Monday, May 15, 2017, 1:38 PM /GTI Research
The Nigerian equity market on Friday reversed prior ten days uptrend to close the week in the red despite massive trading activity. Similarly, market breadth closed negative recording 16 gainers against 37 losers.
In summary, the All Share Index (ASI) shed 231.24 absolute points, representing a decline of 0.81% to close at 28,192.64 points. Similarly, the Market Capitalization shed N79.93 billion, representing a decline of 0.81% to close at N9.75 trillion.
The downturn was significantly impacted by losses recorded in medium and large capitalized stocks, amongst which are; OANDO (-9.64%), DANGCEM (-4.79%), UBA (- 4.32%), UNILEVER (-3.85%), STANBIC (-3.70%), ACCESS (-2.57%), FBNH (-2.20%), OKOMU (-1.96%), LAFARGE (-0.58%) and ZENITH (-0.28%).
Dangote Cement is Africa's leading cement producer with three plants in Nigeria and plans to expand into 13 other African countries.
The Group is a fully integrated quarry-to-customer producer with production capacity of 29 million tonnes in Nigeria and new operations set to begin across the rest of Sub-Saharan Africa.
The Group plans to have 42 million tonnes capacity by the end of 2016 and 50-60 million tonnes of production, grinding and import capacity in Sub-Saharan Africa by 2016.
Dangote Cement's Obajana plant in Kogi State, Nigeria, is the largest in Africa with 13 million tonnes capacity across four lines.
The Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12 million tonnes. The Gboko plant in Benue State has 4 million tonnes capacity.
Over time, Dangote Cement has eliminated Nigeria's dependence on imported cement and is transforming the nation into an exporter of the product serving neighboring countries.
Total Nigeria is one of the foremost oil and gas companies in the Nigerian oil sector. The company is one of the largest in terms of retail outlets across the country and leverages on these outlets to push sales volume.
The company has also benefitted from the deregulation of the downstream sector where it operates as a result of its retail presence in the volume driven oil marketing space.
The company pays consistent dividend and is a firm pick with PFA’s and FPI’s.
The Company has declared a final dividend of N7.00 bringing total dividend for 2016 to N17.00
Despite the challenges in the Nigerian financial services sector, with rising loan loss provisions as a result of their exposure to the oil and gas sector, as well as the potentially toxic power sector, doubts about asset quality and weakening CAR, we still see opportunities in the tier one banks.
UBA reported impressive Q1 -2017 numbers and even though loan loss provisions were high, in absolute terms, the figure is not alarming and was adequately compensated by the N27.6billion rise in gross earnings, amounting to a 37% YoY expansion.
Our expectation for FY 2017 is conservative and makes provision for a further rise in loan loss provision and yet, our price target is reasonable.