Nigerian equities: It’s ‘different strokes for different folks

Okey Onyeaweaku
 
 
Very unfortunately, the Nigerian equities market has recorded a mixed bag performance showing since the beginning of year 2022. Whereas this has been more on the bearish side, the bullish times have also been fairly significant.

A reflection of the market performance is clearly indicated in the downward trend of the twin market index, the NGX All share Index and the market capitalization. From January to November 2022, the NGX All share index has declined by 5.96 per cent (2,795.92 points) from 46,842.86 points on January 4, 2022 to 44,046.94 points on November 16, 2022.

Similarly, the market capitalization has lost 4.99 per cent (N1,262,283trillion) from N25.253trillion on January 4, 2022 to N23.991trillion as at November 16, 2022.

This weak performance have been blamed on the myriad of challenges which have weakened the economy.

But pushing against the tide are stocks which have not only shown resilience, but investors in those companies can boast of returns from capital appreciation and dividends.

These ten stocks include, Cadbury Nigeria Plc which has gained 28% Year to Date as price rose from N8.00 per share on January 4, 2022 to N10.25 per share on  November 16, 2022; Jaiz Bank stock also appreciated 27.14% from N0.70 to N0.89 per share; UPDC stock recorded a surge and gained 26.31% from N0.76 per share to N0.92 per share.

Investors in  Conoil Plc have also gained 19.10% from N22.25 per share to N26.50 per share; Okomu Oil stock appreciated by 17.95% from N142.00 per share to N167.50 per share; at the share price of N1,088.90 per share on November 16, 2022

Seplat Energy gained 17.08% from N930.000 per share on January 4, 2022; Fidelity Bank Plc shares inched up by 17.2% from the price of N3.43 per share to N4.02 a share; MRs Oil gained 15.57% from N12.20 per share to N14.10 per share; Wema Bank Plc shares eased up by 15.55 per cent from N2.70 to N3.12 per share and Transcorp gained 12.14 per cent from N0.98 to N1.10 per share.
These are indeed no mean performances given the harsh operating environment.

CADBURY NIGERIA

Cadbury Nigeria Plc’s unaudited financial statements for the period ended September 30th, 2022, showed that profit grew by 86% to N2.8 billion from N1.5 billion in Q3 2021.
The impressive financial performance came on the back of an inflationary year, where businesses and consumers have struggled with a high inflation rate.

The company reported a profit before tax of N4.023 billion in 2022 as against N2.161 billion posted in 2021, representing an increase of 86%.

The unaudited results also showed that revenue increased by 41.57% to N42.540 billion, compared to N30.047 billion during the same period last year.

A closer look at the results showed that the revenue growth was driven by a significant rise in revenue from its two major product lines. Both segments delivered revenue of N41.541 billion in the nine months compared to N28.859 billion in the same period last year.

Further checks showed that both segments contributed 97.65% of the total revenue of N42.540 billion recorded by the company during the quarter under review.

The company’s cost of sales grew by 39.89% from N24.22 billion in 2021 to N34.164 billion in 2022.

JAIZ BANK

Jaiz Bank’s profit rose more than 14 percent in the third quarter of the financial year 2022, according to its latest regulatory filing on the Nigerian Exchange (NGX).

The strong bottom line was supported by healthy income from financing contracts which printed at N15.62 billion, about 46.12 percent above N10.69 billion reported in the comparable period last year.

In the non-interest banking space in Nigeria, Jaiz Bank controls over 62 percent assets, which is supported by its robust gross income of N23.74 billion as at end of September 2022 from N18.78 billion at the end of September 2021, representing 26.34 percent increment. Jaiz Bank’s unaudited results show that profit for the period increased by 14.59 percent from N2.99 billion declared in September 2021 to N3.26 billion at the end of September 2022.

Supported by growth in other operating income, fees and commission receipts, Jaiz Bank’s total income jumped by 23 percent to N16.03 billion in September 2022 from N13.02 billion in September 2021.

The outing pushed earnings per share higher by 6.16 percent, from 9.09 kobo for the third quarter of 2021 to 9.65 kobo at the end of the third quarter of 2022.

The Management said the bank’s positive earnings result is undoubtedly reassuring to all stakeholders and the public, noting that it underscores the role of Jaiz as the leader in the Non-Interest Bank in Nigeria.

Speaking on the results, Managing Director/CEO, Dr. Sirajo Salisu, said the Bank remained committed to providing value-creating ethical banking services to its growing customer base.

He assured that the Bank is positioned to continue its remarkable earnings streak for the remainder of the year, by leveraging on technology and extending its touch points across the country.

UPDC REAL ESTATE INVESTMENT

UPDC Real Estate Investment Trust (UPDCREI.ng) listed on the Nigerian Stock Exchange under the Property sector also released it’s 2022 interim results for the third quarter.

Its profit before tax declined by 17.7 per cent from N896million in 2021 to N737million in 2022. Earnings per share also dropped 34kobo to 28kobo in the review period. Its assets also dropped from N32.4billion in 2021 to N26.3billion in 2022.

The total indicative share trading liquidity for UPDC Real Estate Investment Trust (UPDCREI.ng) in the past 12 months, as of 1st October 2022, is US$2.15M (NGN891.77M). An average of US$179.33K (NGN74.31M) per month.

UPDC Real Estate Investment Trust is a real estate investment trust which invests in the property market in Nigeria. It was established in 2013. The company managing the UPDC Real Estate Investment Trust is based in Lagos, Nigeria.

OKOMU OIL

Okomo Oil, Nigeria’s biggest producer of crude palm oil and the second biggest producer of rubber has released its Q3-2022 results, reporting a 52% decline in pre-tax profit to N1.1 billion down from N2.3 billion recorded in Q3-21.

The result is on the back of sustained supply chain/price disruptions of CPO in the international market influenced by the Russian/Ukraine crisis.

A review of the financial statements showed that Q3-22 revenue grew by 26.99% to N9.421 billion compared to N7.419 billion in Q3-21. Despite the revenue growth, profits declined by a whopping 40% as inflation-induced rising costs set the company back.

In 2021, the company paid a dividend of N6.677 out of a PAT of N11.539 billion.
According to Joe Onyuike, the National President of the Oil Palm Growers Association of Nigeria, Nigeria requires about $500 million worth of palm oil to meet local demand for the commodity.

SEPLAT ENERGY

Seplat Energy on its part has reported a quite significant reduction in revenue to N39 billion in its third quarter 2022 results, from N62 billion in the corresponding period of 2021.
The energy firm however, reported a profit of N33.9 billion for the nine months that ended September 2022.

Amidst the continuous rise in inflation, the financial report of the company shows that the amount is 144% higher than the profit reported during the same period of the previous year.
The impressive record, however, is on the heels of activities of the previous quarters
(Q1 and Q2) of the year 2022. The Q3 report depicts a N1.6 billion loss and a revenue dip to N39.5 billion, from N62 billion.

The company explained that the third-quarter production was severely affected by evacuation issues in all assets, and this led to deferred liquid volumes of 3.4 MMbbls. Consequently, total liquids production in the third quarter averaged 12,475 bopd, down 58% from the previous quarter (Q2 2022).

It stated, “For OMLs 4,38, & 41, the situation would have been more acute if we had not been successful in operationalizing the Aumukpe Escravos Pipeline (AEP). A total of 1.2 MMbls or 18,600 bopd (gross) was passed via the AEP in Q3 2022. Initial technical and operational hitches were experienced on the AEP but we expect an improvement in the performance of the pipeline from the fourth quarter as we overcome these initial challenges. Third-party deferment on OML 4, 38, and 41, due to evacuation constraints from AEP, was 4.8%.”

Revenue from contracts with customers rose from N183 billion to N259 billion in the 9 months, a 41% jump in the first three quarters of the year. However, revenue for Q3 fell to N39 billion from N62 billion.

Recall that Nigeria’s oil export volumes fell to less than one million barrels per day in August due to significant oil theft and pipeline vandalism. In September, Nigeria National Petroleum Company Ltd (NNPC) reported that Nigeria was losing up to 470,000 bopd.

Also, Nigerian operators have experienced unprecedented levels of crude oil theft through illegal connections to pipelines across the Niger Delta. This situation has resulted in onshore production shut-ins and terminal operators declaring force majeure arising from lower deliveries.

Meanwhile, the company saw an increase in the cost of sales to N140 billion from N125 billion for the nine months ended 30th September 2022, showing a 12.5% rise, while the gross profit stood at N119 billion for the period compared to N58 billion in the previous year.

Also, general and administrative expenses jumped from N21 billion to N33 billion while other income dipped from N33 billion to N22 billion during the period.

Mr. Roger Brown, Chief Executive Officer, Seplat Energy Plc, said while commenting on the report, “Despite an unusually challenging quarter for the Nigerian oil and gas industry, with key export routes being unavailable because of force majeure, we have demonstrated that we have a resilient business.

The Amukpe-Escravos Pipeline has been operational since August and we have had our first oil export this month. The Trans Forcados Pipeline has now resumed operations and we continue to increase our use of alternative export routes, giving us confidence that the final quarter of the year will show some improvement in volumes.”

FIDELITY BANK

The financial services player, Fidelity Bank Plc, has shown an impressive result of 34.7 per cent growth in profits from N28.1bn at the end of Q3 2021 to N37.8bn for the Q3 2022.
This was made known in the Bank’s unaudited financial statements released on the issuer portal of the Nigerian Exchange (NGX) during the weekend.

According to the statement, Net Interest Margin improved to 6.2 per cent from 4.7 per cent in 2021 FY, due to increased market yields while average funding cost remained unchanged YTD.

Average yield on earning assets increased by 166bps to 11.7 per cent while average funding cost stood at 4.3 per cent, which resulted in 72.2 per cent YoY increase in net interest income to N111.9 billion.

Commenting on the results, Managing Director, Fidelity Bank Plc, Nneka Onyeali-Ikpe, stated that “We are happy to report sustained growth across key financial indices in our nine months 2022 results.”

Gross Earnings increased by 38.7 per cent YoY to N241.9bn on account of 53.1 per cent growth in interest and similar income to N210.4 billion from N137.4 billion in 9M 2021.
The increase in Interest Income was driven by improved yield on earnings assets and 16.3 per cent YTD expansion in earnings base to N2,579.0 billion.

Similarly, Total Deposits increased by 13.3 per cent YTD to N2,294.7billion from N2,024.8bn in 2021FY, driven by double-digit growth in low-cost deposits. Low-cost deposits increased by 24.2 per cent YTD to N1,873.6 billion and now represents 81.7 per cent of total deposits from 74.5 per cent in 2021 FY.

FCY deposits increased by $432 million (45.9 per cent YTD) to $1.4 billion and now accounts for 26.2 per cent of total deposits from  19.7 per cent in 2021 FY, as we continue to harness the benefits of our renewed drive in the export business and the diaspora banking space.

The statement of account also showed considerable growth in Net Loans and Advances by 20.0 per t YTD to N1,989.3 billion from N1,658.4billion in 2021FY with intervention fund facilities and the impact of Naira devaluation accounting for 33.8 per cent of the absolute YTD growth in risk assets book.

The Bank was able to keep other regulatory ratios above the required thresholds maintaining its liquidity ratio at 41.3 per cent and Capital Adequacy Ratio (CAR) at 19.4 per cent compared to the minimum requirement of 15.0 per cent.

“We successfully redeemed our $400mn Reg S /144a Senior Unsecured 5 -yr Notes on 17th October 2022. Noteholders received a total of $421mn covering the principal amount and the accrued six months coupon in line with the executed Trust Deeds. We look forward to sustaining the momentum in Q4 towards achieving our set targets for 2022 Financial Year,” explained Onyeali-Ikpe.

Fidelity Bank is a full-fledged commercial bank operating in Nigeria with over 7.2 million customers serviced across its 250 business offices and digital banking channels.

The bank was recently recognised as the Best SME Bank Nigeria 2022 by the Global Banking & Finance Awards and received the Platinum and Service Ambassadors awards from the Development Bank of Nigeria (DBN) for its support of small businesses in the country.

The bank has also won awards for the “Fastest Growing Bank” and “MSME & Entrepreneurship Financing Bank of the Year” at the 2021 BusinessDay Banks and Other Financial Institutions (BAFI) Awards.

MRS OIL

MRS oil posted a profit before tax of N1.490billion in the third quarter ended September 2022, representing 99 per cent over the N306.9million achieved in the corresponding period of 2021. Revenues also rose 23 per cent to N69.150 billion in September 2022 from N53.231billion in 2021. Cost of sales increased from N49.691billion in 2021 to N63.027billion in 2022.

MRS Oil Nigeria Plc markets and distributes a range of refined petroleum products and lubricants in Nigeria for the automotive, industrial and aviation sectors. Fuel products include petroleum motor spirit, automotive gas oil, dual purpose kerosene, aviation kerosene, low-pour fuel oil. The company also sells a range of high-quality lubricants for petrol and diesel engines as well as greases which are manufactured and distributed out of a state-of-the-art proprietary blending facility located at Apapa. The Aviation division sells aviation turbine kerosene. MRS Oil Nigeria Plc operates through 138 company-owned retail outlets and about 255 third-party-owned outlets. Formerly known as Chevron Oil Nigeria Plc, the company changed its name to MRS Oil Nigeria in 2009.

MRS Oil Nigeria Plc is a subsidiary of MRS Africa Holdings Limited. The company’s head office is in Lagos, Nigeria. MRS Oil Nigeria Plc is listed on the Nigerian Stock Exchange.

WEMA BANK PLC

Wema Bank Plc has reported gross earnings of N95.345 billion in the third quarter ended September 30, 2022.

The figure represents a growth of 51.17% year-on-year, from N63.077 billion posted during the same time in 2021.

According to the bank’s unaudited financial results for the third quarter of 2022, the grow in gross earnings reflects an increase in loans and advances and supported in a challenging macro economic environment.

The result shows that Interest income grew by 55.14 percent y-o-y, benefitting from strong loan growth and a higher yield environment to N79.973 billion, from N51.550 billion in 2021.

Similarly, Interest income from loans and advances grew by 40.23 percent to N62.245 billion in 2022 from N44.387 billion in 2021. The income from loans and advances had a 77.83 percent contribution to the interest income for the period.

Net fee and commission income grew to N12.015 billion in the third quarter of 2022 from N8.722 billion in 2021 on the back of a rise in credit-related fees and income, electronic banking income, and trade transaction income, amongst others.

Fees on electronic products also grew by 44.55 percent to N2.550 billion from N1.764 billion in Q3 2021.

The bank recorded strong growth in profit before tax from N7.208 billion in 2021 to N9.457 billion in 2022, a growth of 31.2%, while interest expenses grew by 79.65% to N41.501 billion in 2022 from N23.100 billion in 2021.
Commenting on the result, the Managing Director/CEO of the bank, Mr. Ademola Adebise, attributed the sterling performance to the rising and expanding streams of income from both both fee based transaction lines as well as interest from efficient lending activities.

“Our excellent fundamentals as well as high efficiency in risk management and growing streams of income from various business lines are responsible for our upward trajectory across board. We intend to finish the year on a high and further delight our shareholders with impressive dividend yield at the end of the financial year”, he said.

Also commenting on the result, the bank’s Chief Finance Officer, Mr. Tunde Mabawonku, described the result as the testament of the bank’s resilience in a difficult environment characterised by high operating cost and inflation.

“We are building systems and structures that will consistently deliver on results through efficient customer service, customised products and services, and effective internal control measures”, he said.

Transcorp

Transnational Corporation of Nigeria (Transcorp) Plc equally released its results for the third quarter year ended September 30, 2022, recording significant improvement across its major income lines.

Despite the extremely challenging business environment, the conglomerate with investments in the hospitality, power and oil & gas sectors, recorded impressive growth in its profit after tax which rose by 41.4 per cent to N19 billion up from N13.3bn recorded the previous year in September 2021; while profit before tax grew by 47.7 per cent to N20.9 billion in September 2022, higher than N14.1 billion recorded in the similar period of 2021.

The results filed with the Nigerian Stock Exchange also showed that the Group’s total revenue rose by 12.5 per cent from N85.6 billion in September 2021, to N96.2 billion in the period under consideration.

Operating Income also grew by 14.5 per cent from N27.5 billion in September 2021 to N31.5 billion in September 2022, while Operating expenses for the quarter ended September 2022, stood at N16.0 billion, representing an increase of 30.9% compared to N12.2 billion recorded in the same period of 2021.

The results also showed that total assets increased by 1.3 per cent  from N416.0 billion in December 2021 to N421.2 billion in Q3 2022 due to the increase in Inventories, Prepayments and Trade and Other Receivables which cushioned the effect of the decline in Cash and Cash Equivalents, just as shareholders’ Funds rose to N161.8 billion, representing an 11 per cent year-on-year increase from N146.3 billion recorded due to profitability during the period.

Commenting on the results, Transcorp’s president/group chief executive officer, Owen Omogiafo, explained that the laudable performance this quarter was achieved as a result of the improved performance across all our businesses.

She said, “Despite the challenging operating environment, characterised by gas supply constraints, foreign exchange volatility and rising inflation, amongst others, the group improved profitability and performance during the period. Our hospitality business has sustained its strong growth trajectory,

outperforming all indices. Our business model remains robust, thanks to the prudent and adaptive strategy we have taken across our operations.”

Despite the headwinds, the Nigerian equities market at the NGX has remained bullish in the first quarter ended march 31, 2022. Looking at the details, the All share Index  gained 9.1 per cent (3,939.25 points)  from 43,026.23 points on January 4, 2022 to 46, 965.48 points at the end of the first quarter ended March 31, 2022.

Market capitalization also grew 9.179 per cent or N2.123trillion from N23.183trillion at the beginning of the year to N25.311 trillion on March 31, 2022. This is no mean performance at this turbulent times when the world, Nigeria not an exception is facing one of the most troubling periods.

These challenges range from the effects of Covid-19, insecurity, weak economy. Others telling challenges include the effects of the raging Russia/ Ukraine war which have weakened the Naira, high inflation at 15.7 per cent.

These have in fact affected equities. Some stocks have shown resilience in the midst of these troubles.

The top ten highest gainers in the first quarter included Cutix Plc which gained 35 per cent from 2.05 kobo on January 4, 2022 to 2.27 kobo a share.

Similarly, Total Energies markets appreciated 11.06 per cent from N238.50 per share on January 4, 2022 to N264.90 per share in March 31, 2022. Red star express inched up  11.1 per cent from 2.70kobo  per share early in the year 2022 to close at 3.00kobo per share.

1.Cadbury Nigeria Plc—-28%
2.Jaiz Bank—–27.14%
3.UPDC—–26.31%
4.Conoil Plc—–19.10%
5.Okomu Oil—17.95%
6.Seplat Energy—-17.08%
7Fidelity Bank—–17.2%
8.Mrs Oil——15.57%
9.Wema Bank Plc—15.55%
10.Transnational Corporation—-12.24%

Talking about different strokes for different folks. Aluta continua.