Ruth Ibikunle
The Nigerian stock market last week continued its uptrend, closing higher with 8.32% growth. Year to date, the market has returned 36.95% with the All Share Index and Market Capitalistion at 102,401.88 points and N56.038 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 8.32% growth. What is the outlook for the new week?
This week marks the end of the first month and the beginning of the second month in the first quarter of 2024.
The market has started witnessing the release of Q42023 earnings reports. Apart from Flourmill and Honylell whose businesses hinge on wheat and Guinness Plc whose business hinges on the use of Barley. malt and Sorghum and these raw materials cannot be sourced locally. And with the devaluation of the Naira and the state of the FX in the country, their costs have gone through the roof. Their bottom lines were badly affected.
We have witnessed the unaudited reports from FCMB which grew its bottom by 100%
This is a good signal and omen that the banking sector would measure up to the market’s expectation in performance but in dividends, this is left for the various banks and the CBN policy to determine.
Against that backdrop, we expect to see the market looking up even if the magnitude of the increase is not huge but the market will return the week in the green zone, Moreso that the week also marks the end of a month.
• Japaul Gold published its Q4 2023 result last week with significant growth in its topline and bottom line figures. How attractive is Japaul Gold at the current price of N3.08?
The force that has been behind the rise in the price of JapaulGold is not hinged on its performance but on the news that a major investor is coming in at a price of N2.50. But we need to ask ourselves if an investor who took a position in a company at NM2.50 would also not want to be in the money.
Therefore, the extent to which the price can go is dependent on the market buy-interest in the stock and how much stronger is the information that is moving the price hitherto.
The company seems to operate in the same industry as Multiverse and the market has well appreciated the price of Multiverse and may likely want to do the same to JapaulGold but the event in the coming days and months would display what the market thinks of it.
• FCMB also published an impressive Q4 2023 with growth in its topline and bottom-line figures. Is FCMB a good buy at N11.10?
The spate at which the market is going, N11.10 might not seem to be the highest FCMB can go.
With a N12.45 52-week high price, the stock still has upward potential and might be upward looking until dividends are declared, the market would then weigh the dividend relative to the price and its performance and reprice the stock if there is a need.
• Why is Cadbury trending down?
Remember that in their Q3 2024, Cadbury declared about a 464% loss in their bottom line and we heard that the Company was to trade the loan facility it got from its parent company for an equity stake in the company and the market rose to compensate the price by that information.
According to their last earnings report, Cadbury reported a loss of N1.471 eps and a 4, 849% in their profit after tax
The market is a discounter and has done its job on the price of Cadbury.
• What are the possibilities in Transcorp, AIICO and Honeywell?
The market sentiment towards Transcorp seems to be still strong and there is a buying interest even though a lot of people are taking their profits. If you consider the daily traded volume of Transcorp, one would be forced to believe that there may be more to it than meets the eyes
Honey Q42023 has not put the stock in a better light and I see the market reflecting that performance in the price of the stock and probably would make the price slow, decline, or stagnate.
• How attractive is Dangote Cement at N694.1?
The news of Otedola buying into the stock of Dangote Cement propels the price to where it is now, which is now the 52-week high price. The market does not want to be left behind by this event taking a cue from what happened in FBNH and Transcorp when Otedola decided to look their ways.
Dangote Cement is a high-priced stock, 100,000 units of it is not commonplace, whether to buy or sell, and might be the reason why the price may stagnate for quite a while.
• The CBN Governor, Yemi Cardoso has said the FG is targeting an inflation rate of 21.4%. How feasible is this in 2024?
If what this question states is what I understand, the rise in inflation figures is a reflection of the actions and the inactions of the government.
All it needs to do is put out plans and programs to help stem inflation but the situation we are currently in is precarious. Starting from the FX market and the daily crude production and the ability to generate enough to fund our budget. The insecurity in the country is growing and farmers cannot go to the field and those who defied all odds to do that can’t bring their products to the urban areas because of our dilapidated infrastructure.
One thing is to say, another is to do. Let’s keep our fingers crossed, wait, and watch what magic wand the government is going to wave.
• What are the stocks to watch?
Dangote Sugar, Nascon, Tantalizers, Japaul Gold, Transcorp, and a host of others