Ruth Ibikunle
The Nigerian Stock market last week closed lower with a decline of 2.03%. Year to date, the market has returned 30.30% with the All Share Index and Market Capitalisation of 97,432.02 points and N59.039 trillion respectively.
In a stock market review with the MD/CEO of Globalview Capital Limited, Aruna Kebira, the following were discussed:
Excerpts:
Last week, the stock market closed on a bearish note, shedding 2.03%. What is the outlook for the new week?
As the issuers continue to release their Q32024 earnings into the market, the market continues to discount their prices irrespective of the growth recorded in their results.
This is not farfetched from the current trend in the polity. The Yorubas have a proverb that says ‘igboro rienri’. The town is not smiling. The continuous increase in the price of pms, which also continues to stoke the Inflation figures has made a mess of the personal disposable income of the average Nigerian. Wiping out the middle class entirely.
That has led to a decrease in liquidity in the market, which has also reduced effective demand for equities.
One of the many reasons also is the drop in the price of some of the SWOOT stocks that typically defines the direction of the market each trading session.
During this week, the market may close in mixed proportion daily but would be in the green zone for the week.
How would you rate the performance of Companies that released their Q3 2024 results last week?
The average performance of the companies that have released their Q3 2024 is far from being classified as lackluster. In a very good market, we would have seen prices reaching the roof.
But the market is cold as a result of so many factors
Take the ETI Q32024 for example. The company grew its turnover by 146% and its PBT by 170%, Its PAT and eps advanced by 168% and 156% respectively.
Trading at the price of N24.20, the stock’s price after this result has not witnessed any bullish tendency.
On the aggregate, the state of the market is largely reacting to the illiquidity being witnessed currently.
How attractive is Transcorp at N45.75?
Transcorp shares were delisted at the price of N11.05 for the reconstruction based on 1 for 4.
The stock was listed back after two weeks at the price of N44.20. The market appreciated the reduction in the hitherto bogus share outstanding and it never traded at that price on that day.
It climaxed at the price of N53.45 and investor opened their war chest and came out with millions of volumes of the stock. Contrary to the general belief that the volume in the stock would now be scarce.
Going by its Q32024, the stock performed well. If you concentrate on the eps at N1.10 which was a growth of 203% from N0.36, you may be forced to adjudge the performance as sterling. But that result was prepared with the 40b units of shares in issue.
Then consider that it was based on the 10bn, you will have N4.40 which to a very large extent isn’t a bad one.
But to the discerning investors and based on the quantum of growth witnessed in its Q32024, Transcorp is a stock for tomorrow.
Remember that the Q42024 would be prepared based on the newly reconstructed outstanding shares and would be compared to the Q42023 prepared with 40bn units of share in issue. The resultant effect would be mind-boggling.
Aradel shed 25.75% of its price last week to close at N445.6. What is the best entry point for this stock?
The attitude of the investors towards this stock is like that of a vendetta. The stock was planned to be listed at N469+ and suddenly the figures were changed to N702+.
Those who were warming up for its debut at the NGX were taken aback and changed their mindset towards the stock.
That apathy is what is still responsible for the fate of the stock currently on the NGX. But it seems as if the pattern of the establishment of the prices of the stock is intentional. The volume used for the purpose is always huge and may be the only volume that meets with the board’s lot for the day.
The stock has declared an N8.00 interim dividend, signifying the coming of better days in terms of dividend declaration, the main reason it attracted the attention of discerning investors at the first instance.
If the stock drops by another 10%, it means its time of reversal is at hand.
What are the stocks to watch?
ETI, Transcorp, Transpower, Fidson, Access Bank, Fidelity, FCMB, and a host of others.