Ruth Ibikunle
The Nigerian stock market last week was closed on a bearish note, shedding 0.35%. Year to date, the market has returned 33.30% with the All Share Index and Market Capitalisation at 99,671.28 points and N56.441 trillion respectively.
In a stock market review with the MD/CEO of GlobalView Capital Limited, Aruna Kebira, the following were discussed”
Excerpts:
• The stock market last week closed on a bearish note as the All-Share Index dropped by 0.35% week on week. What is the outlook for the new week?
As a result of the strong headwinds prevalent at the market stoked by the incessant increase in the interest rate by the CBN and the illiquidity experienced by the stock market in addition to the capital flight from the stock market to the fixed and money market, the ASI will be closing the week mixed.
If you noticed during last week, it was low-cap stocks that were paraded as the top gainers and they don’t have the required weight to determine the direction and the closing of the ASI.
If the week closed negative, it would not be a surprise to market participants and analysts. But we can see surprises when any member of the SWOOT stocks is taken up
• What is driving the growth in Livestock Feeds and Vitafoam?
The 52-week low of Vitafoam is N17.00 and when the market brought it to N18.00 just N1.00 away from the 52-week low and there is no peculiar news surrounding the stock, the market moved to correct the pricing and there was reversal from N18 to N21.20 where it has hitherto traded.
Likewise for Livestock. The movement in the prices of the two stocks is strictly the run of play and the dynamics of the market.
• The Q2 2024 result of Geregu was impressive with significant growth in its top line and bottom-line figures respectively. Is this capable of pushing the price of the stock upward?
The performance of Geregu in Q2 2024 as a standalone looks sterling. However, the behavior of prices on the floor of the exchange hinges on many factors apart from just the top line and the bottom line.
Geregu is trading at a price of N1,000.00 and the EPS for the quarter under review rose from 322k to 801k higher than the Q42023 of 642k.
But the P.E ratio as of June 30, 2024, is 124.8x and the earnings yield is 0.81%.
Ordinarily, these statistics would not lead to any significant rally in the price of the stock but we know the forces behind it, wherever the force wants to take it, that is where it goes,
Investors have to be wary as the indicators are not pointing to a buy action.
• Learn Africa has declared a bonus issue of 1 for 8 to shareholders. How attractive is this stock?
At the price of N3.20, a bonus of 1 for 8 is equivalent to 0.125% and that is equal to N0.40. The price has appreciated to N3.52 after the announcement which is N0.32 up already,
Discerning investors would always want to calculate if they take a position at the current price how much will the price appreciate further that would bring the expected ROI. A further increase in price at the first trading of the week would have eaten up the benefit.
• How attractive is Cutix Plc at N4.62?
Cutix announced a dividend declaration and a bonus of 1 for 1. At the reference price of N4.20 on the released date, the 1 for 1 and the 15k dividend declaration amounted to N4.35. Out of that benefit, it is only N0.42k that has gone leaving about N3.93 to gain.
Given the above scenario, Cutix currently should be the darling of the market. The only snag with the company dividend declaration and bonus issues is the qualification and the payment dates.
The chance is, that the qualification date would be about a month or two from now. The stock would have experienced a rally and slow down before that day.
• What are the stocks to watch?
Cutix, Tantalizers, Japaulgold, Verita Kapital, and a host of others