Ruth Ibikunle
The stock market last week grew marginally by 0.22%, bringing the All Share Index and Market Capitalization to close at 65,198.08 points and N35.48 trillion respectively. Year to date, the market has returned 27.21%.
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 closed on a positive note with 0.22% growth. What is the outlook for the new week?
The market reacted to the shocks occasioned by the humongous losses witnessed in most issuers earnings release in the penultimate week.
But the market has come to the realization that the losses were not out of managerial incompetence but as a result of policy change.
Be that as it may, investors are jostling to realign their portfolios in line with the current realities and there is still liquidity at the market arena.
The planned business combination of Dangsugar, Nascon, and Dangote Rice is also contributing to the sentiments in the market.
The banking sector which invariably is the net lender stands to benefit from the losses of the manufacturing companies. The expectation of the Q22023 from the banking sector and the perceived gains from currency revaluation vis-à-vis the consequent dividend to be declared is also a factor to consider in the new pace of the market.
This week, the market would continue to be forward-looking and those who have made enough profits would come in intermittently to take their profit but at the end the market would close in the green zone.
• There is a rumour that Glaxosmith might close operations in Nigeria. How true could this be? How will this news affect the pricing of the stock?
GlaxoSmith on August 3, 2023, wrote to the NGX stating inter alia and I quote: The Haleon Group has also separately informed the Board of its intent to terminate its distribution agreement in the coming months and to appoint a third-party distributor in Nigeria for the supply of its consumer healthcare products.
For the above reasons, and having, together with GSK UK, evaluated various other options, the Board of GlaxoSmithKline Consumer Nigeria Plc has concluded that there is no alternative but to cease operations.
Today we are briefing our employees whom we will treat fairly, respectfully, and with care, meeting all applicable legal and consultation requirements. The Board is conscious that shareholders will have many questions; we have been working assiduously with our professional advisors to agree on the next steps and we will be shortly submitting to the Securities and Exchange Commission (“SEC”) a draft Scheme of Arrangement which may, if approved, see shareholders other than GSK UK, receive an accelerated cash distribution and return of capital. The Board acknowledges the support of the GSK Group in its intentions to make this possible, full details of which we hope to publish shortly. In the meantime, however, we cannot assure you of the final terms of any scheme, or that any scheme will be approved by the SEC or shareholders. Shareholders are advised to seek professional advice and continue to exercise caution when dealing in the company’s shares until a further announcement is made”
With the above, it is no longer a rumor that they are winding up their operations in the country and appointing distributors for their pharmaceutical products.
Investors always see the light at the end of the tunnel, as much as the company had warned that investors should be careful in dealing with the shares of the company, investors are hopeful that the cashback and the dividend about to be declared by the company is mouth-watering, therefore the stock is currently trading at its 52-week high of N8.90
• Sunu Assurance gained 55% in one week. What is driving this growth?
Sunu Assurance is listed on the floor of the NGX in the insurance subsector, and the market at large believes that the recent currency revaluation exercise would impact that sector positively.
By the run of play in the market, the price of the stock is being positively affected more so, that the market considers it cheap at that.
• How attractive is Nigerian Breweries at N42.5?
Nigerian Breweries has been brutalized by societal action and inactions.
First was the Naira notes scarcity that affected their operations and their earnings in Q1023.
As the price was about to turn, the currency revaluation came and dipped their bottom line massively.
Remember the initial actions of the market, the stock price was driven down to N36.50.
But thank God for the discerning investors, who believed that there is still value in the company and nay the stock.
The price is being driven back gradually to where it is supposed to be.
Well, at the current price, NB is still good to go but with the proviso, that there is no future shock like we had witnessed in their Q1 and Q2 2023 earnings.
• Is Guinness a good BUY at N55?
Guinness at the current price is trading very close to its 52-week low price of N54.45.
Despite the misgivings with the stock, at that price, Guinness is good to go.
But the stock price is reading N55 on the ticker tape but the reality is that it is currently on bid at N60.50 and why it has not established a new price is the absence of the required board lot of 100,000 units.
Be rest assured that Guinness may close high this week.
• What are the possibilities in Fidelity, Wema, Sterling, Access, GTCO, Zenith and First Bank?
These are all banking stocks and the market at this moment has a preference for that sector for the fact that it expects good outings from them.
At current prices, yes but any diminution below what currently obtains would be better.
• What are the stocks to watch?
Nigerian Breweries, Guinness, Nascon, Dangote Sugar and Presco.