Ruth Ibikunle
The Nigerian stock market last week closed on a bearish note, shedding 0.46% week on week. Year to date, the market has returned 30.72% with the All Share Index and Market Capitalisation at 97,745.73 points and N55.497 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 closed on a bearish note as the All Share Index dropped by 0.46% weekly. What is the outlook for the new week?
The stock market is a barometer by which what is happening in the polity of a country is gauged
There were hues and cries from every nook and cranny of the country for the populace to embark upon a protest.
The market’s scalpers are traders who take cognizance of news and their potential effect on the market. They enter the market on Monday morning and exit on Friday, no matter the state of the market
This group and several others who believed that by now half of Lagos State would be in flames had to sell down their positions and their portfolios to conserve their money or cut down on their losses.
But the market has always had its mind.
On Friday we saw the likes of Presco, Okomu Oil, UCAP, Oando, and Veritas Kapital trading above 5% of their value, and the market closed that day in the green zone
We have also witnessed the entrance of H12024 earnings reports, most of which are good and cannot be termed lackluster. Yes, there is illiquidity in the market but the little funds available within that space are chasing good performance and we are seeing the resultant effects.
Next week we shall be seeing something different as the protest would have been less intense and the chase for good performance would drive the process of stock pricing up. Hence the market will close in the green zone.
• How attractive is UCAP at the current share price of N12.15?
UCAP declared a dividend of N0.90. And a 2-for-1 bonus, quite unprecedented in the market.
It came down as expected because some investors would have taken their positions way back before the rally.
It was meant to close at N35.15 on the qualification day but somebody, whether it is out of mischief or intentionally drove the price down to N31.00 by placing 2.1m units at the nick of the last nanoseconds before the pre-close auction at N31.00
The stock was marked down by subtracting the N0.90 dividend and the resultant answer was divided by 3 which equals N10.02. But because of the price band UCAP is trading the machine rounded it up to N10.05
A lot of investors who have taken their profits at N40.00 believed that the stock would begin to decline after the marked-down
The market has always had its mind, in place of that hope, the market took the price to N11.05 on the day of marked-down and closed the stock at N12.15 on Friday with an outstanding 77m units of unfilled bids.
What we should consider at this moment is that those who bought at N31 or N30.65 on the qualification date are already in the money
N12.15*3=N36.45 plus a dividend of N0.90 equals N37.35
Even at the current price, the market considers the stock cheap and I foresee a situation where this price rally will culminate at between N18 and N20.00. Mark my words
• Why is NASCON trending down?
The news around Dangote and his oil refinery is what is rubbing off on his entire listed companies. The market believes that if his refinery is starved of crude oil, it means that the extant government and himself have no love lost between themselves. Again, the market believes that there is every possibility that the planned business combination of Nascon, Dangsugar and Dangote Rice will fall into oblivion.
Moreover, the performance of the company in Q22024 is dismal.
But I think the man is yet too occupied with the politics surrounding his refinery to think about the business combination of the three companies
But in the coming days, weeks, and months after the dust surrounding the refinery has settled, we shall witness what will happen
• What is the possibility that Dangote Sugar, NASCON and Dangote Rice merging this year?
The calendar may not be this year but from the body language of the prime promoter of these companies, once he has finished with the issue of crude oil supply to his refinery and its full capacity utilization, he would now have time for this merger.
I don’t believe that the intent was a ruse, the man would pursue this to a logical conclusion
like I said before, the suspension and the issue from the SEC concerning Dangote Rice Just elongated our waiting period
Those who could endure to the end would be smile
• How attractive is Oando at N25.3?
Oando has released a lot of information to the market concerning the upward trajectory of the company and its future. Including the latest news of the presidential assent to its acquisition of 100% of Agip
I am not a fan of the stock but I understand that a lot of investors have taken their positions even at N3.00 to them I say Bon Voyage,
But I fear that their next earnings report may change the whole narrative
The stock can make you a millionaire and also can pauperize you, Let us be as wise as the dove
The wise don’t need any word in 2024
•Certain representatives of the banking sector are aligning with FG on the windfall tax. What impact would this policy make on the banking stocks?
There is no power that is mightier than the state power, If any bank MD rises to challenge the government concerning this windfall tax its history would be like that of Savanah Bank
My people would say that it is what you carry on your head that you support with your hands. I have not seen in my little existence where someone else would help you to support the load you carry
The bank MDs in their wisdom know how to dance to the tune drummed by the FGN, but deep down in them they may not be in support
The coming days and weeks would reveal the extent of what would happen
Let us keep our fingers crossed
• What are the stocks to watch?
UCAP, Veritas, Cutix, Okomuoil, Presco, Veritas Kapital and host of others