Economy

Why Investors Should SELL Unilever Nigeria, HOLD Dangote Sugar Stocks

Published

5 years ago

12/08/2019

By Dipo Olowookere

Recently, the boards of Unilever Nigeria Plc and Dangote Sugar Plc released their financial statements for the first half of this year and while the former recorded a poor performance, the latter was below expectations.

For Unilever Nigeria, its total revenue went down by 11.36 percent to N42.66 billion from N48.12 billion in H1 2018 as a result of the firm’s dismal performance of its Household and Personal Care (HPC) unit, which fell by 18.05 percent due to intense price discounting amongst brands in the sub sector.

According to Meristem Research, when in the second quarter of the year the company made an aggressive marketing effort with a partnership with Jumia on Everyday Essentials, things marginally improved as the business segments as the food and HPC grew by 6.31 percent and 9.03 percent respectively.

Meristem Research noted that, “On a general note, the downward trend in consumer purchasing power foretells a tough environment for FMCGs as companies utilise price discounting strategies and sales promotion to edge out one another.

“Especially, the dismal performance of the HPC segment continues to weigh on the revenue generation capability of the company. Hence, we project a revenue growth of -7.00 percent in 2019, resulting in absolute 2019FY revenues of N86.40 billion.

“Given our expectation of a 29 percent reduction in 2019FY net profits, we forecast 2019FY EPS of N1.10 and 2019 target PE of 20x implying a target price of N22. This portends a downside of 31.26 percent from the closing price of N32 on August 6, 2019, hence we rate the stock a SELL.”

For Dangote Sugar, the revenue generated by the company went down by 4.42 percent to N80.36 billion from N84.08 billion in H1 2018.

According to Meristem Research, the performance on a regional basis was mixed with the Lagos and West regions suffering declines of 9.30 percent and 28.31 percent respectively as a result of increased competition and market share grabbing by other market players while the North and East grew by 10.42 percent and 7.01 percent respectively.

“As stated in our Q1:2019 earnings note, the implementation of alternative logistics such as barges and third-party trucks in clearing raw materials from the ports and factory continues to yield positive results as revenues grew by 10.67 percent from N38.15 billion in Q1:2019 and the streak of negative YoY revenue growth narrowed down to 1.68 percent from 7.27 percent in Q1:2019.

“Following the release of H1:2019 results, the performance of the company continues to stay in line with our expectation and as such, we retain our projected 7 percent growth in sales volume over 2018, however, with a lower average price of N12,000, implying 2019FY revenues of N149.33bn.

“The outlook is bleak with an expectation of lower revenues and profits at the end of the year. Given this outlook, market risk and company’s idiosyncratic risks, we have revised our target PE and 2019 FY EPS down to 5.7x and N1.67 respectively from 6.5x and N1.85 in Q1:2019.

“This indicates a target price of N9.55 with a downside of 2.60 percent from the closing price of N9.80 on August 7, 2019. Hence, we place a HOLD rating on the stock.”

Economy

Afriland Properties, Geo-Fluids Shrink OTC Securities Exchange by 0.06%

Published

1 hour ago

12/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The duo of Afriland Properties Plc and Geo-Fluids Plc crashed the NASD Over-the-Counter (OTC) Securities Exchange by a marginal 0.06 per cent on Wednesday, December 11 due to profit-taking activities.

The OTC securities exchange experienced a downfall at midweek despite UBN Property Plc posting a price appreciation of 17 Kobo to close at N1.96 per share, in contrast to Tuesday’s closing price of N1.79.

Business Post reports that Afriland Properties Plc slid by N1.14 to finish at N15.80 per unit versus the preceding day’s N16.94 per unit, and Geo-Fluids Plc declined by 1 Kobo to trade at N3.92 per share compared with the N3.93 it ended a day earlier.

At the close of transactions, the market capitalisation of the bourse, which measures the total value of securities on the platform, shrank by N650 million to finish at N1.055 trillion compared with the previous day’s N1.056 trillion and the NASD Unlisted Security Index (NSI) went down by 1.86 points to wrap the session at 3,012.50 points compared with 3,014.36 points recorded in the previous session.

The alternative stock market was busy yesterday as the volume of securities traded by investors soared by 146.9 per cent to 5.9 million units from 2.4 million units, as the value of shares transacted by the market participants jumped by 360.9 per cent to N22.5 million from N4.9 million, and the number of deals increased by 50 per cent to 21 deals from 14 deals.

When the bourse closed for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units valued at N3.9 billion, followed by Okitipupa Plc with 752.2 million units worth N7.8 billion, and Afriland Properties Plc 297.5 million units sold for N5.3 million.

Also, Aradel Holdings Plc, which is now listed on the Nigerian Exchange (NGX) Limited after its exit from NASD, remained the most active stock by value (year-to-date) with 108.7 million units sold for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 billion.

Economy

Naira Weakens to N1,547/$1 at Official Market, N1,670/$1 at Black Market

Published

2 hours ago

12/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The euphoria around the recent appreciation of the Naira eased on Wednesday, December 11 after its value shrank against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N5.23 or 0.3 per cent to N1,547.50/$1 from the N1,542.27/$1 it was valued on Tuesday.

It was observed that spectators’ activities may have triggered the weakening of the local currency in the official market at midweek as they tried to fight back and ensure the value of funds in foreign currencies strengthened.

The domestic currency was regaining its footing after the Central Bank of Nigeria (CBN) launched an Electronic Foreign Exchange Matching System (EFEMS) platform to tackle speculation and improve transparency in Nigeria’s FX market.

At midweek, the Nigerian currency depreciated against the Pound Sterling by N3.56 to close at N1,958.68/£1 compared with the preceding day’s N1,955.12/£1 and against the Euro, it slumped by 34 Kobo to trade at N1,612.66/€1, in contrast to the previous session’s N1,613.00/€1.

As for the black market segment, the Naira lost N45 against the American currency during the session to quote at N1,670/$1 compared with the N1,625/$1 it was traded a day earlier.

A look at the cryptocurrency market showed a recovery following profit-taking as the US Consumer Price Index report matched economist forecasts.

The news was enough to convince traders that the Federal Reserve is certain to trim its benchmark fed funds rate another 25 basis points at its meeting next week.

The move also saw Bitcoin (BTC), the most valued coin, return to the $100,000 mark as it added a 2.9 per cent gain and sold for $100,566.12.

The biggest gainer was Cardano (ADA), which jumped by 15.00 per cent to trade at $1.16, as Litecoin (LTC) appreciated by 10.4 per cent to sell for $121.76, and Ethereum (ETH) surged by 7.0 per cent to $3,929.30, while Dogecoin (DOGE) recorded a 6.7 per cent growth to finish at $0.4181.

Further, Binance Coin (BNB) went up by 5.2 per cent to $716.72, Solana (SOL) expanded by 4.6 per cent to $229.77, and Ripple (XRP) increased by 4.2 per cent to $2.43, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.

Economy

Dangote Refinery Makes First PMS Exports to Cameroon

Published

3 hours ago

12/12/2024

Aduragbemi Omiyale

By Aduragbemi Omiyale

The Dangote Refinery located in the Lekki area of Lagos State has made its first export of premium motor spirit (PMS) just three months after it commenced the production of petrol.

In September 2024, the refinery produced its first petrol and began loading to the Nigerian National Petroleum Company (NNPC) on September 15.

However, due to some issues, the facility has not been able to flood the local market with its product, forcing it to look elsewhere.

In a landmark move for regional energy integration, Dangote Refinery has partnered with Neptune Oil to take its petrol to neighbouring Cameroon.

Neptune Oil is a leading energy company in Cameroon which provides reliable and sustainable energy solutions.

Dangote Refinery said this development showcases its ability to meet domestic needs and position itself as a key player in the regional energy market, adding that it represents a significant step forward in accessing high-quality and locally sourced petroleum products for Cameroon.

“This first export of PMS to Cameroon is a tangible demonstration of our vision for a united and energy-independent Africa.

“With this development, we are laying the foundation for a future where African resources are refined and exchanged within the continent for the benefit of our people,” the owner of Dangote Refinery, Mr Aliko Dangote, said.

His counterpart at Neptune Oil, Mr Antoine Ndzengue, said, “This partnership with Dangote Refinery marks a turning point for Cameroon.

“By becoming the first importer of petroleum products from this world-class refinery, we are bolstering our country’s energy security and supporting local economic development.

“This initial supply, executed without international intermediaries, reflects our commitment to serving our markets independently and efficiently.”