The much anticipated Q2 earnings of quoted companies on the floor of the Nigerian Stock Exchange has finally hit the market. In the week that just ended, companies that released their Q2 results were up to 27. Overall, 74 firms have published their Q2 results so far. We expect more results must especially audited reports of the big banks to soon be released in the coming weeks.
Market expectation for Q2 results of most firms is that it will reflect the impact of covid-19 on the businesses. Despite covid-19 disruption on businesses, Q2 results of some companies have been impressive with top line and bottom line growth year on year. Though, Q2 earnings of some firms reflected the impact of covid-19 impact on their figures. Hence we could say that performance of Q2 earnings for year 2020 is mixed.
By and large, the market is beginning to think that Nigerians are good managers of businesses whether covid-19 or no covid-19. The impact of the pandemic did not hit them the way the market thinks it will. The market was thinking that most of the companies will be reporting lower revenue, but a sizable number of them actually did better than they did the previous quarter.
Commenting on the Q2 results released so far, Bright Otoghile, Managing Director of Gruene Capital Limited stated thus:
“Performance of Q2 earnings is mixed. The covid-19 impact is obvious in some companies while some really show that they can still weather the storm. With no further lockdown issue, I think some of them might still perform the way they did in 2019 while some will not.
So basically, the result of most of these companies, looking at the revenues of some like Julius Berger, Nestle, UACN and others in the consumer goods sectors, you will notice that something happened there. Many of them were just trying to breakeven. If you look at the construction sector, while Julius Berger shows sign of covid-19 impact, the same cannot be said of Dangote Cement and Wapco.
In the banking sector, FBNH, FCMB, Union Bank and Wema Bank have released their results. We could see how the results faired, even though some of these results were actually boosted by the issue of assets disposal like First Bank for instance. That is a one off event. Otherwise I will advise investors to use the earnings per share from operations for FBNH.
FCMB tried, their EPS grew to 49 kobo from 38 kobo. If you look at the month of April which actually carried the burden of the covid-19 impact, since we are not going to have that kind of April in future, most of this companies can weather the storm.
The waiting game is for the big bank to see how they perform when their audited result start coming.
Whether the results are good or not, consumer income is affected by the covid-19 pandemic impact.
If the consumer income is low and we can see unemployment rate rising, what will they have for saving? What they invest is from what they save. If that is the case, we will see a mixed performance of the market in terms of see-saw performance. But for you to expect straight performance of the market, given good results from these companies, it might not be there.
We are likely to experience good results and behaviour of consumers towards having their money somehow fixed in the capital market. Everybody is voting for cash as soon as they can get it. That is why we are experiencing ‘see- saw’ type of pricing performance”.
Aruna Kebira, Chief Dealer of Global View Capital Limited in his comment about Q2 results stated thus:
“The market is reacting according to the results that has been released. If you look at Seplat, the price has been declining, but the moment the result hit the market, it gained 10%, which means the price tends to move higher.
MTN’s interim dividend information also hit the market. For MTN, because there is something to look behind it (interim dividend), it might likely move higher than N117.9 it closed last week.
Wapco because of cost saving, their bottom line was actually impressive and took the price of the stock from N10.95 to 12.50, but eventually closed at N11.75. It came back home to rest. You know why, because there is nothing behind it; no interim dividend to look up to.
I can assure you that most of the stocks that will pay interim dividend will perform well. We can see Guaranty Trust Bank and Zenith are beginning to respond, especially Zenith. Guaranty went to N23.30 and came back to close at N22.50. It is certain they are going to pay 30 kobo interim dividend. Because people are looking towards that 30 kobo, there will be that interest in it. So the interest will be sustained until there results are released.
I believe it is time that the market may recover, if not for anything, but for the interim dividend. The effect of the lockdown is actually not reflecting like that on the earnings”.
We should keep our fingers crossed and see how other companies will release their performance to the market and see how the market will react.
DANGOTE CEMENT
Dangote Cement grew its top line and bottom line figures for the first half of the year despite the fact that the market is anticipating that Q2 earnings of manufacturing firms could be significantly affected by the partial lockdown.
The cement manufacturing giant defied all odds as it grew its profit after tax by 5.79% to N126.14 billion from N119.24 billion achieved in the first half of 2019. Earnings per share grew to N7.40 from N7.00 which translate to 5.79% growth year on year.
With current share price of N141.8, the P.E ratio of Dangote Cement stands at 19.16x with earnings yield of 5.22%.
FIRST BANK OF NIGERIA HOLDINGS
The big elephant for the first half of 2020 achieved growth in both topline and bottom line figures. Gross earnings grew by 7.17% to N298.1 billion from N278.2 billion achieved the previous year.
Profit After tax (PAT) grew by 56.33% to N49.5 billion from the PAT of N31.6 billion in H1’19. Earnings per share grew to N1.33 from 88 kobo
With reference to the share price of N5.00, the P.E Ratio of FBNH stands at 3.63x with earnings yield at 27.56%.
FCMB
FCMB grew its top line and bottom line figures in the first half of 2020. The holding company declared gross earnings of N98.18, up by 9.35% from N89.79 billion reported the previous year.
Profit after tax grew by 28.83% to N9.7 billion from N7.53 billion achieved in the first half of 2018. Earnings per share grew to 49 kobo from 38 kobo, which translates to 28.83% growth year on year. Relative to the share price of N1.95, P.E ratio of FCMB is calculated as 3.98x with earnings yield of 25.12%.
FIDSON HEALTHCARE
Performance of Fidson Healthcare in the first half of the year 2020 was impressive as the firm recorded significant growth in its topline and bottom line figures. The healthcare firms are essential front liners in the fight against covid-19. Fidson is among other Pharmaceutical firms that received grant from the Federal Government for production of vaccine for covid-19.
Revenue grew by 11.31% to N8.2 billion form N7.37 billion achieved in the first half of 2019. Profit after tax grew by 81.43% to N500.64 million from N275.94 million reported in H1’19. Earnings per share appreciated to 24 kobo from 13 kobo and this translates to 81.43% growth.
With reference to the share price of N3.15, P.E ratio of Fidson Healthcare is calculated as 13.13x with earnings yield of 7.62%
UNITED CAPITAL PLC
Second Quarter report of United Capital showed significant growth in key indicators despite the challenging global economic climate. Total Revenue in HY 2020 soared to N4.45bn from N3.24bn in HY 2019. An increase of 14.10% was recorded in Profit before tax while Profit after Tax grew by 15.98% year on year. Earnings per share grew to 32 Kobo from 27 kobo achieved in HY 2019.
Relative to the current share of N2.87, the P.E ratio of UCAP stands at 9.00x with earnings yield of 11.11%.
AFRICA PRUDENTIAL PLC
Africa Prudential grew its profit after tax by 5.34% to N1.08 billion from N1.03 billion achieved in HY’19. Earnings per share grew to 54 kobo from 51 kobo, implying a growth if 5.3% year on year.
Afriprud closed at N4.05 last week and this translate to P.E ratio of 7.48x with earnings yield of 13.37%.
LAW UNION & ROCKS INSURANCE
Law Union and Rocks Insurance grew profit after tax by 80.90% to N185.8 million from N102.7 million reported in the first half of 2019. Earnings per share grew to 4 kobo from 2 kobo.
At the current share price of N1.04, P.E ratio of the underwriting firm is calculated as 24.05x with earnings yield of 4.16%.
PRESTIGE ASSURANCE
Prestige Assurance Plc grew its top line and bottom line figures in the first half of 2020. Gross Premium Written grew by 4.65% to N3.91 billion from N3.74 reported in the first half of 2019.
Profit after tax grew by 79.26% to N620.35 million from N346.06 million reported in H1’20.
Earnings per share (EPS) grew 10 kobo from the EPS of 5 kobo achieved in H1’19
Relative to the share price of 50 kobo, P.E ratio of Prestige Assurance is calculated as 5.13x with earnings yield of 19.50%.
MUTUAL BENEFIT ASSURANCE
Mutual Benefit Assurance recorded growth in Gross Premium Written, Profit after Tax and Earnings per Share.
Gross premium written grew by 4.99% to N10.17 billion from N9.68 billion reported in the first half of 2019.
Profit after tax grew by 9.69% to N1.57 billion from N1.42 billion reported in H1’19.
Earnings per share grew to 14 kobo from 13 kobo achieved in the first half of 2019.
At the current share price of 23 kobo, P.E ratio of Mutual Benefit Assurance stands at 1.64x with earnings yield of 60.97%.
NASCON ALLIED INDUSTRIES
Nascon Allied Industries in H1’20 declared a turnover of N14.53 billion, up 11.98% from N12.98 billion achieved in the first half of 2019.
Profit after tax grew by 2.66% to N1.49 billion from N1.45 billion achieved in H1’19. Earnings per share grew to 56kobo from the EPS of 55 kobo reported achieved in the first half of 2019.
Relative to the current share price of N9.60 P.E ratio of Nascon Allied Industries is calculated as 17.09x with earnings yield of 5.85%.
MTN NIGERIA
MTN proposed an interim dividend of N3.50 for the first half of the year. Turnover grew by 12.54% to N638 billion from N566.99 billion achieved in H1’19.
Profit after tax (PAT) declined by 4.68% to N94.9 billion, when compared with the previous PAT of N99.5 billion in half year 2019. Earnings per share to N4.66 from the EPS of N4.89 in Half Year 2019.
With reference to the share price of N117.90, the P.E ratio of MTN stands at 25.29x with earnings yield of 3.95%.
CADBURY
Q2 result of Cadbury show decline in the company’s top line and bottom line figures. Revenue declined by 18.18% to N15.92 billion as against N19.46 billion achieved in H1’19.
Profit after tax declined to N536 million from N669.9 million reported the previous year, and this translates to 19.89% decline in (PAT). Earnings per share dropped to 29 kobo to 36 kobo.
With the current share price of N6.60, the P.E ratio of Cadbury Nigeria stands at 23.10x with earnings yield of 4.33%.
JULIUS BERGER
The impact of covid-19 reflected on the Q2 earnings of the construction giant as top line and bottom line figures declined significantly.
Julius Berger reported a turnover of N102.06 billion, down by 22.56% away from N131.78 billion recorded in H1 2019.
The construction giant declared a loss after tax of N1.93 billion as against the profit after tax of N2.83 billion achieved in the first half of 2019. Earnings per share is declined to –N1.22 from the EPS of N1.79.
With reference to the share price of N15.00, the P.E ratio of Julius Berger stands at -12.30x with earnings yield of -8.13%.
WEMA BANK
Top line and bottom line figures of Wema Bank declined in half year 2020 compared to what was achieved in H1’19. Gross earnings declined by 6.57% to N38.15 billion as against N40.84 billion reported in H1’19.
Profit after tax (PAT) dropped by 33.53% to N1.49 billion from PAT of N2.25 billion declared in H1’19.
Earnings per share (EPS) for the period under review is evaluated as 4 kobo, down by 33.53% from the previous EPS of 6 kobo in H1’19.
At the current share price of 52 kobo, P.E ratio is calculated as 13.42x with earnings yield of 7.45%.
UNION BANK
The profit after tax of Union Bank declined by 9.22% to N10.76 billion from the PAT of N11.85 billion in H1’19, though gross earnings appreciated by 7.68% to N81.86 billion.
Earnings per share for the H1’20 is evaluated as 37 kobo, down by 9.22% as against the EPS of 41 kobo in H1’20.
Currently trading at the share price of N5.40, the P.E ratio of the bank is 14.62x with earning yield of 6.84%.