Monday, June 06, 2017 12:20 PM/Afrinvest
Market Last Week
· The Nigerian equities market appreciated 7.9% W-o-W to close at 31, 371.63 points while YTD return strengthened to +16.7%.
· Performance across sectors was broadly positive as 4 of 5 indices trended northwards W-o-W. The Industrial Goods index appreciated the most, up 9.2% W-o-W while the Consumer Goods index trailed, advancing 7.7% W-o-W. Likewise, the Insurance and Banking indices rose 6.1% and 4.0% respectively. On the contrary, the Oil & Gas index declined 4.5%.
· The top performing stocks for the week were FBNH (+31.3%), UAC-PROP (+25.2%) and MANSARD (+24.7%) while 7UP (-14.2%), LINKASSURE (-12.7%) and OANDO (-10.3%) were the worst.
Market This Week
· The Afrinvest weekly sentiment indicator surged to 4.3 points from 2.5 points last week as market sentiment remained overwhelmingly bullish.
· Whilst we uphold our assertion that the upbeat market performance has been buoyed by improvements in FX management and macroeconomic fundamentals, we expect to see some profit taking in early trading sessions this week as the benchmark index’s 14-Day RSI at 89.0 points indicates that the market currently stands in the overbought region.
· Nevertheless, trading multiples show that – despite the market rally – Nigerian equities remain cheaper and attractive when compared to SSA peers and we believe the improvements made in FX management will continue to buoy foreign participation in the market.
· Our top pick for the week is WAPCO.
Top Pick For The Week: Lafarge Africa Plc
· Lafarge Africa Plc (“WAPCO” or “the Group”) FY:2016 result comfortably outperformed Analysts’ estimates on key earnings metrics.
· FY:2016 revenue fell 17.8% Y-o-Y to N219.7bn, slightly ahead of our estimate of N216.5bn, while the Pre-tax loss of N22.8bn also beat our forecast of N44.3bn.
· Fourth Quarter standalone EBITDA expanded 291.7% Y-o-Y to N18.8bn (75.2% of total adjusted FY:2016 EBITDA) while EBITDA margin rose 22.8 percentage points Y-o-Y to 32.0% in the Quarter.
· WAPCO recorded a tax credit of N39.7bn – from deferred tax assets generated from UNICEM operations pre-acquisition - which erased the pre-tax loss and consequently brought post-tax profit to N16.9bn against a consensus forecast of a post-tax loss of N30.3bn.
· Earnings Per Share came in at N3.31 (from N6.43 in FY:2015) while the Group declared a final dividend of N1.05, translating into a dividend yield of 2.6%.
· In Q1:2017, the WAPCO recorded a positive performance as Gross Revenue grew 55.1% Y-o-Y to N81.3bn from N52.4bn in Q1:2016 while PAT settled at N5.2bn following a Loss of N1.9bn reported for Q1:2016. The stock has an RSI of 58.0, 52 weeks high of N77.96 and current price of N48.90 (02/6/2017), implying an attractive upside of 24.6% for capital gain when compared to and our current TP: N60.82. Hence, we recommend a BUY on the stock.
NB: Rates on N50M and above are negotiable, and all rates are valid ONLY for funds received on/before 9th June 2017.
1. Afrinvest Stock Recommendation for the Week – 300517
2. GTI 5 Weekly Stock Picks - 300517
3. GTI Top-5 Weekly Stock Picks -220517
4. Trevor Neil’s Friday Technical Analysis Surgery
5. GTI Top-5 Weekly Stock Picks -150517