Ruth Ibikunle
The stock market last week closed bearish as the All share index and Market Capitalisation were down by 2.08% to settle at 51,893.94 points and N28.268 trillion respectively.
In a stock market review with the MD/CEO of Global View Capital Limited, Aruna Kebira, the following were discussed:
Excerpts:
The market last week was down by 2.08%. What are the possibilities for the new week?
The market in Tandem with the current weak microeconomic variables and the dearth of the participation of foreign investors has been declining steadily from week to week.
The point of reflex of these variables is still dim as there are accusations and counter-accusations of party faithful against the outcome of the last general elections.
Citizens are proffering interpretations to some sections and subsections of the nation’s constitution to determine whether the president-elect would be made substantial, come May 29 or whether the opposition has a very good case at the Election Tribunal.
Because the stock market is not isolated and insulated from the general happenings in the polity and the dampened investment horizon, the market has been held hostage.
We have seen sterling performances and mouth-watery dividend declarations by issuers, but the haze in the investment horizon is too thick to allow any meaningful appreciation in the market.
The new week may toe the line of the past weeks because the end of the political imbroglio is not in sight
GTCO has released a final dividend of N2.80 for the 2022 year-end. How attractive is GTCO at N24.40?
The dividend declaration from GTCO has a dividend yield of 11.5%. One of the best in the market and for this earnings season.
Even when the 2022FYE results was not forthcoming from this bank, the discerning market participants have always known that the worst that will emanate from them is a N2.70 dividend. But they beat the market’s expectation and top it up with 10k.
To that end, the dividend of N2.80k from GTCO looks attractive at a price of N24.40k.
The response of the price to this dividend declaration is another kettle of fish entirely. Even if the price does respond positively, it may not be in excess of one day.
But for the dividend-loving investors, it would be a win-win situation for them if they have or decide to take a position in GTCO
Fidelity Bank has announced that its private placement of 3.037 billion ordinary shares at N4.60 was 100% subscribed. What are the possibilities in stock going forward? How attractive is it at N5.09?
The essence of a listed company embarking on a private placement exercise to is avert or reduce the cost of fundraising and to circumvent other stringent conditions associated with public offerings and Rights issues.
Also, the desire of a listed company to raise funds from private placement is to have access to adequate funding for its planned projects or to provide itself with working capital.
Whichever of these reasons that made Fidelity Bank to embarked on the private placement will only place the bank in a better position to rein in more income in the future.
The immediate effect is not going to be felt as there will not be a distribution of the same. And the positive impact of such fund in an organization depends on the judicious use of it by the Board and the channels into which it was deployed.
Value investors may not see any big deal of the exercise at the price of N5.09 as they have nothing to derive immediately. But growth investors who are seeing beyond the N5.09, believing that the funds deployment will lead to positive growth in the bank’s earnings across the board, will move to position themselves ahead of time and would find the current price of N5.09 attractive.
Transcorp gained as much as 23.36 percent last week. How attractive is it at N1.69?
During the course of last week, it was in the media that the Billionaire investor Femi Otedola acquired 5.02% of the outstanding shares of Transcorp via AMCON.
The acquisition according to reports put it that Otedola has become the second highest shareholder in the company.
Remember that a cross order of 1.5 billion units of Trancorp shares was consummated on April 11, 2023, valued at N2.1bn another 115million crossed at N1.40
Remember also the antecedents of the individual involved. He was at Forte Oil, FBNH, and in Geregu and we saw what his presence did for the prices of those stocks.
It is said in my place that the moment you begin to see “Eko” leaves, it signifies that the market is around the corner. It is also said that the witch cried at night and the baby died in the morning, you don’t need any oracle to unravel what transpired in the night.
Now we have seen “Eko” leaves in the coming of Otedola in Transcorp, we should be well assured that that price may soar above N2.00.
With the caliber of information at the market arena surrounding Transcorp, its life will not remain the same again, if care is not taken, the stock will move out of the low-priced stock range.
Why is Airtel and May& Baker trending down?
The average investor in the market understands that we are treading a difficult terrain. Every investor will move to balance his portfolio in tandem with the information available at the marketplace and the current happenings in the polity.
Most investors are moving their resources and seeking higher or better yields than their previous positions.
Airtel Africa does not have December 31 as their year-end, to that extent no dividend is expected from them now and since the likes of Zenith, NAHCO and GTCO are declaring encouraging dividends, investors would take steps to move their resources from stocks where there are currently no benefits.
Also, it’s the craving to exit positions that leads to price decline. In their 2022 FYE earnings release, May & Baker declared a 30k dividend just like in their 2021 FYE. The market is always seeking increases in performance and is not favourably disposed to being stagnant which is the case of M&B.
Even at the current price of N4.05, the yield is 7%, when there are various dividend yields of 11, 10 and 9% respectively available in the market.
Position holders are relinquishing their positions for better yields.
Is May& Baker a good buy at N4.05?
As discussed above, there is every possibilities that the price of the stock may decline further before the qualification date of May 16, 2022.
It would be attractive if it further dropped by any percentage.
How low will Airtel get to? Can someone take position at N1198?
The price of N1,198 happens to be Airtel Africa’s 52-week low price. Which is N842.00 away from its N2,040 52-week high price. Relatively it’s 70% away from its 52-week high price.
By all standards and all things being equal, a 70% deviation of a price from its 52-week should make the stock look attractive and good to go.
While the market is waiting for the release of its result, there could be another decline as current investors justled to move their resources away from the stock seeking better returns.
What are the possibilities in FBNH, Access, Zenith, Nigerian Breweries, and UBA?
UBA would be marked down on Monday, April 17 and since the benefit would have been removed, the price of the stock would naturally slow down, especially in the face of the current realities.
Nigerian Breweries is passing through and at the price of N36.30, I find it attractive and good to go.
Remember when the price was adjusted for the bonus, the price of the stock fell to N37.50 and rebounded to N48.85 before the current trend witnessed in the stock.
Zenith with all its dividends is trending down in tandem with the current happenings in the market. The lower the price before the markdown, the more attractive it becomes.
Recall that the stock normally recovers from its markdown on the markdown day, but I cannot lay my fingers on in it now whether the current dispensation would allow it to perform such a feat.
What are the stocks to watch?
NAHCO, Zenith, GTCO, Transcorp and Presco.