Ruth Ibikunle
The Nigerian stock market on Monday closed on a bullish note with 1.92% growth. Year to date, the market has returned 13.20% with the NGX All Share Index at 84,640.89 points and N46.317 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 last week closed on a bullish note with 4.24% growth. It continued its upward journey on Monday with 1.92% growth. What is the outlook for this week?
“The market has continued to look up and has not shown any sign of weakness up until now. It is now taunted in the local parlance that the market is on steroids, but one thing I have come to notice for sure is that the market still has a lot of traction, and liquidity is pouring in on a daily basis.
The fear of an imminent meltdown in the market by some market pundits to me, is neither here nor there.
Why? There has been a lot of change in the investment landscape of the country, most especially in the stock market.
The profits we see and are reported are real, and dividend declarations are done out of the real EPS. There is an increased participation of the owners of the businesses in share acquisition as reported by the NGX in their director dealings reports.
This has revealed to what extent the owners of the business trust the businesses they are running.
Be that as it may, I also the possibility of the index breaking and crossing 85,000 points and beyond within this trading week.
It is amazing what the market is cooking, so all investors especially those who took positions early and in good stock should be in a brace position ready for the long haul”.
•What is driving the growth in Cadbury? Is it a good buy at the current price of N26.45?
“Cadbury in its Q3 2023 made a whopping 464% loss in both their PAT and EPS. This was due to the exchange rate differentials in the facility they took from their parent company.
The unification of the exchange rate put their loan position in a precarious position and when marked to the market led to a humongous loss of N10bn from a gain of N2.8bn in the previous period.
But Cadbury had written to the NGX of an EGM where the issue of the reason for the dismal performance is going to be discussed.
Specifically, Cadbury wrote inter alia; that the outstanding intercompany loan of US$7,718,118.44 (Seven Million, Seven Hundred and Eighteen Thousand, One Hundred and Eighteen US Dollars, Forty-Four Cents) (equivalent to ₦7,036,446,501.26 ( Seven Billion, Thirty-Six Million, Four Hundred and Forty-Six Thousand, Five Hundred and One Naira, Twenty-Six Kobo) owed by the Company to Cadbury Schweppes Overseas Limited (“Cadbury Schweppes Overseas”) be converted into equity by the allotment of 402,082,657 ordinary shares of 50 kobo each to Cadbury Schweppes Overseas, each share to rank pari passu in all respects with the existing ordinary shares in the capital of the Company, at the price of ₦17.50 per share, being the share price of the Company as at close of trading on December 27, 2023, and on such other terms as may be agreed by the Directors subject to obtaining relevant regulatory approvals.
With that, the books of Cadbury will become clean and the possibility of doing business became brighter hence the market is in a rush for its shares”.
•What are the possibilities in Fidson?
“The price of Fidson took a turn and looked up and touched its 52-week high price of N19.20 when it was announced of their partnership with a Chinese company Jiangsu Aidea Pharmaceutical Company Limited in the areas of treatment of HIV infection.
The chance is, that the news has been fully reflected in the price and the stock price has been trending down and closed on Monday, January 15, 2024, at N17.80.
Like the current force in the market and because the stock has tested that height, the possibility of a repeat of this feat is open and this time the stock price can break this 52-week high as stocks on the NGX are now known for breaking 52-week high prices recklessly”.
•How attractive is Fidelity Bank at N13.45?
“Fidelity Bank has always been pivotal in my decision to participate in the banking stocks. The bank has always had an impressive EPS and earnings yield.
The attraction in the stock currently would be on the likely dividend declaration after the Q4 2023 AFS.
The bank’s 52-week high is N14.40 and with the liquidity seen in the market and the current frenzy, a repeat of that price and a break is possible”.
•Nigeria’s inflation rate has increased to 28.92% according to the National Bureau of Statistics. Is this likely to affect Capital Market participation?
“The market has seen inflation’s part one, two, three, and many more the market has been able to withstand the devaluation of the naira and the rise of the dollar over and above the N1000.
Even if the inflation figure rose up to 40% now, the current would discount it and move forward, more so, that the CBN ash stay action on the MPC meeting for two consecutive meetings.
The market is on auto control independent of the figures for the NBS and the MPC”.
•What are the stocks to watch?
“Unity Bank, Japaulgold, Tantalizers, NASCON, and a host of others”.