Ecobank Group, the Pan African bank is planning to open a subsidiary in France and new subsidiaries in Africa this year.
The planned subsidiary in France will be the first to be opened outside the African continent.
Mr. Arnold Ekpe, chief executive officer of the group stated this in Lagos yesterday while addressing senior officials of the Nigerian Stock Exchange (NSE) and dealing members of the NSE at facts behind the figures programme.
He said “In 2009, we intend to open five new subsidiaries including a subsidiary in France,” adding that this will bring the total number of countries in which the bank is present to 30.”
He said those are countries for which licenses had previously been obtained, remarking that with the exception of two other countries of strategic importance, the bank’s geographical expansion is coming to an end.
He said 2009 would be a year of consolidation for the group, during which it intended to focus on improving the performance of its existing businesses, adding that as the new affiliates begin to mature and as less funding is required for expansion, they shall begin to see a significant improvement in the performance and profitability of the group.
He said as a listed company, Ecobank would ultimately like to be considered as a preferred investment destination that offers superior, diversified and stable returns.
“We are entering a new phase for the Ecobank group: as our geographical expansion comes to an end, we shall increasingly focus on improving customer service, efficiency, productivity and performance, with the unchanged objective of building a world class pan-African bank,” Ekpe said.
In 2008, revenues grew by 52 per cent to $826 million as a result of a growth in business volumes. The bank recorded significant growth in deposits, branch network, net interest revenues and fees and commissions.
Revenues in the African region experienced substantial growth. For instance, the bank’s business in Nigeria grew by 55 per cent, the UEMOA region, comprising affiliates in French speaking West Africa grew by 44 per cent..
Other operations in the West African Monetary Zone (less Nigeria) also performed well, growing by 44 per cent during the year while Central Africa operations grew by 72 per cent while the newly established eastern and southern Africa operations grew by 556 per cent.
Overall, gross revenues (excluding interest expense) increased to $1,156 million but profit before tax dropped by 15 per cent to $ 162 million.
Ecobank’s efficiency ratio deteriorated to 67 per cent from 61 per cent because of its continued heavy investment in expansion in more countries and branch network.
It also continued investment in improving technology and processes and in strengthening the capital base of its affiliates.
On the whole the group invested $110 million in this manner and its value added, after these investments, was $586 million against $524 million in 2007.
Ecobank to open subsidiary in France Thursday, Jun 18 2009
Offshore 8:50 pm
Nigerian stocks fluctuate over profit taking Thursday, Jun 18 2009
Market Update 8:45 pm
The Nigerian stock market continued on the downturn yesterday as investors profit taking swayed the overall market performance.
The market had been fluctuating for more than one week, dropping about N182 billion for the two days, representing about 2.64 per cent of the market value.
Both performance indices witnessed significant depreciation with the market capitalisation and All-share index dropping about 1.22 per cent and 1.21 per cent respectively to close for the trading session.
The market capitalisation which opened at N6.744 trillion shed N82 billion to close at N6.662 trillion while the All-share index also fell by 359 points to close at 29,215.89 points compared with its opening index of 29,574.89 points.
Mr. Musa Elakama, assistant director general of the Nigerian Stock Exchange (NSE) said during the presentation of the facts behind the figure of Ecobank Transnational Incorporated Plc that the market is circling at the moment which is a normal phenomenon for the market to behave in such way.
Elakama said it is expected that investors take profit from their investment which is what the market is witnessing.
He said when the market is experiencing downturn without positive improvement, then something is wrong somewhere.
Two food/beverages and tobacco companies: Nestle Nigeria and Flour Mills led the losers’ chart with N3.89 and N1.52 to close at N180.11 and N28.99 respectively.
They were followed by Julius Berger with a loss of N1.50 to close at N34.00. Flour Mills and Julius Berger had lost N1.46 and N1.50 on Wednesday to close at N30.51 and N35.50 respectively.
Lafarge Wapco lost N1.28 to close at N24.42. First Bank dropped N1.08 to close at N22.45 and Union Bank down by N1.05 to close at N19.95.
Also, NBC fell by N1.00 to close at N25.00. UBA shed 68 kobo to close at N14.31. Nahco depreciated by 57 kobo to close at N11.07.
On the upward side, Guinness Nigeria topped the chart with N6.00 to close at N128.00. Two petroleum marketing products companies: African Petroleum and Oando Plc followed with N4.00 and N3.00 apiece to close at N98.00 and N93.00. UACN added N1.90 to close at N41.90. UACN-Property Development gained 94 kobo to close at N19.90. ETI added 83 kobo to close at N17.54. Unilever Nigeria was up by 61 kobo to close at N14.61.
The banking sub-sector was the most active with a turnover of 463.28 million shares valued at 4.86 billion in 6,628 deals. The highest value recorded by the sector this year. Insurance sub-sector followed with a turnover of 86.88 million shares worth N124.40 million in 982 deals, information communication and technology sub-sector had a turnover of 58.23 million shares valued at N345 deals while food/beverages and tobacco sub-sector recorded a turnover of 16.83 million shares worth N293.33 million in 723 deals.
Benue Cement grows net earnings by 2,588% Thursday, Jun 18 2009
Club News 8:36 pm
Benue Cement Company (BCC) Plc appeared set for a record performance this year as the cement company grew net earnings by 2,588 per cent during the first quarter.
Key extracts of the interim report and accounts of Benue Cement Company for the three-month period ended March 31, 2009 showed that sales leapt by 796 per cent while net earnings during the three months already surpassed the full-year post-tax profit for 2008.
The report showed a turnover of N9.32 billion in first quarter 2009 as against N1.04 billion recorded in comparable period of 2008. Profit after tax rose from N198.7 million in first quarter 2008 to N5.35 billion in 2009.
The first quarter report further highlighted significant improvement in the operations of BCC since 2008 as recent investments in production expansion and retooling impacted positively on operations.
Audited report and accounts of BCC for the year ended December 31, 2008 had showed that sales roe by 201 per cent while profit after tax tripled by 231 per cent.
The full-year report showed that sales rose from N5.47 billion in 2007 to N16.45 billion in 2008 while net earnings stood at N4.14 billion in 2008 compared with N1.25 billion in 2007.
The board of the cement company however opted for capitalisation of reserves through a scrip issue of one for four shares rather than cash payout.
Alhaji Aliko Dangote, chairman, Benue Cement Company (BCC) Plc, has said the company would ride on the back of improved industrial performance, new capacities and administrative efficiencies to achieve long-term sustainable profitability.
According to him, the production capacity of the cement company could reach three million metric tonnes thus enabling it to improve sales and profitability.
He pointed out that the second production line of the company had been upgraded and commissioned in January 2008.
“When the two kilns lines are totally upgraded we will be able to reach a capacity of 3 million metric tonnes during the year 2008,” Dangote said.
He added that with recent significant investments to increase storage capacity, the resolution of the energy problem would boost local capacity utilisation, bridge the local supply gap and improve profitability.
He however noted the adverse effect of what he described as “negative moves in Government policy on the banning of cement imports” urging that Government policies should support sustainable development of Nigerian manufacturing companies.
“The company is determined to be a front-runner in the industry and optimistic that Government policies will be fashioned in a manner that would considerably minimise the cost and other constraints of doing business in Nigeria,” Dangote said.
BCC has witnessed enormous investments in rehabilitation and expansion of production facilities since the emergence of Dangote Industries Limited as the new core investor. From its near-comatose pre-privatisation position, the company has emerged as one of the leading cement companies in Nigeria boasting of the highest capacity by any quoted cement company with some three million metric tonnes per annum.
Dangote Industries Limited acquired federal government’s 35.39 per cent equity stake in BCC in April 2000 and following the formal handover, Dangote Industries took physical possession of the company in February 2004.
Incorporated in July 1975 for production and sale of ordinary Portland cement, BCC was listed on the Nigerian Stock Exchange (NSE) in April 1991.
UTC breaks 15-year drought with N37m dividends Thursday, Jun 18 2009
Club News 8:28 pm
UTC Nigeria Plc would be paying its first cash dividend in 15 year this year as the board of the food company recommends distribution of about N37 million to shareholders as return for the 2008 business year.
Although the details of the audited report and accounts of the company for the year ended December 31, 2008 are yet to be made public, directors of the company said they have recommended a dividend per share of 3.0 kobo to shareholders.
The last cash payout by UTC was 14 kobo made for the 1993 business year. The company had however showed positive sign last year with a bonus issue of one for 10 shares, its first form of dividend in some 14 years.
The dividend payout might be an indication in the precarious financial position of UTC, which had been forced to abandon a much-needed recapitalisation in 2008 due to the stock market recession.
UTC had planned to raise new equity funds to sustain its expansion programme as it strives to meet the targets of five factories in Lagos and one each in Ibadan, Ilorin and Abuja in the next three years.
With new management and directors, UTC has recorded considerable improvement in recent years, pulling away from the brink of bankruptcy that greatly emaciated the hitherto large conglomerate.
UTC had consolidated its recovery in 2007 with appreciable improvement in the underlying profitability of the food company. Audited report and accounts for the year ended December 31, 2007 had showed that the company continued to grow sales apace and for the first time in nearly a decade, the company’s operations ended on the positive with operating profit of N68 million in 2007 compared with operating loss of N24 million in 2006.
Stripped of exceptional items, 2007 witnessed the most significant growth in profitability while improved business efficiency saw overall business costs relative to the top-line dropping to its lowest in 2007.
Turnover grew by 54 per cent from N951.6 million in 2006 to N1.47 billion in 2007. Top-line growth was driven by increased products visibility as UTC Nigeria moved its products aggressively to all cadres of consumers. Cost of sales meanwhile rose by 51 per cent to N889.6 million in 2007 as against N587.5 million in 2006. Gross profit thus jumped by 58 per cent from N364 million in 2006 to N575 million in 2007. Operating expenses stood at N547.7 million in 2007 in contrast to N408.6 million in 2006. Interest and other incomes rose by 91 per cent from N21 million in 2006 to N40 million in 2007 while financing charges grew by 21 per cent from N23 million in 2006 to N28 million in 2007. Pre and post tax profits stood at N40.2 million and N37.6 million in 2007 compared with N54.3 million and N52.6 million respectively in 2006. However, adjusted for write backs totaling N101.1 million in 2006, the company was operationally in the red in 2006 with a net loss of N48.5 million as against net earnings of about N38 million in 2007.
Following this trend, underlying profitability ratios were better in 2007 although exceptional items in 2006 showed otherwise. Gross profit margin continued to build up at 39 per cent in 2007 as against 38 per cent and 32 per cent in 2006 and 2005 respectively. Pre-tax profit margin stood at 2.7 per cent in 2007 while returns on equity and total assets stood at 3.0 per cent and 1.5 per cent respectively.
Wema Bank’s new CEO promises new direction Thursday, Jun 11 2009
Club News 7:33 pm
Mr. Segun Oloketuyi, new managing director and chief executive of Wema Bank Plc has resumed with a promise to take the bank to new heights. This follows the successful acquisition of 40 per cent of the bank’s shares by SW8, which emerged as the new core investor, after a competitive bid endorsed by the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (Sec). Mr. Oloketuyi, erstwhile executive director of Skye Bank is joined by Mr. Ademola Adebise, formerly of Accenture and Mr. Taiwo Adeniji, former risk manager with the African Finance Corporation (AFC).
At his maiden press briefing yesterday, Oloketuyi said the new management would usher in a new direction for the bank that would leverage on its name and strong franchise. “We are embarking on a three-phased approach of stability, preparing the bank for growth and to grow the bank. We know what to do to grow the bank and we will start today,” he said.
He acknowledged that the bank has been through a rough path but promised that with the cooperation of all stakeholders including shareholders, regulators and staff, the bank would return to profitability.
“From today, over a six months period, we will address those issues that have made our customers and staff to leave the bank. We plan to regain the trust of our customers and deliver superior customer satisfaction. Like the fabled phoenix, Wema Bank will emerge stronger. We will become a beacon of hope,” he stated.
While emphasizing that the immediate challenge facing the new management is the institution of corporate governance, best practices in the bank, Oloketuyi noted that the new team intends to pursue a strategic and sustained transformation plan which would reverse the fortune of the bank.
He acknowledged the immense contribution of the two interim management team appointed by the CBN led by Mr. John Aboh and Mr. Lai Alabi in ensuring that the institution survived and successfully transferring the warehoused shares to the new core investor through a credible and credible process.
He said the new management would not consider sack of workers, adding that it would leverage on the strength of its human capital and carry along those staff that aligns with its vision to build and international institution, adding that the bank would endeavour to remove the toga of an ethnic bank. “The new Wema will not discriminate against tribe or gender. We are not building a regional bank but an international institution. We are not ashamed that Wema’s strength is from the Western region. Cross-border interest will be met. It does not mattern where you come from. Those that will add value, no matter where they are from, we will get them.”
Investors gain N511bn as market set for another bullish run Tuesday, Jun 9 2009
Bull Run Jonbull's Stock Guide 7:26 pm
By Stanley Oronsaye
The Nigerian stock market was very active last week. Despite a 19.2 per cent drop in the volume of shares traded from 2.6 billion shares to 2.1 billion shares, the value of transaction rose marginally by 5.85 per cent from N16.06 billion the previous week to N17 billion. The market activity, as represented by the number of deals, however, increased by 22.5 per cent from 33,371 deals to 40,867 deals.
The All share index rose by 8.84 per cent last week, adding 2,192.62 points while the value of investors’ holdings rose significantly by N510.8 billion to N6.14 trillion. The market capitalisation opened this year at N6.9 trillion.
As a result, all four sectoral indices appreciated. The NSE Food and Beverages Index rose by 5.1 per cent, the NSE banking index went up 11.1 per cent, the NSE Insurance index rose 2.8 per cent and the oil and gas index went up 5.7 per cent.
Analysts attribute this new rally to the activity of foreign portfolio investors who are again showing interest in the Nigeria market. This is on the back of favourable corporate earnings which still suggests a comparatively robust market despite the global economic meltdown.
Also, the manner the Central Bank of Nigeria (CBN) has creatively managed the monetary and the foreign exchange crisis give the impression that the Nigerian economy would stand up stronger than many other emerging economies.
The latest endorsement was from the International Monetary Fund (IMF)which commended the apex banking industry regulator for its creative use of the monetary space in handling the crisis. The IMF also projects that the Nigerian stock market would begin to show relative recovery from this year.
Already, discerning portfolio managers and other institutional investors are taking position in anticipation of the imminent rally. As is expected in the early days of a bullish run, blue chip stocks are the most attractive, recording significant price gains at the end of each trading session. At the close of session last week, major stocks such as Conoil, Guinness, Flour Mils of Nigeria, African Petroleum, Nigerian Breweries, Zenith Bank, First Bank, Oando and others were the top price gainers. Due to the high market capitalisation of these stocks, this resulted in the significant rise of market performance indicators at the end of the week.
Institutional investors, both local and foreign, are taking position in firms with good brand name, diverse and experienced board composition and with good corporate governance. These investors are attracted to these equities which are currently selling at huge discounts compared to their net asset value.
Also, funds are moving from the fixed income instruments segment into the equities market as institutional investors are more willing to take medium-term positions in the market. Value of transaction at the over-the-counter (OTC) window dropped by over 40 per cent as investors rearrange their portfolio to reflect the new investment outlook.
Still smarting from the bearish trend at which it ended the previous week, the market closed on Monday on a bearish note as the market capitalisation shed 0.60 per cent and the index went down by 0.81 per cent. This disparity was as a result of the listing by introduction of 4.04 billion units of Afromedia Plc at N2.92 per share. This added N11.8 billion to the market capitalisation. The index went down by 200.86 points and market capitalisation dropped by N33.9 billion.
Investors staked N3.03 billion on 439.96 million shares in 9,900 deals as 40 equities appreciated compared to 57 that shed weight. On the gainers chart, shares of First Inland Bank and Red Star Express appreciated by 5.0 per cent, Conoil rose by 4.99 per cent, Union Homes went up by 4.97 per cent while Diamond Bank and Zenith Bank appreciated by 4.96 per cent. On the other hand, shares of International Energy Insurance,
Daar Communications and Benue Cement depreciated by 5.0per cent while RT Briscoe and UACN shed 4.99 per cent each.
The market staged significant recovery on Tuesday as both performance indicators rose by 3.57 per cent, erasing the losses recorded in the last three trading sessions. The index rose by 877.60 points while the market capitalisation appreciated by N201.74 billion. Investors staked N2.31 billion on 329.6 million shares in 6,684 deals as 70 equities appreciated compared to 25 that shed weight. Shares of Julius Berger, Cement Company of Northern Nigeria, Fidelity Bank, United Bank for Africa (UBA), Intercontinental Bank and Oando all appreciated by the maximum 5.0 per cent each. Price losers included Linkage Assurance, Berger Paints, FTN Cocoa Processing, Vitafoam and Courtville Investments, among others.
Activities of opportunistic buyers reinforced the bullish disposition of the market during the week. The market closed with many stocks closing on bid, with no offer to sell. Analysts attribute this to the activities of institutional investors that are taking position in other to take advantage to the emerging new price discovery. Many stocks are posting goods results, prompting some category of investors to take loner term position than before.
For instance, during the week, Renaissance Capital, a leading investment bank focused on the emerging markets of Russia, Ukraine, Kazakhstan and sub-Saharan Africa, has upgraded its estimate for Guaranty Trust Bank to N19 per share. Shares of the bank closed last week at N11.50, after opening the week at N10.10, indicating a huge buy opportunity for discerning investors.
The market closed bullish on Wednesday as both performance indicators appreciated by 3.40 per cent. The index rose by 866.54 points while the market capitalisation rose by N197.2 billion.
Investors staked N3.3 billion on 373.7 million shares in 6,683 deals as 83 equities appreciated compared to 15 that shed weight. Shares of Guaranty Trust Bank, Cement Company of Northern Nigeria, First Bank, First City Monument Bank, Nigerian Bags Manufacturing Company and Afribank all appreciated by the maximum 5.0per cent. On the other hand, shares of Deap Capital, G Cappa and DN Meyer depreciated by 4.96 per cent while shares of A.G. Leventis and C and I Leasing shed 4.94 per cent each.
The bullish streak continued on Thursday as both performance indicators rose by 2.70 per cent. The index added 710.11 points and the market capitalisation rose by N161.6 billion. Investors staked N4.3 billion on 513.01 million shares in 8,290 deals as 72 equities appreciated compared to 20 that shed weight. Shares of Consolidated Hallmark Insurance, Regency Alliance Insurance and Wema Bank appreciated by 5.0 per cent while Flour Mills, Cadbury, Cement Company of Northern Nigeria and Bank PHB al appreciated by 4.99 per cent each. On the other hand, shares of Oasis Insurance shed 4.98 per cent, Capital Oil went down 4.97 per cent, C & I Leasing and Presco depreciated by 4.95 per cent, while Crusader shed 4.94 per cent.
The market closed slightly lower on Friday to end the wee on a bearish note. Both performance indicators depreciated by 0.22 per cent. The index went down by 60.77 points and the market capitalisation dropped by N13.83 billion. Investors staked N4.1 billion on 427.5 million shares in 9,310 deals as 61 equities appreciated compared to 35 that shed weight. Shares of Vitafoam, Aiico Insurance and Cornerstone Insurance appreciated by 5.0 per cent while Cadbury and Diamond Bank rose by 4.99 per cent.
On the other hand, shares of First Aluminium depreciated by 5.0 per cent, Oasis Insurance lost 4.99per cent, Avon Crowncaps shed 4.98 per cent while Zenith Bank and Cement Company of Northern Nigeria shed 4.97 per cent each.
The stock market is expected to continue on the bullish run this week, with major equities recording new price discoveries. With investor confidence gradually returning, there is no disregarding the incident of profit-taking, as some investors still smarting from huge price losses suffered are wont to sell-off to clean up their books.
However, with many stocks closing on bid for much of the trading sessions, the indication is that more funds are entering the market to chase the few equities on offer.
Banks write-down marginal loans in capital market Tuesday, Jun 9 2009
Club News 3:13 pm
By Friday Atufe
Commercial banks in Nigeria have begun to write-down marginal loans they extended to their customers to purchase shares in the Nigerian stock market.
Some chief executives of banks who confirmed the development said the provisioning for the credit facilities was in line with the Prudential Guidelines of the Central Bank of Nigeria (CBN).
One of the chief executives said the degree of the provisioning by banks would differ from one another because of the extent of their involvement in the stock market.
It was learnt that some of the affected banks made 100 per cent provision for the credit with the hope of writing them back to profit if they are repaid by the customers.
The CBN makes it mandatory for banks under the prudential guidelines to classify loans whose principal and interest have been outstanding for 90 days but less than 180 days as substandard, those that are more than 180 days as doubtful while those that are more than 360 days as lost.
Banks provide 10 per cent of the principal of a loan that is substandard, 50 per cent for those that are doubtful and 100 per cent for lost loans.
The negative impact of the on-going provisioning by banks has begun to impact on their bottom lines, thereby making some of them to reduce dividend pay-out and in some places to give bonus instead of cash dividend.
According to the Chartered Institute of Stockbrokers (CIS) “Estimate of the banking industry exposure to the capital is far worse than previously thought, ranging from N1.5 trillion to N2 trillion.”
The CIS noted that most industry insiders know that the exposures not reported by banks were far greater than the reported figures, adding that there is a need to address total banks’ exposures through the following: Exposure through margin accounts to clients, exposure to capital markets operators/stockbrokers, crystallised underwriting to various issuers/institutions, loans created by banks but collaterised with equities and direct/indirect purchase of own shares (treasury stock)
The umbrella body for stockbrokers in the country said these exposures financed mainly by bank deposits resulted in a high bubble in prices which saw the index reach N13.2 trillion by March 5, 2008.
Inability of the loan beneficiaries to repay the loans against the backdrop of heavy losses suffered in the stock market made the CBN to ask banks to restructure the existing facilities extended to licensed stockbrokers, institutional and individual investors to longer repayments periods.
Mr. Dipo Williams, president of the CIS said in Lagos recently that one of the recommendations of the Stockbrokers’ Annual Conference of last year is the need for government to purchase the toxic assets because of the necessity to clean up their balance sheets and give them a breathing space to operate effectively.
He said the government could achieve this either through a special investment vehicle like the Ministry of Finance Incorporated or an asset management company in order to wipe out the excess supply of securities that is weighing down on prices in the stock market.
Time to exhale for the NSE Tuesday, Jun 9 2009
Market Update 2:51 pm
By Chuck Biosah
In my March 2, 2009 article, entitled “The NSE appears to be in recovery mode”, I indicated that the downtrend in the Nigerian capital markets appears to have been halted temporarily because for the first time since April 7, 2008, the failed rally of the NSE index did not breach the low of the previous failed rally. This is a phenomenon technicians call a “higher low” and an indication that the market was putting in a bottom.
Subsequently, the NSE index turned around on April 15, 2009 after touching a 52 week low of 19804. After bouncing off the 52 week low, the NSE index had a sustained six (6) weeks rallying closing at 30,924.97 on June 2, 2009, a gain of 11,121.4 or 56.1% from its most recent 52 week or 2009 low of 19,804 before running into head winds on June 3, 2009 as highlighted in the graph below:
However, although the index experienced its first decline on June 3, 2009, indications that the recent rally was weakening emerged in the closing prices of stocks on June 2, 2009 as most stocks were unable to close at their intra-day highs.
At the beginning of the current rally, I received several inquiries about the rally being a “Dead cat bounce”, My perception was that the rally was real and not a dead cat bounce because majority of the NSE listed stocks were above their 20 day and 50 day cumulative simple moving averages (DCSMA), and several stocks were attaining new 52 weeks highs. Nevertheless, as of Tuesday (June 2, 2009), I noted that we have come too far and very fast in a very short period, and to quote the famous former Chairman of the United States Federal Reserve Bank, it was beginning to look like” irrational exuberance” all over again. Traders are again beginning to throw caution to the wind; forgetting the last few months when there was a lot of “weeping and gnashing of teeth”
Although the index has declined by 1,410 or 4.6 per cent in the last two days, the current rally is still on course as the NSE index is still above its 20 DCSMA and the 50 DCSMA of 26,812 and 22,988.28 respectively. Technically, until the NSE index breaks above its 200 DCSMA of 31,520 and sustains it, the Bull Run will still have some head winds ahead of it.
Future NSE trend
The future appears bright for majority of the listed NSE stocks. However, some of these stocks need to pull back to reduce some of the recent irrational moves in their prices. The pull back will allow the stocks to consolidate some of their gains. Using the Fibonacci calculation, investors should look at Fibonacci retracements levels of 38 per and 50 per cent (i.e., 26,699 & 25,365) in the NSE index for a better entry. These retracement levels will still be above the NSE index of 20 day and 50 day cumulative simple moving average signifying that the current upward trend has not been derailed.
As the market retraces, I believe that Nigerian Breweries (NB) is worth watching. This stock can easily generate at least 25% profit for traders who buy above its current resistance level. On Friday (June 5, 2009), Nigerian Breweries (NB) lost N2.69 or 5% after running into a major resistance at N53. In the last three (3) weeks NB has been unable to break above this price level. This price level is acting as a price resistance because it is a prior 52 week high. On June 5, 2009, NB had an intra-day high of N53.00k, but closed at the intra-day low. NB is currently trading above its 50 day and 200 day cumulative moving averages, signifying a stock that is trending higher. I recommend that investors buy NB on a pull back to the N45 – N46 price level.
Investors renew confidence in Guinness over anticipated result Monday, Jun 8 2009
Club News 6:00 pm
Guinness Nigeria Plc led the gainers’ chart of the Nigerian Stock Exchange (NSE) last week with a gain of N9.50 to close the week at N118.50 per share.
Investors exchanged 185.511 million ordinary shares valued N1.625 million in 268 deals.
Stock market analysts attributed renewed investors confidence in the stock to expectation of its third quarter results in the market.
The unaudited result of Guinness for the half-year ended December 31, 2008 showed a turnover of N43.5 billion as against N2.2 billion in the comparable period of 2007. Its profit after tax stood at N8.1 billion compared with N5.4 billion in 2007.
There are indications in the market that the third quarter would be better than that of the corresponding period of 2007.
Chief Ralph Alabi, chairman of the company gave a very positive prospect of the company to the shareholders at its 58th annual general meeting of the company held in Benin-City, the Edo State capital.
He said despite the challenges of the business environment, the business remained resilient with good margins and impressive cash flows, which will continue to support their capacity to return value to their shareholders.
Alabi said they expected the business environment to remain challenging in the immediate and medium term and the board will work with the executive management to ensure that our company continues to adapt as necessary, taking advantage of opportunities and investing for sustainable growth.
The chairman said they intended to continue to meet the needs of their consumers and other stakeholders while investing for their benefit in future, remarking that by doing this successfully and responsibly we are optimistic that we will deliver the greatest rewards to our shareholders and all our other stakeholders.
He said several projects aimed at increasing the capacities of the Lagos and Benin breweries had commenced, adding that work has advanced on the project to connect the Benin operations to gas supply.
Alabi added that all the brands of the company were set to benefit from the growth in the can-packaged segment, which the company pioneered in the industry in 2005. Guinness Nigeria Plc recorded a turnover of N69.2 billion for its financial year ended June 30, 2008 compared with a turnover of N62.3 billion, representing an increase of 11 per cent.
Profit after tax stood at N11.8 million compared with N10.691 million.
Guinness Nigeria is a member company of Diageo Plc, the world’s leading premium drinks business.
Its shares were listed on the NSE in 1965 and it presently has about 60,000 shareholders.
The company built its first brewery in Ikeja in 1962 and later built another brewery in Benin in 1974 to produce Harp lager beer. The facility was expanded to accommodate a second stout brewery, commissioned in 1978.
A fourth Guinness brewery was built in Ogba in 1982 to brew Harp lager beer. It was further expanded to include Guinness Stout. In order to further increase capacity to meet the growing demand for its products, the company in 2004 commissioned another brewery at Aba, Abia State.
Presently, its portfolio include Guinness Foreign Extra Stout, Guinness Extra Smooth, Malta Guinness, Harp lager beer, Gordon’s Spark, Smirnoff Ice and Satzenbrau, .
As at June 30, 2007 it has authorised share capital of N1 billion out of which N737.5 million had been paid up.
Analysis of its shareholding shows that 46.03 per cent of its shares is held by Guinness Overseas Limited, Atalantaf Limited 7.77 per cent and Nigerian citizens and associations 46.2 per cent.
