The Nigerian equity market defied the country’s economic recession to produce a 50.1% return to emerging the world’s best-performed bourse in 2020. The lull at the fixed income market drove the stellar performance of the bourse, as investors shifted their focus to the equity market.
Investors’ positive sentiment towards some stocks was the catalyst the market needed to stand out despite the pandemic, which brought the global economy to its knee. FELIX OLOYEDE looks at five equities which advanced the most in 2020.
SUNU makes the highest capital appreciation in 2020
SUNU Assurance Nigeria, a member of the Pan-African insurance firm, SUNU Group, made the highest leap in capital appreciation terms in 2020. The impressive financial performance of the company during this period caught the attention of investors. It propelled the value of its equities soared 400% to N1.00. Being a penny-stock may have also worked for it as investors acquired a large volume of its stocks with little amount.
The company whose name changed in 2019 after SUNU Group acquired Equity Assurance three years earlier, rose from N327.36 million loss in the third quarter of 2019. It posted N291.56 million profit in the same period last year.
Investors are also hopeful of an impressive year-end performance for the just concluded financial year. It may be the first time the company would declare profit in three years, having posted N277.28 million and N60.21 million losses in 2019 and the prior year respectively.
Neimeth International Pharmaceuticals posts 259.68% return
The pharmaceutical segment of the economy is one of the sectors that has benefitted tremendously for the coronavirus pandemic. Neimeth International Pharmaceuticals profited from the disruption which hit the health sector like a thunderbolt last year. Accordingly, the firm grew post-profit by a whopping 606.41% to N181.03 million of June 2020 when compared with the same period in the preceding year,
This trend did not skip investors’ attention. They showed strong sentiment towards Neimeth, which caused its shares to jump by a whopping 259.68% in 2020 to N2.23, making it the company with the second-highest capital appreciation.
The company, which is planning to raise new equity this year, had a post-tax profit decline of -3.48% to N212.48 million at the end of the 2020 financial year. The depreciation of the Naira resulted in N188.05 million exchange loss, causing the dip in profit.
Airtel Africa shares value grows 184.98%
Investors were unbothered about the series of decline in Airtel Africa’s post-tax profits. They continued to show faith in its equities. Despite improved revenues, profit-after-tax dipped 4% for the 2020 full year financial year, which ended in March, weakening by 56.9% and 36.4% in Q1 and a half year 2021, respectively.
This trend did not reduce positive sentiments investors had for Airtel. Its shares soared 184.98% to last year on the Nigerian Stock Exchange, emerging as a delight. The telecom was one of the sectors that profited from the lockdown imposed to curtail the coronavirus spread. Corporates and individuals resorted to virtual platforms for businesses, thereby, increasing the demand for Airtel Africa’s service. It drove Investors’ interest in the equity positively.
Raghunath Mandava, CEO, Airtel Africa, told investors that the pandemic initially affected its operations. Customer usage patterns were adversely impacted, particularly in April, as the slowdown in economic growth resulted in lower available disposable income. “However, in May and June, we can see customer usage returned to being broadly consistent with pre-Covid-19 trends. As a result, the business saw revenue growth picking up in May and June,” he added.
The Airtel Airtel made the highest appreciation in the AFR-ICT index, trumping one of its MTN Nigeria, whose shares were up 61.81% last year.
Livestock Feeds profits from border closure, up 178%
The 16-month border closure, which President Muhammedu reopened in December, attracted mixed reactions while it lasted. While the closure hurt some sectors of the economy, agriculture was better for it. Livestock Feeds which plays in this sector was one of those which profited from it.
Investors took advantage of the positive run the animal feeds and concentrates maker enjoyed, causing its stocks to soar 178% to N3.51 at the end of 2020.
Livestock Feeds grew revenue 7.50% to N7.99 billion and post-tax profit by 2247.09% to N224.80 million in Q3 2020, as farmers had to rely on locally produced feeds and concentrate for their animals.
The change of leadership at the firm did not anyway harm its performance during this period. Adegboyega Adedeji became the substantive managing director of Livestock Feeds in October.
United Capital stocks soar 96.25%
Financial service group, United Capital also enjoyed positive sentiment from investors last year. It was the fifth most advance equity, appreciating 96.25% to N4.71 during this period. It was also the highest rise recorded in the financial sector on the bourse last year.
The firm which raised N15 billion through Series 3 Commercial Paper on the FMDQ Securities Exchange, warmed itself to investors hearts with its impressive financial performance. It improved revenue by 25.90% to N2.62 billion and post-profit was up 41.31% to N1.55 billion as of September 2020.
Investors are even hoping for a better result when the full-year result is eventually released.
Despite the knock the coronavirus pandemic dealt on the global economy, which saw Nigeria plunging into its second recession in four years, investors had something to relish.