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Afrinvest Stock Recommendation for the Week – 300517

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Tuesday, May 30, 2017 11:35 AM / Afrinvest Research 

Market Last Week  

·        The Nigerian equities market closed 3.4% higher W-o-W to settle at 29,064.52 points while YTD gain improved to 8.1%.

·         Sector performance mirrored the broader index as 4 of 5 indices appreciated W-o-W.

·       The Banking and Insurance indices appreciated the most, up 7.6% and 3.7% W-o-W while the Consumer Goods index followed, adding 1.7% W-o-W.

·         Similarly, the Industrial Goods index also inched 0.1% higher W-o-W. On the contrary, the Oil & Gas index depreciated 0.9% W-o-W.

·      UAC-PROP (+25.9%), FBNH (+22.0%) and MANSARD (+20.3%) topped the gainers’ list while CADBURY (-11.6%), MOBIL (-9.8%) and LEARNAFRICA (-9.4%) led the losers’ chart. 

Market This Week  

·      The Afrinvest weekly sentiment indicator further rose to 2.5 points (from 2.3 points last week) as bullish sentiment continued to boost market activities.

·         As recent macroeconomic indicators signal an improvement in the general condition of the economy, we expect investors’ appetite to stay strong this week.

·      However, we do not rule out the possibility of some investors taking profit in the early trading days of the week as market’s 14-day RSI (79.5) is currently around the overbought region. 

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Top Pick For The Week: Total Nigeria Plc 

·     Total Nigeria Plc is one of the major players in the downstream Oil & Gas sector with a 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. While in the corresponding period in Q1:2017 Total recorded a 34.8% growth to N80.5bn while PAT 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 19.7% upside to current price (N260.00). Hence, we recommend a “BUY” rating on the stock.

Recommendation – BUY

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