The Nigerian stock market in year 2022 closed on a positive note, returning 19.98% year on year, with the All Share Index and Market Capitalisation at 51,251.06 points and N27.915 trillion respectively.
In a stock market review with the MD/CEO of Global View Capital Limited, Aruna Kebira, the following were discussed:
• How would you rate market performance in 2022?
The stock market in the year 2022 was on a steady trajectory and was on full throttle from the first trading day of the Year.
The stock market would have returned the highest in its recent history in 2022 but by February 24, 2022, Vladimir Putin of Russia sent his forces to invade Ukraine and that rift has persisted even into 2023.
The world supply chain was disrupted, scarcity of bare necessities became the order of the day. Because of the role and position in the world supply of Oil and Gas and Wheat of Russia and Ukraine, inflation crept into the world economies leading to Central Banks increasing interest rates in order to be able to stem the rising inflation attending this invasion.
The stock market which has never stand aloof of the microeconomics variables, began to feel the heat and most stocks ended up with their new 52 weeks low prices.
Zenith traded N18.90, GTCO traded N16.95, Nestle also trade N963.90 while NGX trade N17.00.
But it is often said that whatever comes down will eventually go up and coupled with the numbers emanating from the stables of the issuers, the stock market began to find its feet again. And as ended the year positive.
If the analysts’ predictions were anything to go by, the stock market would have returned negative.
But the 2022 stock market saw the CBN increasing rates for four consecutive times and inflation peaking at 21%.
Kudos should be given to the domestic investors who have decided to take their own destinies in their hands
According to the NGX report, In November 2022, the total value of transactions executed by Domestic Investors outperformed transactions executed by Foreign Investors by 72%
The report further shows that Institutional Investors outperformed Retail Investors by 40%.
The CBN through its BVN can monitor account balances of bank account operators and since a number of these monies that found their ways into the system don’t want to be questioned, the only option to achieve anonymity is to push them into investments and the stock market was ready to receive them given the fact that the interest rates in the money market in the fourth quarter of the year was not anywhere close to encouraging.
• What is the outlook for year 2023?
There is always that frenzy that comes with every New Year. Analyst predictions, spiritual predictions dreams and the likes that would naturally make the year to on a good note.
2023 is an election year and not an exception and the citizens always anticipate a better government from the newly elected one.
The last Q3 earnings reports available at the market place were actually not disappointing and most exceeded the market’s expectation.
The NGX has mandated all issuers to release their management reports otherwise called unaudited reports to the market in the first 60 days after the end of financial year while awaiting the Audited Report.
In the last days of December 2022, it was observed that all the issuers that come to the market with notices of Board meetings were compensated by the market in anticipation of the release of their unaudited reports.
All these are going to shape the start of the market which will eventually drive it northward except there is another unforeseen circumstance lurking around the corner.
Nevertheless, the discovery of the monumental oil theft in the Niger Delta region of the country has put a hold on the hemorrhage on the national capacity of daily oil production.
At the last check, Nigeria daily oil output has increased from 900m to about 1.3m bpd. That is a cheering news to all the oil and Gas stocks listed on the exchange and when that numbers begin to grow and eventually reached our daily output limit, there would be a multiplier effect across the country, inflation will eventually be tamed while interest rates will begin to moderate.
Be that as it may, the stock market would begin to thrive and boom.
• Multiverse led other gainers in the course of last year with 1890% growth from N0.2 to N3.98. How sustainable is this growth? How attractive is Multiverse?
Multiverse effectively grew by 1890% which was still as a result of its share reconstruction exercise during the year.
Multiverse reconstructed its share outstanding by a denominator of 10 times. It was on the basis of 1 for 10 and that drove the price form N0.20 to N2.00, which was artificial and the rest growth was by the run of play in the market as investors believed that the outstanding numbers of shares and nay the float has been deflated 10 times.
Multiverse can only be attractive at this price if their continued earnings report are sufficient to sustain it. Anything short of that the market will reevaluate the price and do justice to it.
• Wema Bank grew its share price by 441.67% to N3.9 from N0.72. How sustainable is this growth? Is Wema Bank a good BUY at the current price?
The same hypothesis holds for WEMA Bank. The Bank carried out share reconstruction during the year and that accounted for the growth rate we are seeing above.
But WEMA Bank has been like a cat with nine lives and has been the only stock known to me that has undergone share restructure exercise and still turn out quality earnings that are capable to sustain the artificial increase in the price.
Wema Bank has been able to make enough earnings commensurate to the increase in the price. To me WEMA is good to go. Even at this price.
• What is the driving force for the growth in the following stocks: Academy Press (158%), Champion Breweries (134.04%), Learn Africa (88.03%), PZ (86.07%), Guinness (77.69%), Airtel (71.61%), Fidelity Bank (70.59%), Presco (56.61%), BUA Cement (45.79%), Fidson (44.69%), and UCAP (41.41%)?
I have always said that the market has a mind of its own and the market reward or punish the price of stock when its expectation are met or exceeded and when issuers come to the market with lacklustre earnings reports.
The growth in these stocks has been the quality of their earnings reports and the corporate actions. During the year under review Guinness made a tremendous come back recovering their positions in hundreds of percentage and went ahead and declared all their earnings per share save 1k as dividend for that financial year.
Airtel Africa and Presco participated in the declaration on interim dividend of 2.5cents and N2.00 respectively
PZ is still trading cum-div for their final dividend of N1.01 to be marked down by January 6, 2023
Fidelity has consistently churn out earnings yield in excess of 20% back to back and the market has no reason not to compensate the price.
Academy Press, Learn Africa, BUA Cement, UCAP and Fidson are getting the market’s attention as per their potentials and their past performances while Champion Breweries is rested on its acquisition of The Raysun Nigeria Limited
• Nestle dropped by 29.33% year on year to N1100 from N1556.50. How attractive is Nestle at N1100?
Nestle is a high priced stock with an outstanding shares of only 792.656m units. Coupled with the price, a 100,000 units of the stock is always difficult to come by.
But there was an investor who was in a hurry to divest from the company and offers units that are enough to form Board Lots and pronto the price dropped to an all time 52 weeks low price of N968.90 even when they declared an interim dividend of N25.00
Believe you me, the stock has started it journey back to where it is coming from. It would have arrived there before now but for the scarcity of Board lot.
• What are the possibilities in Nigerian Breweries, GTCO, Vitafoam, Access, UBA, Zenith and FBNH?
Nigerian Breweries is another stock that established a new low in the course of the outgoing year, touching as low as N28.80 while its 52 weeks high is N62.80
It has just given its unalloted shares to its shareholders in the form of bonus of 1 for 4. At a price of N41 that the stock is trading, daily market price exceeds N42.50, though it has not been established at that price which again is an issue with Board lot. In the coming days, the stock will find its level
GTCO is just coming out of the cold. Since their declaration as a HOLDCO, GTCO continued to decline in both their top and bottom lines and the market frowns at such performances especially when the market expect much from you.
But one thing I like about banks management is that they always know how to come back from their misadventure. They go all out to look at their mistakes and even learn to overcome it.
GTCO in their last Q3 earning result reversed the trend and the market is taking the stock serious once again.
Vitafoam just declared its Q4 2022 earnings report as at September 30, 2022 and the numbers are not quite interesting as the market and investors would want it. They declared a final dividend of N1.52 as against N1.50 in 2021. Trust the discounting factor side of the market, the stock traded over N22.00 on the day of the release of the corporate action, it lost 20k in the last trading day of the year to close at N20.45
ACCESSCORP would have been in the same league with Zenith, GTCO and Stanbic given the quality and the growth in their earnings report. But the snag while it’s still trading at the current price is of two folds
One, investors believed that irrespective of their bottom line, they go ahead a reward the investors with paltry dividends. The market has termed the bank and its management as being stingy claiming that they deserve compensation commensurate with the size of their earnings per share.
But the truth is that the Bank is involved in aggressive expansion and would therefore need to plough back a chunk of its earnings to be able to stay afloat and carry out the acquisition and expansion at the same time
Secondly, the market is frowning at their rate of expansion and acquisition and investors are considering their financial leverage. Investor believed that the bank is highly geared and may not be able to sustain a situation of facility recall by the facility issuers.
But of a truth and apart from the small size of the dividend declared, my faith in the management of the bank is as solid as it was before this scenario. Access to me at lower than N10 is good to go. The turn of event of their fortune will catch a lot of shareholders napping.
• What are the stocks to watch?
Winning in the market is fixation and concentration on stocks with fundamentals while keeping an eye on the neglected stocks in the case of a possible swing of events.
I have been talking of Presco even at N120.50 and fortunately, the stock closed the year at N137.50. I put more emphasis on Presco than Okomuoil because Okomuoil has already declared and paid cumulative interim dividend of N9.00 which has limited its potentials of declaration a mind bugging final dividend.
I will still go for Presco, Okomuoil, NB, Guinness, Julius Berger, Flourmill, Fidson, Zenith, GTCO MTN, Dangote Cement and WAPCO