Monday, October 09, 2017/12:50PM/ Afrinvest Research
Market Last Week (Our Observations)
Sentiment on the Nigerian Bourse last week was broadly positive as the All Share Index gained on 3 of 4 sessions to close at 36,320.98 points, indicating a 2.5% gain W-o-W and a YTD return of 35.1%.
Sector performance was also largely positive with the Industrial Goods index leading gainers, up 6.2% W-o-W while the Banking index trailed, returning 3.2% W-o-W. Likewise, the Oil & Gas index (+1.8%) and the Consumer Goods index (+1.4%) closed the week in the green. The Insurance index was the lone loser, down 1.2% W-o-W.
Last week’s top gainers were CILEASING (+19.6%), CAVERTON (+18.3%) and PRESCO (+15.3%) contrary to the top losers led by CONTINSURE (-12.0%), PZ (-9.4%) and UNITYBNK (-8.3%).
Market This Week (Our Expectations)
The Afrinvest weekly sentiment index advanced to 4.7 points (from 3.5 points the prior week) owing to an improvement in market breadth.
This week, we expect market performance to maintain its positive momentum, buoyed by anticipated release of Q3:2017 earnings results.
However, we advise investors stay bullish on stocks with sound fundamentals.
Our top pick for the week is ACCESS.
Top Pick for the Week: Access Bank Plc.
Access Bank Plc, Access or the Group or the Bank ranks as a Tier-1 bank based on Afrinvest classification with total assets of N3.5tn as at FY:2016 and also qualifies as a Systemically Important Bank (SIB) based on the CBN s taxonomy.
Access has its footprints across Sub-Saharan Africa, China, Lebanon, UAE and the UK. The Groups presence in Africa cuts across Ghana, Rwanda, Zambia, the Gambia, Sierra Leone and R.D. Congo with 33, 7, 6, 6, 4 and 2 branches respectively.
The Bank continued its impressive performance in H1:2017 with Gross Earnings growing 41.7% Y-o-Y to N246.6bn whilst PAT rose 17.5% Y-o-Y to N39.5bn. Interest income also increased 44.2% to N161.9bn in the period. The Bank also declared a dividend of N0.25 implying a yield of 2.4%.
The stock has a 14-day RSI of 53.3, P/BV of 0.62x and is currently trading at a current price of N9.90 (06/10/2017). This implies a relative undervaluation of the stock with more upside for capital gain.