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Afrinvest Stock Recommendation for the Week - 080517


Monday, May 8, 2017, 04:28 PM /Afrinvest Research

Market Last Week

Sentiment remained overwhelmingly bullish on the Nigerian Bourse last week as the Benchmark index appreciated 1.8% W-o-W to close at 26,235.60 points, paring YTD loss to 2.4%.

Sector performance remained mixed as 3 indices gained of 5. The Banking index strengthened the most, up 3.6% W-o-W while the Consumer Goods trailed, adding 3.0% W-o-W. Likewise, the Oil & Gas index inched 3.0% higher W-o-W. On the contrary, the Industrial Goods index declined1.1% W-o-W whilst the Insurance index recorded 0.1% loss W-o-W.

FIDSON (+43.6%), OANDO (+24.0%) and LIVESTOCK (+16.2%) topped the gainers’ list while UNITYBNK (-13.8%), CHAMPION (-8.9%) and STANBIC (-6.7%) led the losers’ chart.

Market This Week

The Afrinvest weekly sentiment indicator declined marginally to 3.0 points from 3.1 points last week despite positive sentiment which emanated from the impressive first Quarter earnings and expectations of a rebound in economic activities following positive PMI readings for April.

The broad-based nature of the 2-week long rally – with mid & small cap stocks also advancing – suggests investor sentiment in equities is beginning to improve.

Nevertheless, whilst we continue to hold a positive short term view of the market, we expect to see some profit taking in early trades this week

Our top pick for the week is TOTAL.

Top Pick For The Week TOTAL Nigeria Plc

Total Nigeria Plc. (Total or marketing and distribution companies in Nigeria with broad distribution network of over 500 service stations nationwide and a wide range of top quality energy products and services.

The Company operates 5 Liquefied Petroleum Gas (LPG) bottling plants across the country, in addition to 3 lubricant blending plants. Total is also strategically placed as one of the major suppliers of aviation fuel in the industry.

As at FY:2016, top line and bottom line grew 39.9% and 265.6% to N291.0 and N14.8bn respectively. In Q1:2017, Total recorded a 34.8% growth to N80.5bn while PAT however declined 5.4% to N2.7bn. 

We believe the company will continue to benefit from developments in the downstream Oil & Gas sector and we expect the dividend payment trend to continue.

We have a 12-Month TP of N311.10 which represents a 22.0% upside to current price (N255.00), the market valuation of TOTAL is relatively cheap and we retain “BUY” rating on the stock.


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