Stock Market Review: December 4, 2023

Ruth Ibikunle

The Nigerian stock market last week closed on a positive note with 0.27% growth following 0.17% growth in the previous week. Year to date, the market has returned 39.35% with the All Share Index and Market Capitalisation at 71,419.18 points and N39.082 trillion respectively.

In a stock market review with the MD/CEO of Global View Capital Limited, Aruna Kebira, the following were discussed:


• The stock market last week closed on a bullish note with 0.27% growth, though the Market Capitalisation dropped because Union Bank was delisted from NGX. What is the outlook for the new week?

The news at the marketplace is pro-market and the market cannot do otherwise than to take the journey to the north.

The week we are entering is the first week of December, and the recapitalization frenzy, the good outing of Q32023, and the great expectation of a repeat of the sterling performances in Q42023 are the stimuli currently within the market space. I expect the market to also look up and finish up this week.

Those penny stocks that hitherto holders took profit from last week would also come back and continue to be upward looking and these activities would culminate in the market closing in the green zone.

• Mecure continued its uptrend last week, gaining as much as 41.04% last week. Is it a good buy at N12.99?

Mecure has been a wonder stock since it was listed on November 12, 2023. Week in and week out the stock had maintained a steady rise and attained the maximum percentage gain every day and people who have played in it are not just smiling but are laughing to their banks.

The stock had moved from its listing price of N2.96 to a close of N12.99 last Friday, is it good to buy at that price? What I cannot lay my fingers on is the force that had taken the price of the stock this far. Is the force still strong or weak?

If the force is still strong then the stock would have been buyable but if not, I can see a situation where the price would stagnate and trade within that established price band.

What is driving the growth in Consolidated Hallmark Insurance?

Consolidated Hallmark Insurance was delisted and Consolidated Hallmark Holdings was listed, to enable the company to transform into a holding company.

But on the day of listing, there was a mistake as per the reference price which was set at N0.50 and the market reacted accordingly. But no trade could be matched that day because of the oversight.

The next day, the reference price of the stock was set at N1.09 and because of the value of the subsidiaries, the market rose to demand for it which pushed the price up to N1.43.

Like every other stock, there was profit taking and the stock closed on Thursday and Friday at N1.30.

But believe me, the synergistic force that has pushed the stock price so far has not expired, it is just that characteristically, market players will move to take profit.

The end of the week would determine whether the force has lapsed or is still in force.

• How sustainable is the growth in Northern Nigeria Flour Mills?

The numbers released by the firm into the market are quite encouraging qualifying their Q22023 as a sterling performance.

The company grew its turnover by 59.5%. It grew its EPS by a 392% margin and this is just halfway through the year.

The price had appreciated from N28.85 (November 23) to N36.00 representing a 24.7% increase. Since it is their Q2 report and there is no significant expectation at the end of the release of the result like dividend declaration, or bonus declaration, I can see the price stagnating in the coming days and the stock would trade within that price band until there is another information that would act as another stimulus for its ascent one again.

• What are the possibilities in Ecobank and FCMB?

FCMB has its Q32023 delayed as it was been audited. The earnings report was released to the NGX website on November 27, 2023.

The result was quite impressive as the bank grew it turnover by a 75.7 % margin and returned a 114.9% in earnings per share growth.

The reason we see the price of the stock still trading within the established price band is the fact that they did not declare an interim dividend.

But the report is an indication of the probable happenings and the payment of dividends at the close of the year.

ETI on the other hand according to their Q32023 released to the NGX on November 30, 2023, grew its gross earnings by a 59% margin and PAT by 56%.

We are aware of the net positive effect of the unification of the dollar rate on the financial performances of the banks and the directives from the CBN as regards the deployment of the windfall.

But the banks while retaining the portion of the windfall can increase their dividend payout ratio from the profit from operations while using the exchange differential as buffers.

Remember they are allowed to deploy this largess into investment and are allowed to use the proceeds of their investments as they fit.

Logically, I see a situation of an improved dividend payout ratio among the banks to which these two banks belong.

What are the stocks to watch?

Transcorp, Consolidated Hallmark Holdings, Japaul, Unity Bank, Dangsugar, Nascon and a host of others.

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