- Political climate against 2023 General Election to determine market direction
- Stocks to watch
The stock market closed the year 2021 on a bullish note with year on year growth of 6.07%. The All Share Index and the Market Capitalisation closed at 42,716.44 points and N22.296 trillion respectively. The growth in 2021 was triggered by impressive Q3 results released by companies listed on the Nigeria Exchange. The positive vibration pushed the market out of the negative to positive and eventually closed the year on a bullish note.
Looking at year 2020, which was a covid year, the market grew by 50.03%. Comparing this growth with year 2021 that returned 6.07%, one could say that 2021 was pretty tough on the market.
Commenting on the market performance, the MD/CEO of APT Securities and Funds, Mallam Garba Kurfi stated thus:
“We expected to close higher than what we closed. We understand why we closed where we closed.
One of the reason is that Dangote Cement did not do share buyback as scheduled. Recall, in year 2020, they did their share buyback towards the year end. So that did not happen as planned and I don’t know what they will tell shareholders as to why the share buyback exercise did not hold.
Secondly, MTN has not notified the market about the extent of subscription of its just concluded public offer. That would have given confidence to the market to close higher.
If that was done, it would have boosted the growth of the All Share Index. Recall that the FGN Sukuk was oversubscribed by 300%. We know that the MTN public offer would be oversubscribed, but it was not mentioned.
I am aware that BUA Food is likely to be listed on the Nigerian Exchange. If this had been announced, it would have triggered further growth in the market.
We should expect a positive outlook for the first and second quarter of the year. However the election preparation by political parties will determine the outlook of the market for the rest of the year. How the electioneering process is handled will determine the level of confidence investors will have in the market. Foreign Investors will be on the lookout for the political climate as this will determine their investment decision”.
STOCKS TO WATCH
Access Bank closed 2021 at N9.3, with year high of N9.95 and year low of N7.05. It is trading 6.53% away from its 52 weeks high of N9.95.
Access Bank is expected to pay at least a final dividend of 55 kobo in addition to the 30 kobo interim dividend already paid to shareholders.
On the basis of the bank’s Q3 2021 earnings per share of N3.43, book value at N22.49 and the P/E ratio standing at 2.71x, make the stock a bargain at the current price.
Zenith Bank is expected to pay a final dividend of N2.70 in addition to 30 kobo interim dividend already paid.
Currently trading at N25.15 and the price has touched a high of N27.5 and a low of N19.50 in the past 52 weeks. It has an uptrend potential of 8.55% relative to its 52 weeks high of N27.50.
On the strength of its Q3 earnings of N5.12, Zenith Bank’s book value at N37.81 and P/E Ratio standing at 4.91x, make the stock a bargain at current price as it could be said to be selling at 35.47% away from its book value.
GUARANTY TRUST BANK
The share price of Guaranty Trust Holding Company closed year 2021 at N26. In the last 52 weeks, the price of GTCO has touched a high of N36 and a low of N23.90. There is an uptrend potential of 27.78% relative to its year high of N36.
The bank is expected to pay at least N2.70 final dividend in addition to 30 kobo interim dividend already paid to shareholders.
The Q3 2021 earnings per share of N4.40 at a current share price of N26 gives a low P.E ratio of 5.90x.
The book value of N28.62 implies that stock is trading within the region of its fair value.
By the time GTCO consolidates its HoldCo structure, the share price will grow significantly beyond its current level.
UBA is currently trading at N8.05 and it has touched a high of 9.25 and a low of N6.75 in the last 52 weeks. UBA has an uptrend potential of 12.97% relative to its year high of N9.25.
UBA is expected to pay at least a final dividend of 35 kobo in addition to 20 kobo dividend already paid to shareholders.
With Q3 earnings per share of N3.06, relative to the current share price of N8.05, UBA has a low P/E ratio of 2.63x.
With the book value at N23.34, relative to the current price of N8.05, UBA is considered very cheap.
The renewed interest in FBNH by investors was triggered by substantial shareholding power tussle by certain high net worth individuals. This led to the recent growth in the share price of the big elephant.
Currently trading at N11.40, the share price of FBNH in the last 52 weeks has touched a high of N12.90 and a low 6.25. It has an uptrend potential of 11.63% relative to its 52 weeks high of N12.90.
Although its Q3 2021 earnings per share declined to N1.14 from N1.90, the P.E ratio of FBNH stands at 10x.
FBNH is expected to pay at least a final dividend of 45 kobo, same as what they paid the previous year.
With the book value at N20.99, relative to the current price of N11.40, FBNH is considered cheap.
Fidelity Bank closed 2021 at N2.55 with a year high of N2.80 and year low of N2.08. It is trading 7.14% away from its 52 weeks high of N2.80.
With Q3 earnings per share of 92 kobo, relative to the current share price of N2.55, Fidelity Bank has a low P/E ratio of 2.77x.
Fidelity Bank is expected to pay at least a final dividend of 22 kobo, same as what they paid the previous year.
A book value at N9.76, relative to the current price of N2.55, implies that Fidelity Bank is trading below its intrinsic value. This suggest an uptrend potential for Fidelity Bank.
Ecobank is currently trading at N8.70 and the share price has touched a high of N9.50 and a low of N4.70 in the last 52 weeks. At N8.90 Ecobank has upside potential of 8.42% relative to its year high.
Q3 2021 earnings per share of N5.70 and the current share price of N8.70 gives a low P/E ratio of 1.53x, which suggests that the price of the stock is cheap.
Book value of N47.76 relative to the current price of N8.90 makes Ecobank very cheap.
The share price of FCMB is currently trading at N2.99 with the year high of N3.5 and year low of N2.66. It is trading 14.57% away from its 52 weeks high of N3.5.
With Q3 2021 earnings per share of 70 kobo, relative to the share price of N2.99 gives a low P/E ratio of 4.27x for FCMB.
FCMB is expected to pay at least a final dividend of 15 kobo, same as what the paid the previous year.
FCMB has a Book value of N11.92. Relative to the current price of N2.99, it can be said that FCMB is underpriced.
MTN has received approval to go into banking service. They have also got the licence for 5G Technology which is set to be launched in January. It is obvious that most businesses will continue to use zoom for meeting; and this will increase their turnover and profit after tax.
The share price of MTN grew to N197 from N169 after their public offer. In the last 52 weeks, the share price of MTN has touched a high of N209.9 and a low of N157.
MTN without doubt has the capacity to surpass its year high of N209.9.
There is high demand for cement as projects keep increasing across the country. Even as high as the price is, people are still buying. Dangote Cement, BUA Cement and Lafarge will continue to enjoy the ever increasing demand for their product.
BUA Foods is expected to be listed on the Nigerian Exchange soon. The entrance of BUA Food into the market will trigger growth of stocks in that sector.