A Gaze into Third Quarter Earnings Prospects: As the Nigerian Economy Signals a Comeback

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Third Quarter Earnings

Ibikunle olorunyomi

Traditionally, stock markets are considered to be indicators or predictors of probable economic events, which could actually be favorable or unfavorable. A depressed stock market, all things being equal may signal a potentially recessed economy, and vise versa. This assertion may be sacrosanct enough, relating the impressive activities and the general price performances of various equities in the Nigerian bourse within the second quarter of 2017, with the recent declaration of a technical halt to a life threatening economic downturn that has lingered for a while now. But again, a holistic view of the functionality of any growing economy will bring to doubt the stock market’s predictive ability, as we have seen in the past, a depressed stock market yet a growing economy.

The Nigerian annual growth rate has been predicted to advance 1.8% by the end of third quarter 2017, and 2.90% in 12months time after it grew 0.55 percent year-on-year in the second quarter of 2017.

Asides from the slight pull back experienced in the last on month, which can easily be traced to investors’ sell off activities to secure profit for a better repositioning strategy, the optimism in the market is still considerably high. Can we then say that the real bull market is already here? Or, is the pull back a major reversal that may establish the claim of some certain individuals that the new dawn is not yet here? These are some of the questions that economists, strategists and market analysts are pondering on now. These should naturally be a concern for every investor as they seek for reasonable entry for maximum returns.

As the third quarter winds down, the market and shareholders hope for consolidated performances from the respective stakeholders as some of them are still filling their q2 result.

FIDELITY BANK 

On the 29th of august 2017, Fidelity Bank published its Q2 2017 results, which showed a turnover growth of about 22.5%. Its revenue moved from N70billion in 2016 to about N85billion in 2017.

The bank’s profit before tax soared 66.7 per cent to N10.2bn from N6.1bn recorded in the previous year, while the tax increased by 75.5 per cent to N1.2bn from N674mn in HY 2016.The profit after tax grew 65.59% from about N5.5billion to 9billion in the corresponding period.

Earnings per share also Grew 63% from the previous 19kobo to 31kobo, also within the six month period.

The P.E. ratio at 4.42 and earnings yield at 22.63% placed the bank’s stock among the highly attractive and equity to watch on the floor.

FIDELITY

The Bank’s total assets arrived at N1.308trillion as at the end of in the second quarter period of 2017, from about N1.298trillion in 2016, representing 0.81% qnq growth in the corresponding period.

Customer’s deposit base shrunk by (4.02%) within the period.

The little decline we see in the pricing its equity can be traced to the indifferent reactions of investors to the zero interim dividend payment for the period by the organization, despite the impressive performance. But the fundamentals are still strong, and we hope at the sight of the third quarter performance reports, the bank will only be consolidating its good efforts and consequently make the discerning investors smile.

STANBIC IBTC

Stanbic IBTC’s audited results for the half-year ended 30 June 2017, which was released to the Nigerian Stock Exchange (NSE) on the 29thof august 2017 showed an improvement in all the key financial metrics when compared with the 2016 performance. The bank reported gross earnings of N97.2billion for the H12017, which was a 36.3% growth away from the N71.3billion made in the corresponding period of 2016. Profit after tax also rose by 113% to N24.1billion in 2017, from N11.1billion in 2016. The stellar bottom-line performance was driven by an enhanced interest and trade income within the period.

The Nigerian lender also grew its earnings per share from 95kobo to N2.30kobo in the corresponding period.

Price to earnings ratio stood at 17.6x and the earnings yield at 5.68%.

STANBIC IBTC

Stanbic IBTC grew its total assets by 20% from roughly N1trillion to about N1.3trillion as at the end second quarter 2017.

Loan to banks reduced by 43% with a corresponding 9.5% reduction in deposit from other banks within the period under review.

Customer’s deposit base on the other hand expanded by 12.8% within the period, with a corresponding loan push to customers at 4.25%.

The board recommended the approval of an interim dividend of 60 kobo per share (31 Dec 2016: 5 kobo per share) for the period ended 30 June 2017.

GUINNESS PLC

Guinness Nigeria Plc reported N125.9billion as turnover for the year ended 30th June 2017, as against the N101.9billion reported in the previous same period. This when compared represent a 23.5% annual growth.

The organization also recorded an impressive bottom-line performance, when its profit after tax for the period under review grew by 195% recovering from about N2billion loss in the previous period, and arrived at N1.9billion in the corresponding period of 2017.

The earnings per share of the brewer stood at N1.28kobo, as against the loss per share of N1.34kobo recorded in the previous corresponding period.

The per ratio currently stood at 61x and 1% meager earnings yield at when computed.

The brewer has proposed and recommended a dividend of 60kobo per share to its investors for approval at the next Annual general meeting.

FORTIS MFB 

Fortis Microfinance bank plc reported 152% growth in profit after tax for the period ended June 30th 2017.the companies bottom-line grew to N677.5 billion for second quarter 2017 compared to N267.9 billion recorded in the financial year 2016. A critical examination of the account revealed that moderation in provision of impairment charges aided the spectacular bottom-line performance.

The micro lender’s interest income for the period rose to N2.5 billion in against the N1.7billion posted in the year before.

Fortis Microfinance bank plc asset’s base hit N21.7 billion in the period under review against the N20.8 billion recorded the previous year.

The company’s earnings per share grew by 25% from 12kobo to 15kobo in the corresponding period.

The P.E. ratio stood at 17.2x with an earnings yield of 5%.

CUTIX

Cutix plc’s financial results for the period ended July 2017, which hit the market on the 29th of august 2017, revealed that the company grew its topline by 81%, when it posted gross profit of N1.2billion for q1 2017 compared to N712.6 recorded in the previous same period.

The company also recorded N104.1million as profit for the period as against the N53.4million recorded same period in 2016 which represents 95.09% profit on a year to year comparison.

The earning per share grew 100% to 12kobo from 6kobo in the corresponding year.

The pe ratio stood at 18.42dx and the earnings yield at 5%

Cuitx plc total assets stood at N2.3billion as at the first quarter 2017 compared to 1.9billion it stood in same period of 2016.

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