Profiting from position in the Premium Board

The Nigerian Stock Exchange introduced the Premium Board in the quest to separate the boys from the men and to incite, though healthy, competition amongst the men.

But some men, for reasons best known to them, decided to click ignore. There are some stocks presently on the main board that might have found comfort being on the premium board but looked the other way or they seem to be allergic to the competition envisaged by the exchange.

 

What Qualifies a Stock to be on the Premium Board?

Every Issuer that seeks admittance to the Premium Board shall already be listed on the Main Board of The Exchange and such issuer should submit itself for evaluation under The Exchange’s Corporate Governance Rating System (CGRS) and must score a minimum rating of 70%.

The Issuer must achieve a market capitalization that is equal to or in excess of N200 billion on the date the Exchange receives the Issuer’s application to list on the Premium Board; and must have any of the following:

  • a minimum free float requirement of 20% of its issued share capital; or
  • the value of its free float is equal to or above N40 billion on the date the Exchange receives the Issuer’s application to list.

Provided that The Exchange may from time to time determine the market capitalization and free float requirements.

 

 Present Listings on the Premium Board

 

ACCESS BANK

ACCESS Bank overtook Zenith Bank as the bank with the largest assets, customer base and revenue in Nigeria. The stock trades below its short term, intermediate and long-term moving averages

The banks share price is currently trading at N6.15 with a N5.30 fifty two weeks low and N12.00 fifty two weeks high prices. The bank share is trading at about 16% above it 52 weeks low and 48.8% away from its 52 weeks high price.

Access has shown in its financials that there was a huge synergetic gain from its merger with the former Diamond Bank.

The market recently witnessed the thought of the GMD, Mr. Herbert Wigwe about the bank as he took the buying side of the bank’s shares indicating his confidence on himself as the team lead and the management to deliver on their promise.

A position taken in the stock of Access Bank only has a downside risk of a probable 16% and an upside potential of 48%.

 

DANGOTE CEMENT

With the news of a share buyback program still surrounding the stock by Q3 0f 2019, Dangote Cement wrote the Nigeria Stock Exchange of the decision of the management and the approval of the shareholders for its share repurchase.

The circular stated that the company will embark on the process of buying back 10% of its outstanding shares as at that date and the process will be spread over a year period. That means all things being equal; the process will likely terminate by the third quarter of 2020.

As at that time Dangote Cement outstanding shares was 17,040,507,405 units and 10% of that is 1,704,050,740 units.

From records available on the website of the NSE the management of Dangote Cement has already bought back 11, 204, 624 units through Vetiva Capital

If that is all that they have bought so far, they are left with 1,692,846,116 units outstanding to be bought back.

The stock is reading N126.00 on the ticker but may be available at N120. With a 52 week low price of N116.00 and 52 weeks high price of N18.0.40, Dangote Cement is trading 8.6% over and above it one year low price and 43% away from its one year high price.

Dangote Cement is the largest cement company in Africa with 45.6 million tonnes capacity across 10 countries. According to CBN PMI data, cement PMI rose sharply between May and June after the Federal Government allowed construction companies to resume during the first phase of lockdown easing

Dangote Cement has a 2,147trn market cap, putting it at the second position…

 

FIRST BANK OF NIGERIA HOLDING

The big elephant as it is called. The bank has been resilient from day to day and it now a proverb in the capital market circle that what the bank has shed in terms of provision for NPLs is enough to start four other banks and no bank can withstand what it has withstood and is still breathing.

The market has a positive sentiment toward the stock and the market is patiently waiting for when it begins to write back all the provision it has made.

Trading currently at N5.00, 52 weeks high of N7.85 and N3.60 as its 52 weeks low price, for this bank, is just a matter of time.

 

MTN

The telecommunication company is expected to improve its revenues despite the lockdown due to the shift in business continuity plans to remote working strategies and improved internet usage.  The availability of their services just in time during the lock down ranging from voice calls to data usage, Netflix streaming and their e-channels including their momo agency witnessed a high turnover and patronage which will definitely impact their bottom-line.

MTN is known for both interim and final dividends and it is a safe haven for dividends seeking investor.

At N90.00 fifty two weeks low and N145.00 fifty two week high, this stock has the upwards side to journey.

 

SEPLAT

Seplat Petroleum Development Company Plc is an icon in the oil and gas sector of the Nigerian Stock Exchange. It determines whether the oil and gas index will go up or not. It contributes about 227.139b capitalization to the NSE market capitalization.

Seplat has been trading flat at N386.00, Its 52 weeks high is N657.00 while 52 weeks low is the price at which it is trading, that make its down side risk equal to the present price.

The world oil price is hitching up a bit and might necessarily impact on the price of this stock; and in a good market will bring good profit potentials to investors.

 

UBA

With the current price at N6.20, UBA is trading 29% over and above it 52 weeks low price of N4.40 and 49% away from its 52 weeks high price, UBA is sure to deliver arising from the family with which it belongs to. If you are in doubt, check the UCAP Q2 2020 financials.

 

WAPCO

Though the stock has lost its position to BUA Cement Company, it is still a force to be reckoned with in that industry.

The many problems that has be dogged this stock is the rights it embarked on back to back and the payment of dividends from pioneer profits, but it still has the potentials of turning around its fortune any day anytime.

Wapco is trading at N11.00 currently i.e. 22.9% over and above its 52 weeks low and 60% away from it 52 weeks high price of N17.60.

 

ZENITH BANK

Zenith Bank is one of the top stocks despite delivering a modest 0.6% expansion in profit after tax in their Q1 2020 financials. The bank had been adjudged by an international rating agency to be the best bank in Nigeria

It is expected that its revaluation gains from the successive devaluation of the Naira will improve its bottom line by Q2 2020.

In conclusion, the board displays those stocks that are force to be reckoned with and those that have sterling qualities and are outstanding and cannot fail any investor any day.

With the low prices available on the floor of the NSE, a position taken in any constituents of this board is akin to cherry picking that will manifest to good stories when the market turns bullish.

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