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Afrinvest Stock Recommendation for the Week -260218

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Monday, February 26, 2018 /11:25 AM /  Afrinvest

Market Last Week (Our Observation)

Performance of the local bourse was largely bearish last week as the All Share Index (ASI) fell 0.2% Wo-W to 42,570.89 points while YTD return weakened to 11.3%.

Performance across sectors was mixed as 3 of 5 indices closed in the red. The Oil & Gas index led laggards, down 1.8% W-o-W. The Consumer and Industrial Goods index trailed, shedding 1.1% and 1.0% respectively. On the flip side, the Banking index gained, up 1.5% W-o-W.

Similarly, the Insurance index appreciated, up 1.2% W-o-W. The best performing stocks were LIVESTOCK (+19.0%), JAPAUL OIL (+16.7%) and CAP (+7.8%) while the worst performers were CONOIL (-18.3%), COURTVILLE (-15.8%) and UNIC ( -15.6%)

Market This Week (Our expectations)
The Afrinvest Weekly sentiment indicator improved to 0.9 points from 0.3 points recorded the previous week as market slightly recovered in the last four trading sessions of last week. Although performance of the local bourse was negative W-o-W, the market gained on 4 of 5 trading sessions as investor hunted for bargains and selectively positioned in mid- to large-cap stocks ahead of the earnings season. This week, we expect to see investor sentiment to be driven by corporate filings as the earnings season is expected to enter full gear.

In one of the early filings submitted last Friday, Total reported a lackluster FY:2017 result with Revenue declining 1.0% Y-o-Y while after-tax profit fell sharply by 46.0% Y-o-Y to N8.0bn on the back of increased cost pressures. The company however raised its final dividend to N14.0/share from N7.0/share in FY:2016. Yet, we expect investors to react negatively to the weak operating performance in early trading sessions this week. 

Our February 2018 equity watchlist comprises of ACCESS, UBA, ZENITH, MANSARD and WAPCO 

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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