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Poor performance of blue chips drag down equities market



NGX Group makes strategic investment in Ethiopian Securities Exchange

Okey Onyenweaku

The recent subdued whimper in the Nigerian equities market is really not new but it is nonetheless significant. The NGX All share Index has plunged by 10 per cent from 48,836.78 points between Oct 5, 2022 and November 3, 2022.

Similarly, the market capitalization also dropped by  9.4 per cent (N2.26 trillion) from N26.373 trillion on October 3, 2022 to N24.094trillion on November 3, 2022.

Aside the persisting economic crunch in the broader macro-economic arena, the sudden drop of the equities market has been blamed on the poor performance of the major and heavy stocks on the market platform. Some of these companies include Dangote Cement, BUA Cement and Airtel Africa.

For example, Dangote Cement in the Third Quarter of 2022 had hit N1.177 trillion as its revenue showing. This represents a 15.17% growth compared to the N1.022 trillion it had reported the previous year.

The cement manufacturing giant declined in its profit after tax by 23.41% year on year to N213.1 billion from N278.25 billion reported in Q3 2021.

Earnings per share of Dangote Cement stands at N12.51, down by 23.41 from the EPS of N16.18 reported the previous year. For the third quarter of 2022, the management of Dangote Cement has recorded an increase in the overall volume of cement sales by 6.2 percent to 20.8metric tons in the third quarter of 2022.

According to the company, this was achieved, despite the elevated inflation caused by a very volatile global environment. To further increase the supply of cement across its operational base, the company also commissioned its power plant at Okpella and progressing well to deploy grinding plants in Ghana and Cote d’Ivoire.

Chief Executive Officer of Dangote Cement, Michel Puchercos, who disclosed this while presenting the third quarter results to the Nigerian Stock Exchange, weekend, further explained that “to mitigate the impact of the significant increase in energy and AGO costs, we are strengthening our efforts to ramp up the usage of alternative fuels.”So far this year, we have co-processed 101,553 tonnes of waste, representing a 77% increase in 2021. We are on track to commission our alternative fuel feed system at Obajana lines I and V, and Ibese line II in November.

”In addition, we are ramping up our investment in compressed natural gas, CNG, to reduce our AGO usage.”
He explained that the company recorded an increase in revenue of N1,177.3 billion, up 15.2% compared to last year, and Group EBITDA of ?515.9billion, up 0.2% with an EBITDA margin of 43.8%”

Dangote Cement, it would be recalled, is Africa’s leading cement producer with nearly 51.6Mta capacity across Africa.

A fully integrated quarry-to-customer producer, it has a production capacity of 35.25Mta in its home market, Nigeria.

Obajana plant in Kogi State, Nigeria, is the largest in Africa, with 16.25Mta of capacity across five lines, while the Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta.

The Gboko plant in Benue State has 4Mta, while the Okpella plant in Edo State has 3Mta. Through recent investments, Dangote Cement has eliminated Nigeria’s dependence on imported cement and has transformed the nation into an exporter of cement, and one serving neighbouring countries.

Meanwhile, the Dangote stock also lost 2 per cent from October 5, 2022 to November 4, 2022.

BUA Cement


BUA Cement also posted a drop in profit for the three months ended September 2021 to 2022 by 41 per cent from N24.765billion in September 2021 to N14.433billion in September 2022. While cost of sales jumped from N33.496billion to N45.325billion in the review period, Earnings per share also took an equally deed plunge by as much as 43 per cent from 66 kobo to 33kobo.

However, its nine months ended September 2022 performance showed a growth in Profit before tax of 19 per cent from N 74.332billion in 2021 to N88.811billion in 2022. Activities on the NGX trading platform showed that the cement stock grew by 12.90% to N70.00 per share from the N62.00 with which it began the trading session on October 25.

Further checks showed that BUA Cement closed trading on Wednesday with a share price of N70.00 per share and a market capitalisation of N2.3 trillion, as against N62.00 per share and a market capitalization of N2.099 trillion on October 25, 2022. This shows that the stock gained N271 billion or 12.90% during yesterday’s trading session.

BUA Cement stock price has grown by 38 per cent from N52.00 in October 5, 2022 to N72.00 per share in November 4, 2022.


Airtel Africa Plc is a giant telecom company which total customer base increased to 134.7 million, up 9.7%, with increased penetration across mobile data (customer base up 10.6%) and mobile money services (customer base up 24.0%).

In the third quarter 2022, the company’s revenue grew by 12.9% in the half, to $2,565m, and 12.7% for Q2’23.

Profit after tax was $330m, lower by 1.5% due to higher foreign exchange and derivative losses of $160m. Profit after tax excluding foreign exchange and derivative losses was up by 30.4% while Earnings Per share  before exceptional items was 6.8 cents, a reduction of 9.5% largely as a result of higher foreign exchange and derivative losses of $160m.
Analysts observed that its Mobile Services revenue in Nigeria grew by 19.7%, in East Africa by 12.4% and in Francophone Africa by 12.1% (and across the Group by 15.6%, with voice revenue up by 12.0% and data revenue up by 22.1%).

Mobile Money revenue grew by 29.5%, driven by growth of 31.5% in East Africa and 23.6% in Francophone Africa.

As the third quarter came to a close, EBITDA increased by 14.3% to $1,255m in reported currency and by 17.8% in constant currency, with an EBITDA margin of 48.9%, an increase of 60 basis points in reported currency and 38 basis points in constant currency.

The board had declared an interim dividend of 2.18 cents per share (2 cents in H1’22).
In July 2022, the Group prepaid $450m of outstanding external debt at HoldCo. The remaining debt at HoldCo is now $550m, falling due in May 2024. The leverage ratio has fallen to 1.3x from 1.5x in the prior period. Airtel Africa stock price dropped from N2000.00 to N1,275.00 per share in the review period.

There is a consensus that the rise and fall of share prices of valued stocks affects the market. Whatever happens to them affects the market whether up or down. So the movement in the prices of their stocks most times determines the movement of the equities market. Therefore, such heavy or highly capitalized stocks such as Dangote Cement, BUA Cement and Airtel belong to the category of stocks that drives the market both in good times and the bad times. This is because their high market capitalization.

Research shows that the all share index had attained the giddy height of 54,085.30 points in May 27, 2022 before the decline which has continued till date.

Analysts agree that businesses will find it difficult to survive in an operating environment as harsh as Nigeria’s.

Nigeria’s economy has in most of the past seven years been struggling, giving out discouraging signals to would be investors in the country. This has become a source of concern to the discerning especially economic experts whose expectations are not met.
Throughout this year the impressions of the Bretton Woods institutions do not seem to see signs of improvements in the economic policies for positive growth, but that of gloom and uncertainty.

Critically, recent statistics reveal that the rate of unemployment in the country, which is one of the highest in the world is 40%. At the same time, the underemployment rate stood at 25%; even as inflation, which is hitting the roof top at 20.6,highest point in the last seven years. At the same time, Diaspora remittances inflow stood at $19 billion in 2021 lower than the $23billion recorded before the covid -19 year is struggling.
Also remarkable is the country’s heavy debt burden at N43trillion ($103b)and expected to continue to grow; of the budget of N17.123trillion budget deficit stood at N6.25 trillion (representing 3.6 per cent of total budget) as over 99 per cent of revenues is used to service debt. More worrisome is that the country has set new borrowing limit from 25 per cent of GDP to 40 per cent of the GDP. This was contained in the Medium Term Debt Strategy.


The major revenue earner for the country, crude oil price, which has hit  over $80 pbd and above presently, still fluctuates.

Insecurity has not only hobbled agriculture, many parts of Northern Nigeria have been taken over by bandits such that not much business activities can subsist. The World Bank just noted that Nigeria’s revenue to GDP ratio hovered between five and six per cent last year and remains the lowest in the world. These days almost every everybody is aware that Nigeria parades the most poverty stricken people in the world, competing with India.
The Naira which sold at N220/$ in June 15, 2015 has depreciated by 300 per cent to N870/$ as at November 4, 2022.

Analysts believe that week economy definitely affects equities market negatively. However, they also reckon that low stock prices attract investors.

‘’Some of the stocks are trading between 12 and 24 months low.

“The most attractive stocks are banking shares like GTCO Plc, Zenith Bank Plc, Fidelity Bank Plc, Access Holdings Plc, UBA Plc, and Stanbic IBTC Plc. Another sector is telecommunications with firms like MTNN Plc, and building materials producers like BUA Cement Plc, Lafarge Africa Plc, and Dangote Cement Plc among others,”  notes Kasimu Garba Kurfi, the Chief Executive Officer of APT Securities and Funds Limited.

“Good prognosis no doubt but given the vagaries in the broader economic field at the moment, how many potential investors are liquid and calm enough to tir themselves ride for the long haul ride? And where would the caravan eventually berth?”

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