Ruth Ibikunle
The stock market last week closed on a positive note with 1.35% growth week on week. Year to date, the market has returned 44.74% with the All-Share Index and Market Capitalisation at 148,977.64 points and N94.561 trillion.
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 bullish note with 1.35% growth. What is the outlook for the new week?
The All-Share Index (ASI) closed last week with a solid gain of 1.35%, continuing its strong Year-to-Date performance.
The gain is premised on many factors, among which are:
Macroeconomic Reforms: Investor optimism is driven by ongoing government and central bank reforms, such as those in the foreign exchange market, which are seen as positive for the long-term outlook of listed companies, especially those with foreign currency exposure.
Positioning Ahead of Earnings: Anticipation or release of strong corporate earnings results, especially from blue-chip companies, can fuel demand and push up the overall index.
A surge in foreign capital seeking high returns in the Nigerian equity market, often attracted by the currency’s valuation and high dividend yields of specific stocks.
Bargain Hunting/Profit Taking: The outlook for the new week is generally mixed to cautiously bullish, with an expectation for continued profit-taking and a focus on corporate disclosures.
Profit-Taking and Sector Rotation
Mixed Index Performance: While the overall ASI was bullish, the weekly report noted that some major sub-indices, including NGX Banking, NGX AFR Bank Value, and several others, depreciated last week. This indicates active profit-taking in those segments.
Outlook: The market may witness a tug-of-war between new investors entering the market and those who wish to realize the significant gains made recently. This could lead to a mixed trading pattern with a focus on value and growth stocks.
Corporate Earnings and Dividends
Q3 Results: The market will continue to digest and react to third-quarter (Q3) unaudited results that are being released. Strong earnings from major blue-chip companies, particularly in the cement, consumer goods, and financial sectors, will likely support the bullish sentiment.
For example, recent results from companies like Transcorp Power (38% Revenue Growth) and Infrastructure Debt Fund (21.9% Revenue Growth) can influence sentiment.
Dividend Yield: A company’s past performance and dividend policy are highly influential on Nigerian investors’ decisions. Stocks with attractive dividend yields or expectations of a bonus issue may see renewed demand.
FX & Monetary Policy: The Nigerian stock market remains sensitive to Foreign Exchange (FX) rate movements and the Central Bank of Nigeria (CBN)’s monetary policy. Any new policy pronouncements or significant shifts in the FX market could immediately impact corporate costs and investors sentiment.
The inflation reading for the month of September was 18.02%, which indicates that the MPC in their next meeting might find it a reason to further tinker with the MPR downwards.
Oil Prices: As a major oil-exporting nation, global oil price fluctuations will continue to have an indirect, but significant, impact on the domestic economy and, consequently, the stock market.
While the strong momentum from the previous week suggests a slight bullish tilt, investors are advised to trade cautiously. The market is likely to be driven by stock-specific news, particularly Q3 earnings and dividend-related announcements, rather than a broad-based rally.
- What is driving the growth in the share price of Sovereign Trust Insurance and Royal Exchange Plc?
The share price growth for both Sovereign Trust Insurance Plc (SOVRENINS) and Royal Exchange Plc (ROYALEX) is primarily driven by two powerful, interconnected forces in the Nigerian financial market:
Strong Corporate Earnings and Turnaround: Both companies have reported significant improvements in their financial performance.
The Insurance Industry Recapitalization Mandate: Investor speculation and positioning ahead of the new, higher capital requirements for Nigerian insurance firms.
Sovereign Trust Insurance Plc (SOVRENINS)
The growth in SOVRENINS’s share price (which has posted a Year-to-Date gain of over 200%) is primarily a function of fundamental performance and recapitalization play:
The company has reported a significant turnaround and robust profitability in its most recent financial reports.
In its 2024 Full-Year Performance, Profit After Tax (PAT) rose by 79% to N2.35 billion, and insurance revenue grew by an astounding 109%. This impressive growth was attributed to a surge in insurance revenue, higher investment returns, and efficient cost management.
Like all Nigerian insurance companies, SOVRENINS is preparing to meet the new, much higher Minimum Capital Requirements (MCR) mandated by the Nigeria Insurance Industry Reform Act (NIIRA) 2025.
Investors are bidding up the stock in anticipation that the company will successfully raise the necessary capital (through public offerings, rights issues, or private placements) or potentially be a target for a merger or acquisition, which would ultimately result in a higher valuation for existing shareholders.
Royal Exchange Plc (ROYALEX)
ROYALEX has also delivered triple-digit Year-to-Date returns, with its growth attributed to a successful restructuring strategy and financial recovery:
The company has successfully executed a restructuring plan that has delivered significant bottom-line results.
The group reported a N1.49 billion pre-tax profit, representing a massive 90% increase year-on-year in their Q32025 earnings release, and the Net income for the Group surged by 133% to N1.7 billion.
Increased Investment Income: A major driver for their earnings growth is the significant rise in earned income and interest income, as well as improved returns from their associate companies. This suggests better returns on their investment portfolio.
The recent financial results show an improvement in balance sheet strength, with total assets rising and a critical recovery in retained earnings, which swung from a deficit to a positive position.
As with Sovereign Trust, ROYALEX’s strong performance positions it favorably to navigate the insurance industry’s recapitalization exercise, which is fueling broader investor interest in the insurance sector.
- Okomu has declared an interim dividend of N10 for shareholders for Q3 2025. How would you rate the earnings performance of Okomu for Q3 2025?
Based on the reported figures, the earnings performance of Okomu Oil Palm Company Plc for Q3 2025 can be rated as Excellent/Exceptional.
The decision to declare a significant interim dividend of N10.00 per share, coupled with the impressive financial metrics, signals a period of robust growth and high profitability.
The unaudited financial statements for the third quarter ended September 30, 2025, showcase a performance that has more than doubled its profitability year-over-year: With a revenue of N173.95b, PBT of N84.10, PAT of N60.33 and an earnings per share of 6325k. The company’s core performance is outstanding, with both PBT and PAT more than doubling compared to the same period last year. This triple-digit growth in profit is a clear indicator of superior operational efficiency and favourable market dynamics.
Very Strong Revenue Growth
A 67.34% surge in revenue to N173.95 billion shows that the company has successfully increased its sales volume and/or leveraged high market prices for its products (Crude Palm Oil and Rubber). This top-line growth provides a solid foundation for the bottom-line profitability.
Dividend Payout (Implied Strength) – Highly Positive
The declaration of a N10.00 interim dividend is a strong vote of confidence from the board. Interim dividends are paid out of current earnings, and a high payout indicates:
High Earnings Visibility: The company is confident that its current and future earnings can comfortably cover this substantial payment.
Strong Cash Flow: It implies robust cash generation from operations, which is essential to pay dividends without straining the business.
Driving Factors Behind the Performance
The exceptional performance is likely sustained by:
- Favorable Global CPO Prices: Crude Palm Oil (CPO) prices globally have been strong, which directly boosts the company’s revenue and margins.
- Strong Domestic Demand: Nigeria’s limited CPO imports mean local producers like Okomu benefit significantly from sustained, high domestic demand.
- Macroeconomic Environment: While general macro challenges exist, a relatively more stable exchange rate compared to previous periods may have helped temper foreign exchange losses on imported raw materials or revaluation of foreign-denominated liabilities, contributing to the strong profit figures.
In summary, the Q3 2025 results for Okomu are phenomenal. The doubling of profit and strong revenue growth, capped off by a generous N10 interim dividend, positions the company as one of the top performers on the Nigerian Exchange for the period.
- How attractive is Okomu at the current price?
The attractiveness of Okomu Oil Palm Company Plc (OKOMUOIL) at its current price is a mixed bag, with strong fundamental performance being weighed against current valuation metrics.
Based on the recent Q3 2025 results and market analysis, here is a breakdown of the stock’s attractiveness:
Valuation Metrics: Caution (Appears Overvalued by Some Metrics)
The primary caution for the stock’s attractiveness is its valuation relative to some historical averages and analyst targets.
Metric Okomu value
Current price N1,020
Analyst average price target N779,75
12-Month
Fair value N783.43-N804.54
If you rely purely on analyst price targets and discounted cash flow (DCF) models, the stock appears overvalued and therefore Less Attractive at the current price, suggesting a potential price correction is possible.
Fundamental Performance: Highly Attractive (Excellent)
The underlying financial health and growth trajectory makes the company incredibly attractive:
Exceptional Earnings Growth: Q3 2025 profit after tax (PAT) more than doubled, showing +112.90% year-on-year growth. This indicates explosive fundamental strength.
High Profitability and Efficiency: The company boasts strong margins (e.g., Net Profit Margin of 36.28% and Return on Equity (ROE) over 100% as per some recent data), which are world-class.
Strong Balance Sheet: The company has reduced its borrowings and significantly grown its retained earnings, indicating disciplined, internally-funded growth.
Dividend Yield: The N10.00 interim dividend signals confidence. The overall expected dividend yield (based on a full-year forecast) of around 3.5% – 5.7% is attractive for a growth-oriented stock.
The company is a High-Quality Growth Stock with excellent management and market positioning. This exceptional performance is the reason the market has driven the stock price so high.
The attractiveness of Okomu at N1,020.00 depends entirely on your investment horizon and risk tolerance:
Overall Rating: Attractive, but Expensive. The stock’s current price reflects its stellar Q3 performance and the bullish outlook for the agricultural commodities sector. However, the premium valuation suggests that much of the good news may already be priced in, limiting the immediate upside potential.
- Why is Academy Press trending down?
The downward trend for Academy Press Plc (ACADEMY) stock, especially the sharp drop observed recently, is likely a result of a combination of market dynamics, profit-taking, and valuation adjustments, rather than a sudden disaster in its core business.
Here are the key factors contributing to the recent downward trend:
1. Profit-Taking After a Massive Rally
The most significant factor is that the stock experienced an enormous price surge for most of the year.
Massive Year-to-Date (YTD) Gain: Academy Press was one of the Nigerian Exchange’s top performers, with a YTD gain of over +160% to +218% as of early Q4 2025.
Correction/Pullback: After such a massive rally, it is natural for investors who bought the stock early to take profits. Large-scale profit-taking by institutional or major investors creates significant selling pressure, which leads to a sharp price correction. The recent downtrend appears to be a major pullback from its all-time high of N11.26 set in July 2025.
2. Market Perception of Valuation
Despite the company’s strong fundamentals, the rapid price increase can stretch the valuation, leading to a correction:
Trading Above Fair Value: Multiple valuation models and analyst estimates suggest the stock is currently overvalued at the high price levels, with some fair value estimates ranging from N6.99 to N7.73. When the market price (e.g., N9.60 or N11.26) is significantly above the estimated fair value, a correction is likely.
Analyst Alerts: Some market sentiment indicators have flagged “investor sentiment deteriorates” and noted a “new major risk – Share price stability” following the strong run-up in July, suggesting a market-wide recognition that the stock was due for a cooling-off period.
3. Mixed Recent Financial Performance (Quarterly)
While the full-year 2025 results were excellent, the most recent quarterly figures may have triggered some selling:
Excellent Full-Year 2025: The company reported an impressive profit after tax (PAT) of N716.5 million for FY 2025, a +800% growth from the previous year. This news was the primary catalyst for the earlier huge price rally.
Q1/Q2 Income Decline (Sequential): The net income for the most recent quarter showed a sequential decline (e.g., one source notes a drop from N486.07 million to N398.06 million, a -18.11% change). While still profitable, a sequential drop in earnings can disappoint the market and contribute to a sell-off, especially after a period of high expectations.
In summary, the stock’s downtrend is primarily a technical correction driven by profit-taking after an incredible rally, combined with the market’s attempt to adjust the price back toward more realistic valuation levels following that surge.
- Is Ellah Lakes still a stock to have in one’s portfolio?
Assessing whether Ellah Lakes Plc (ELLAHLAKES) is a stock to hold in one’s portfolio depends entirely on your investment strategy, risk tolerance, and time horizon, as the stock exhibits characteristics of a high-risk, high-potential “turnaround” and “growth” play.
Here is a breakdown of the key factors for and against holding Ellah Lakes:
The Bull Case (Reasons to Invest/Hold)
Ellah Lakes presents a classic long-term growth story focused on a critical sector (Oil Palm/Agribusiness) in Nigeria.
- Massive Growth Potential in Agribusiness: The company has pivoted from fish farming to a vertically integrated agribusiness, focusing on oil palm, rice, cassava, etc. Nigeria has a significant supply gap for palm oil, which positions Ellah Lakes to capture massive local demand and potential export markets.
- Aggressive Expansion Plans: The company is actively executing ambitious expansion plans, including:
- Planting an additional 1,500 hectares of oil palm in 2026.
- Installing a Palm Kernel Oil (PKO) mill.
- Bringing all its land holdings into active production to ensure full capacity utilization.
- Strong Management Vision: Management has outlined a clear path for growth, aiming to become cash-flow positive and eventually distribute dividends, which signals confidence in their long-term strategy.
- Historical Stock Performance: The stock has seen a massive price increase over the last year, with a +230% return, showing strong market enthusiasm and momentum for the agricultural sector.
The Bear Case (Reasons for Caution/Avoidance)
The stock comes with significant risks that cannot be ignored.
- Current Unprofitability: The company is currently operating at a loss. The most recent reported quarterly net income was negative N-308.34M, and the full-year 2025 result was a loss per share of N-0.14. The investment case rests solely on future profitability.
- Valuation Concerns: While some metrics (like Price-to-Book) appear reasonable compared to industry averages, the stock trades at a very high Price/Sales and has a negative P/E ratio due to the losses. Some analysts have flagged it as overvalued after its recent rally.
- Shareholder Dilution Risk: The company has taken steps to convert director/shareholder and CBN program loans to equity, and shareholder dilution has been flagged as a major risk multiple times in recent news. This means that new shares are being issued, which can reduce the value of existing shares.
- High Volatility and Risk: The stock is considered highly volatile and has a high Beta of 2.75, meaning its price swings much more widely than the overall market.
Ellah Lakes is a speculative growth stock in a high-potential sector. If you believe management can execute their ambitious expansion and turn the company profitable in the next 3-5 years, it could be a significant gainer. It requires a long-term horizon to withstand the current volatility and wait for the projects to mature. The lack of current profitability, no dividend payments, high volatility, and risks of shareholder dilution make it too risky for investors looking for stability, immediate returns, or value investments
In short, Ellah Lakes is a high-conviction “bet” on the future of Nigerian agribusiness. Only consider it if you are prepared for significant risk and volatility while waiting for the expansion projects to come to fruition.
- What are the stocks to watch?
CWG, Chams, NGX, Nahco, Dangsugar Fidelity, UBA, Access, Ellah Lakes, and a host of others.