NSE RoundUp! Equities lose N167bn amidst concerns over corporate earnings

The Nigerian equities market traded mainly on the negative last week as early corporate earnings results further fueled concerns over the performance and returns by quoted companies.

With four of the five trading sessions ending with losses, aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) lost N167 billion last week.

The benchmark index for the Nigerian stock market, the All Share Index (ASI) indicated a week-on-week decline of 2.0 per cent, reflecting the widespread negative sentiments across the sectors. The decline last week built up the average year-to-date return at the stock market to -3.99 per cent.

Aggregate market value of all quoted equities dropped from the week’s opening value of N9.059 trillion to close the week at N8.892 trillion, representing a net capital loss of N167 billion. The ASI also declined correspondingly from the week’s index on board of 26,328.22 points to close the week at 25,802.54 points.

All sectoral indices closed in the negative with the exception of the NSE Industrial Goods Index which beat the odds to rise by 4.37 per cent. The NSE 30 Index, which tracks the 30 most capitalised companies, declined by 2.66 per cent. The NSE Banking Index dropped by 2.81 per cent. The NSE Insurance Index dropped by2.56 per cent.

The NSE Consumer Goods Index depreciated by 5.54 per cent while the NSE Oil and Gas Index declined by 5.04 per cent.

Early results released last week were largely unimpressive. The first full-year results for the year ended December 31, 2016, released by Forte Oil, indicated significant decline in profitability, forcing the board of the oil and gas company to withhold dividend payment. Investors reacted negatively by sending Forte Oil to the top of the losers’ table, dropping by 15.1 per cent to close at N61.

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Forte Oil reported turnover growth of 19.3 per cent to N148.6 billion in 2016 as against N124.6 billion in 2015. However, profit before tax fell by 24 per cent to N5.3 billion from N7.0 billion while profit after tax declined by 50 per cent to N2.9 billion as against N5.8 billion recorded in 2015. Based on the weak results, the directors did not recommend any dividend for the shareholders compared with N4. 5 billion dividend paid for the 2015 business year.

Most quarterly results released last week also showed significant declines in profits or outright losses, heightening investors’ apprehension over the dividend yields and returns in a market suffering from three-year depreciation in prices.

In one of the results, Flour Mills of Nigeria reported that profit after tax dropped in nine-month period ended December 31, 2016 to N7.40 billion compared with N19.0 billion recorded in comparable period of 2015. Turnover had however grown from N263.68 billion in December 2015 to N389.94 billion in December 2016. In another results for similar nine-month period, Seven-Up Bottling Company reported a net loss of N4.84 billion by December 2016 compared with net profit of N2.23 billion by December 2015. However, turnover also rose from N60.23 billion in 2015 to N75.9 billion in 2016.

Price trend analysis showed that there were 23 advancers against 37 decliners last week, worse than the 29 advancers against 30 decliners recorded in the period week. The largest segment of the market remained dormant, with 115 flat stocks last week against 116 that were unchanged in the previous week.

After Forte Oil, Neimeth International Pharmaceuticals, which also reported unimpressive results, recorded the second highest loss of 15.07 per cent to close the week at 62 kobo. UACN Property Development Company declined by 13.89 per cent to close at N2.48. Total Nigeria lost 10.36 per cent to close at N268.08. Diamond Bank declined by 10.1 per cent to close at 89 kobo. Nestle Nigeria dropped by 9.33 per cent to close at N680 while Wema Bank declined by 9.09 per cent to close at 50 kobo per share.

On the positive side, Caverton Offshore Support Group led the gainers with a gain of 15.9 per cent to close at 80 kobo. Lafarge Africa followed with a gain of 9.8 per cent to close at N44.40. Unity Bank rose by 8.1 per cent to close at 80 kobo. Mobil Oil Nigeria added 4.3 per cent to close at N275.99 while Seven-Up Bottling Company rallied 3.8 per cent to close at N112.10 per share.

Total turnover stood at 1.153 billion shares worth N8.032 billion in 12,783 deals last week as against a total of 990.584 million shares valued at N18.823 billion traded in 14,917 deals two weeks ago.The financial services sector led the activity chart with 841.221 million shares valued at N3.065 billion in 7,102 deals; thus contributing 72.93 per cent and 38.16 per cent to the total equity turnover volume and value respectively. The services sector followed with 91.826 million shares worth N139.497 million in 265 deals while the third place was occupied by industrial goods sector with a turnover of 67.010 million shares worth N247.141 million in 510 deals.

The trio of Continental Reinsurance Plc, FBN Holdings Plc and Med-View Airlines Plc were the most active, jointly accounting for 381.262 million shares worth N788.588 million in 1,008 deals, representing 33.05 per cent and 9.82 per cent of the total equity turnover volume and value respectively.

Also traded during the week were a total of 310 units of Exchange Traded Products (ETPs) valued at N19,292 executed in 10 deals compared with a total of 8,519 units valued at N527,483 traded in 10 deals two weeks ago.

In the bond segment, a total of 100 units of Federal Government bonds valued at N106,155 were traded in a deal compared with a total of 59,299 units valued at N56.379 million traded in six deals in the previous week.

The market last week also saw the listing of Med-View Airlines Plc, the only subsisting airline to be listed on the stock market. Med-View Airlines listed 9.75 billion ordinary shares of 50 kobo each at N1.50 per share.

“We expect sideways trading in the equities market next week (this week), given the lack of impressive corporate earnings released so far to spur renewed interest from investors. The trend may however change if some positive results are released,” analysts at SCM Capital stated on the outlook for the market in the new week.

Analysts at Cowry Asset Management Limited stated that they expected a mix of bargain-hunting and profit-taking as investors continue to react to low prices and the not-too-impressive results.

 

 

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