Ruth Ibikunle
The Nigerian stock market last week closed on a positive note with 2.61% growth, week on week. Year to date, the NGX All Share Index has returned 35.52% at 101,330.85 points. The Market Capitalisation stands at N57.293 trillion.
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 2.61% growth. What is the outlook for the new week?
It is said that when you start seeing “Eko” wraps everywhere, of a truth, there is a market nearby.
This is the second week of the last month of the three-month moratorium the NGX gave to every issuer with December as year end to file their FYE report. And a majority of the listed companies have December as their year.
Expectations will be heightened, and discerning investors, not “armchair analysts” will be taking positions in stocks with good fundamentals, especially with reference to the EPS from the Q3 2023 earnings reports.
In that wise, barring all unforeseen circumstances and shocks in the economy, we look forward to a better market this week.
If Transcorp Power continues its gaining streak, the move will add fervor to the green zone closing of the market this week.
• TRANSPOWER gained 33.07% in one week, closing at N351.30 from the listing price of N264. Is it a good buy at N351.30?
Transcorp Power was listed at N240.00 on Monday, March 4, 2024. Like every other first listing especially a listing by introduction, serious investors will queue up for the stock at a 10% high.
To provide liquidity for the stock, the owners released 40m units on the first day to close at N264 hence it never registered anywhere that it traded the listing price of N240.00
Is the price good at N351.30, the price it closed on Thursday? Remember the stock traded at N386.43 on Friday before settling down to close at N351.30, the previous close price on Thursday.
Will the price recover?
I have seen a lot of write-ups concerning Transcorp Power, starting from its listing price of N240.00 which was considered to be overpriced, and the claim by Nairametrics that the listing price was undervalued and that it was supposed to have been listed in the region of N300 plus, the drop in its EPS over time and that the shares were bloated from 800m to 7.5b units and also that the financial documents used in the listing were belated.
It is the termite that doesn’t want to fly that complains of the thunderstorm. Any serious termite on a flying mission will discount any thunderstorms and rain and make mincemeat of a flying journey.
The events of the coming days, weeks, and months will either vindicate or rebut all these claims
In my opinion, those who would have taken positions on credit and do not have their positions covered would have quickly sold on Friday to take the accruing profits.
My knowledge of this market indicates to me that the journey of Transcorp Power is just at the prelude stage.
But this is not a buy recommendation.
• How attractive is Transcorp at N17?
As an operating Holding Company whose Transcorp Power is a subsidiary, there has been established a strong correlation between the prices of the two companies.
Analysts are of the opinion that Transcorp being the father of Transcorp Hotel and Transcorp Power and Transcorp Hotel trading at N101.00 and Transcorp Power trading at N351.30, has no business trading under N20.00
The stock has hit N19.20 before and reversed and has also hit N20.88 and reversed, these prices have come to form a resistance for the stock.
But I am not a chartist, but Village Intelligence told me that when the stock hits N20 again, it going to break that resistance and when it does, the extent of the movement of the price of Transcorp can only be determined by the extent of the movement in the price of Transcorp Power.
A father cannot have two prosperous sons and be begging to feed in the neighborhood. Also, remember that the main reason investors bought into the IPO of Transcorp was the oil well they have, and if my memory serves me right, that oil well is still intact in its kitty.
• What is driving the current vibration in FBN Holdings?
FBNH as it is now is like the pool of Bethsaida. It receives occasionally visitation from the spirit to stir its water.
Also, like the Biblical pool of Bethsaida, if you jump in late after the troubling of the waters by the spirit, you miss the bus by a nanosecond.
The stock touched N35.00 and came back to under N30.00. It was those who could stare risk in the face and take it, plunge in, and wait for the stirring of the spirit again in another higher dimension so that they could cash out.
As far as the spirit continues to visit the pool of FBNH, all you need do is devise a strategy to be ahead of the spirit inside the pool.
• Why is Guinness trending down?
Many companies have their earnings bottom line hit seriously because of the dollar rate. Nestle, Dangsugar, MTN, NB, and Guinness were not spared.
As natural to the market as a discounter, the market forces are moving to reprice the stocks based on their last results, but Guinness price will also drop to a level that the same market will consider it cheap and there would be activities in the price of the stock that may push it back. Trust the market dynamics.
• What are the stocks to watch?
JapaulGold, Nascon, Dangsugar, Transcorp, Transcorp Power, AIICO and Tantalizers.