Proshare Logo
   Market Date: 29-01-2015   
Agriculture ARTS FINANCE All One Min News Archives Bonds Cap Mkt Sentiments Capital Market CASHLESS NIGERIA Commodities Corporate Earnings Daily & Weekly Market Updates Elections Enterpreneurship ETFs Forex Frauds & Scandals General Global Market Insurance Investors NewsBeat Islamic Finance Mergers & Aquisitions Money Market Mortgage Mutual Funds Nigeria Economy Oil Sector Opinions and Analysis Pensions People Personal Finance Politics Power Products & Services Professionals Property Public Offers Private Placements Regulators REITs Stock PICKS Taxation Telcos Travel & Tours Unlisted OTC MARKET World of Business

Diamond Bank Plc: Not as Bad; Bottom-Fishing Will Pay-Off

Category: Investors NewsBeat

  Read (4570)
Diamond Bank Plc: Not as Bad; Bottom-Fishing Will Pay-Off



Wednesday, April 06, 2011; Vetiva Research
While we await clarity from the Bank’s Management with regards the relative underperformance of their FY’10 scorecard (PAT of N1.3 billion; a 73% decline relative to its Q3’10 record of N4.9 billion), we would like to take a cursory review of the near term fundamentals of the Bank vis-à-vis market valuation of its share price.  
Based on earlier guidance by the management, we look forward to the Q1’11 results on Thursday, April 7. Given the directive of the Nigerian Accounting Standard Boards that all Deposit Money Banks are to reinstate the 1% general provisions that was waived for FY’10, we think the Q1’11 numbers of banks will be relatively weak (Diamond Bank inclusive).  
Hence, we remain focused on the H1’11 results and beyond, which we believe will better reflect the recovery of Diamond’s profit momentum especially as the management continually improves its hold on key cost heads.  
Overall, we believe the market has overreacted to the FY’10 results and posit that bottom-fishing on Diamond Bank’s shares will pay-off. Besides the general political risk which has dominated asset pricing in the run-up to elections, the massive sell-off of the counter following the earnings release has deepened bargain opportunities. In addition to the fundamental attractions on Diamond at the current price, the technicals point toward opportunity.  
The Relative Strength Index (RSI) shows that Diamond’s shares is deep in-the-money and we believe the stock will gain support at the current level. At its current oversold position (an RSI of 25.9), it trades at 23% discount to its book value (P/BV of 0.77x Vs. peer average of 1.18x).  
Hence, early buyers will be the biggest beneficiaries of the oversold opportunities. At the current price of N5.65, the counter trades at deep discounts of 39% and 43% to Year-High and 52-week High of N9.27 and N9.97 respectively. From a YTD perspective, the shares has lost 25%, an indication of market overreaction when benchmarked against the respective losses of 0.14% and 1.83% of the NSE ASI and Banking Sector Index.

Tags: , 

Comment With Your Facebook or Yahoo! ID

Latest news

News on Investors NewsBeat

About Us

Who We Are
Our Team & Partners
Corporate Governance
Advertise with Us
Subscribe / Unsubscribe
Site Map
News Feed - RSS
Contact Us
Volunteer Program
Message from CEO

News & Features
The Analyst / Market Data
Investor Relations Portal
The Regulator
Economy & Politics
Training Portal
Events Calendar
NewsStands - Online Reputation

Products and Services

Research & Market Intelligence
Analyst Services
Offers & Rights Support Service
Investor Relations Services
Alert & Subscription Services
Share Support Services
Proshare Consult
Event & Seminar Coverage
Market Directory
File a Complaint
News & Analysis

News from TheANALYST
Video News from WebTV
Money Market Updates
Opinions & Analysis
Nigerian Economy
Market Data
The Regulator
Discussion Forum

Subscriber Agreement
Privacy Policy
Data Policy
Copyright Policy
Comments in Site
Advertising Code
Conflict of Interest
Content Partnership
3rd Parties

Online Trading and Execution
Legal Support Services
Web/Technology Services
File a Complaint

CBN Governor 2014