Nigeria and Airtel Africa stocks drive price appreciation.
He added that impressive corporate earnings and dividend pay-out to shareholders contributed to these companies’ price appreciation.
According to him: “The three companies are the largest companies by market capitalisation on the NGX. If these companies record one per cent gain, it will affect the direction of the stock market.
“The financial results of these companies have been impressive despite foreign and domestic challenges. Despite reporting high operating cost, the likes of MTN and Airtel Africa have maintained robust fundamentals. We have seen Dangote cement dropping in nine months ended September 30, 2022 profit before tax over operating expenses, influenced by inflation. However, Dangote cement remains one of the top three companies on the Exchange in terms of market capitalisation.”
Also, CEO of Wyoming Capital and Partners, Mr. Tajudeen Olayinka said investors reacted towards low prices of some fundamental stocks on the Exchange.
According to him, “Prices had become too low to resist, and this happened because of prolonged repricing of securities across markets and instruments, pushing down stock prices below the levels they should ordinarily be. It also demonstrates improved earning capacities of some listed companies, as they continue to adjust to the variability of costs and cost pressures in the short run, in order to stay afloat.
“Another factor is the usual positioning and repositioning for year-end rally by investors, as some companies begin to show strong earnings’ prospects ahead of full year results.”