CBN shifts deadline for banks adoption of common year end: The Central Bank of Nigeria (CBN) yesterday shifted the deadline for Banks to adopt a uniform accounting year end to December 2009. This according to CBN was in response to “irrational behavior†of some banks in their attempt to mobilize deposits.
The direct impact of this announcement could at least ease the current strain in liquidity created in a bidding continuum following the banking industry’s battle for deposits. This could unravel a long sought key to unlock institutional funds
The key to market recovery in our view remains a total change in general mindset. We perceived that prevailing sentiment has been largely speculative and short-term, which has consistently denied the market the so desired rally and momentum. We can’t conclude without pointing out that this has, in a way, present opportunities for investors seeking long positions as some equities are currently trading in their oversold bands.
Our best call includes choice picks from the banking sector, food and beverage, and Breweries.
The banking sector leads the pack with tier1&2 FY08 earnings multiple averages of 15.12x and 16.61x respectively. Our choice pick within the sector includes UBA (11.92x), FCMB (12.29x), Oceanic (12.82x), GTBank (14.51x), and Zenith (14.75x).
From the food and beverage, our preferred picks are Dangote Sugar (11.43x), NBC (15.67x) as against sector average of 17.05x.
Nigerian breweries currently trades at FY08 PE of 14.25x with 3.15% dividend yield while Guinness trades at FY08 PE of 14.13x with dividend yield of 2.85%.
CSL Research & Strategy
