Ruth Ibikunle
The stock market on Wednesday closed on a negative note, dropping marginally by 0.02%. Year to date, the market has returned 2.63% with the All Share Index and Market Capitalisation at 52,599.65 points and N28.650 trillion respectively.
In a stock market review with the MD/CEO of Global View Capital Limited, Aruna Kebira, the following were discussed:
Excerpts:
•The market on Wednesday closed marginally lower by 0.02%. Is the market likely to close the week positive?
The negative close of the market was occasioned by the marginal loss in MTNN of N1.00, based on its weight and as one of the SWOOT stocks, the market went with it to its direction.
I don’t see the market closing in the negative for the week. The Q42022 earnings releases so far have met and surpassed the market’s expectation and the market is moving to reward the prices of those stocks accordingly.
•Cadbury has published its Q4 2022 earnings. It recorded 30.3% growth in revenue and 110.38% growth in profit after tax. How sustainable is this growth? Is this capable of pushing the price further?
This growth in cadbury’s earnings is sustainable. Remember it took a turn-around in their Q12021 and have maintained the tempo up until their Q42021.
They also started the year 2022 on a sound footing which has climaxed to the earnings report we are considering now.
The management of the company may have discovered where they went wrong and have put their affairs and operations in proper perspective, going forward, we may likely be witnessing this type of growth from the company.
•Unilever reported 75.78% growth in its earnings per share to N1.09 from the EPS of N0.59. They paid 50kobo dividend the previous year. Are they like to increase their dividend pay-out?
Unilever is one of the early birds for this year and their earnings report was very impressive. The market moved instantly to reward the hard work the management put into their operations for the year 2022.
As per the dividend, remember that that is a function of the policy and an exclusive of the Board. In a situation where the dividend declared is hinged on a percentage of the earnings per share, we may be looking forward for a higher dividend, but if the company have pegged their dividend payout as a result of their liquidity need, we may likely see the same dividend declared irrespective of the growth in their eps.
Remember that because some companies have fixed their dividend payout in absolute terms, that is why even if their eps is low, they will still declare the same old dividend.
The onus of what to pay is exclusively dependent on the Board of directors
•What is driving the price of Okomu? Is it a good BUY at N181.1?
Okomuoil’s 52-week high price is N216.90 and the state of the market during the year punished the price until it gets as low as N127.80 despite declaring interim dividend twice within the financial year
Okomuoil from time have been a performing stock both in earnings and dividend declared. The market is anticipating a repeat of that in their Q4 and investors are taking positions ahead of the release of their full earnings for 2022.
•CBN has increased Monetary Policy Rate to 17.5%. How will this impact the capital market?
In the ordinarily terms, when rates are increased by the CBN, the Bonds and the money market will be net beneficiaries as investors would move their resources from the capital market to those markets. And the scrabble for better yields and returns will help to dampen the prices in the capital market.
But I doubt whether we will see that scenario in the immediate term in the capital market
Reason are, this is the fourth time the CBN is raising rates to help stem the rising inflation. And this particular increase is to forestall the effect of the excess liquidity that will attend the electioneering activities in the country.
Secondly, the body language of the government is clear that though it is ready to borrow massively, but not ready to raise rates at the money market. An example of that is the result of the primary T-bills auction on January 25, 2023. The stop rate for 90 days dropped significantly from 2% to 0.29% while that 180 days fell from 4.33% to 1.8%. The 364 days was from 7.3% to 4.78%.
Investment in those securities will have negative yield as inflation is still above 21%.
Investors will have no reason seeking to invest in those securities except for those that will trade gains for safety.
Moreover, the earnings released so far into the market is an indication that all the earnings for 2022 will follow the same good pattern
•What are the stocks to watch?
Nigerian Breweries, Zenith, GTCO Julius Berger Presco and Okomu Oil