csl nigeria portfolio weekly

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Nigeria Portfolio Weekly

Nigeria | Comments and valuation 25 May 2015

CSL Stockbrokers is a division of FCMB (UK) Limited which is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA in the United Kingdom.

Last weekend, telecommunication companies and domestic airline

operators gave advance warnings of service disruptions arising from

scarcity of petroleum products. Most commercial banks also sent out text

messages to customers stating that most bank branches will be open for

business between 8:00am-1:00pm (compared with normal business hours

of 8:00am-5:00pm) starting this week due to the shortage. The current

scarcity is the worst on record. Nigeria's Finance Minister and

Coordinating Minister of the Economy, Ngozi Okonjo-Iweala, recently

stated that the Federal Government (FG) will not bow to what she calls the

blackmail efforts of petroleum marketers. The marketers say the FG owes

them about N200.0bn (US$1.0bn) in petroleum subsidy.

FX: The naira weakened by 0.8% against the US dollar to trade at

N199.2/US$ in the interbank market last week. The naira, however,

strengthened by 0.7% on the streets of Lagos as it traded at N220.5/US$ on

the bid and N219.0/US$ on the offer. The Central Bank of Nigeria’s

Monetary Policy (MPC) at the end of its meeting last week noted that there

has been increased stability in the FX market due to the closure of the Retail

Dutch Auction System and the modified two-way quote trading at the

interbank market. According to Bloomberg, Nigeria’s gross external

reserves stood at N29.8bn on 21 May.

Bonds: Yields increased on all maturities last week with yields on short-

dated maturities recording the largest increase in the secondary market for

Federal Government of Nigeria (FGN) bonds. The yield on an FGN bond

with just about 1.2-yrs to maturity increased by 20bps to 13.79%; at 3.2-yrs

it increased by 11bps to 13.79%; and at 15.3-yrs (2030) it increased by 1bp

to 15.54%.

Oil: The price of Brent declined by 2.2% last week to trade at US$65.4/bbl

on the back of weakness in the Chinese economy and a strengthening of

the US dollar. US ending crude inventories for the week ending 15 May

declined by 0.2%. According to data provided by Baker Hughes, the total rig

count in the US declined by 3 last week (Land: +3; Inland Waters: -1;

Offshore: -5) with land rigs recording its first increase in 27 consecutive

weeks.

Equities: The NSE index declined by 0.5% last week with a year-to-date

return of -1.1%. It was a mixed performance last week. The index closed

lower as most banks and industrials declined. Among industrials, Lafarge

Africa declined by 2.2% to lead losses, followed by Dangote Cement which

lost 0.3%. Guinness Nigeria gained 0.5% while Nigerian Breweries declined

by 1.2%. Nestle Nigeria declined by 2.2% to lead losses among consumers

while Unilever Nigeria lost 0.1%. Flour Mills of Nigeria stayed flat. The

banking sub-index declined by 0.2%. FBN Holdings and Access Bank

Top y-t-d stocks

Stock Price (N) Y-t-d %

FCMB 3.14 26.1

Unilever 45.00 25.7

Presco 30.26 25.3

UACN 41.20 21.2

Zenith Bank 22.25 20.9

All Share Index 34,272.09 -1.1

One-week performance

Y-t-d performance

Source: NSE, CSL Research *As at 22 May 2015

Contact information

Lagos: +23 4 (0)448 5436

Analyst: Adedayo Ayeni

Head of Research: Guy Czartoryski

London: +44 (0)20 7290 6854

Sales: Temi Popoola, CFA

[email protected]

[email protected]

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Strategy


Nigeria | Comments and valuation 25 May 2015

CSL Stockbrokers is a division of FCMB (UK) Limited which is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA in the United Kingdom.

gained 1.8% each to lead gainers. Guaranty Trust Bank lost 1.4% followed

by UBA which lost 1.3%. Zenith Bank stayed flat. Among mid-cap banks,

Skye Bank returned 18.4% last week to lead gains.

Model portfolios: Last week the Model PFA Portfolio made 4bps (19.79%

y/t/d), with fixed income losing 2bps and equities contributing 6bps. The

Model Growth Portfolio lost 36bps last week (10.67% y/t/d).


Strategy

CSL Stockbrokers is a division of FCMB (UK) Limited which is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA in the United Kingdom

CSL Recommended PFA Portfolio

The CSL Recommended PFA Portfolio made 4bps last week. The biggest gain came

from the position in FBN Holdings which made 23bps, followed by Skye Bank which

made 9bps, and Access Bank and Diamond Bank which made 5bps each. The biggest

loss came from the position in Guaranty Trust Bank which cost 24bps, followed by UBA

which cost 7bps, and Lafarge Africa which cost 5bps. The portfolio is up 19.79% y/t/d.

CSL Recommended PFA Portfolio: Week 271

Source: NSE, FMDA, CSL estimates.

1 Jan 2015 Most recent Past

Security / deposit position, N position, N Position Week ytd Past Week ytd

T-Bill 21 Feb 13, EI9525565 0 0 0% 0% 0% 0 0

T-Bill 23 May 13, EJ1851017 0 0 0% 0% 0% 0 0

T-Bill 8 May 14, EJ6708154 0 0 0% 0% 0% 0 0

T-Bill 5 Dec 13, EJ388060 0 0 0% 0% 0% 0 0

T-Bill 22 May 14, EJ690999 0 0 0% 0% 0% 0 0

4th FGN Bond 2014 S6, 29 Jun 14 0 0 0% 0% 0% 0 0

7th FGN Bond 2015 S2, 23 Apr 15 36,860,000 38,000,000 10% 0% 3% 0 35

7th FGN Bond 2030, S3, 23 Jul 30 26,980,000 25,840,000 7% 0% -4% 0 -35

9th FGN Bond 2019, S3, 29 Jun 19 25,500,000 26,677,500 7% 0% 5% -2 37

GTB Bond 20,000,000 20,000,000 5% 0% 0% 0 0

Cash on deposit 138,636,962 27,215,847 7% 0% 0% 0 0

FBN Holdings 3,091,000 49,878,938 13% 2% 4% 23 445

Zenith Bank 6,443,500 55,625,000 14% 0% 21% 2 486

GT Bank 7,050,400 66,348,000 17% -1% 16% -24 788

UBA 1,290,000 21,033,000 5% -1% 19% -7 260

Access 4,686,000 10,755,900 3% 2% -5% 5 23

Diamond 5,984,550 7,734,025 2% 3% -20% 5 -16

Fidelity 2,916,000 8,930,000 2% 1% 17% 1 74

Skye Bank 2,420,600 2,338,700 1% 18% -3% 9 -3

Guinness Nigeria 2,858,550 2,647,240 1% 0% -7% 0 -7

Nigerian Brew 7,769,100 3,602,080 1% -1% -7% -1 -26

Lafarge Africa 7,245,000 8,647,200 2% -2% 19% -5 44

Dangote Cem 11,440,000 5,087,940 1% 0% -11% -0 -55

Flour Mills 1,176,000 525,000 0% 0% -11% 0 -4

Nestle 8,802,225 3,832,350 1% -2% -13% -2 -46

Comm. -3

Total 321,149,887 384,718,720 100% 0.04% 19.79% 4 1,979

Performance attribution


Strategy


CSL Recommended Growth Portfolio

The CSL Growth Portfolio lost 36bps last week. The biggest loss came from the position

in Guaranty Trust Bank which cost 22bps, followed by Lafarge Africa which cost 21bps,

and Dangote Cement and Nestle Nigeria which cost 8bps each. The biggest gain came

from the position in FBN Holdings which made 21bps, followed by Access Bank and

Diamond Bank which contributed 5bps each. The portfolio is up 10.67% y/t/d.

CSL recommended Growth Portfolio: Week 271

Source: NSE, FMDA, CSL estimates.

Notes to all portfolios Allocations in all three model portfolios follow as closely as possible allocations published in our Strategy & Economics Year

Ahead 2010 report, and subsequent weekly and quarterly reports. Stock-specific allocations in these reports are directed by

a) published CSL stock-specific recommendations, b) available free float, given a notional portfolio level of N200m, c) stock

liquidity and d) desired sector diversity. Stock weights thus indirectly reflect published CSL stock recommendations. Clients

may request further information concerning these portfolios, including portfolio spreadsheets. Model portfolios are for a

notional N200m in each case. Model portfolios were launched on 15th January with offer prices available during trading hours

on the day and shares in less liquid stocks being traded in subsequent trading sessions. Stocks prices for a given reporting

period are given at the last price (and not the bid price) reported at close of play on the preceding Friday, or last trading day

of the week, according to Bloomberg. Bond prices are quoted at close of play for the day before, at the bid price supplied by

the Financial Markets Dealers Association of Nigeria website. We do not have current information on the pricing of the GT

Bond and, for the time being, have marked it at par, though we understand it to trade at 12.5-13.0%, in comparison to its

13.5% issue coupon.

1 Jan 2015 Most recent Past

Security / deposit position, N position, N Position Week ytd Past Week ytd

GTB Bond 10,000,000 0 0.0% 0.0% 0% 0 0

Cash on deposit 52,063,478 8,254,203 1.9% 0.0% 0% 0 0

FBN Holdings 10,835,000 53,813,438 12.1% 1.8% 4% 21 334

Zenith Bank 9,573,200 60,438,400 13.6% 0.0% 21% 0 412

GT Bank 12,117,875 72,204,375 16.3% -1.4% 16% -22 652

UBA 3,710,900 22,382,190 5.1% -1.3% 19% -7 204

Access 2,904,000 11,573,600 2.6% 1.8% -5% 5 31

Diamond 1,576,350 8,317,725 1.9% 2.7% -20% 5 31

Fidelity 696,600 9,747,000 2.2% 0.5% 17% 1 79

Skye Bank 877,800 848,100 0.2% 18.4% -3% 3 -1

Guinness Nigeria 4,960,425 4,593,740 1.0% 0.5% -7% 0 -9

Nigerian Brew 42,978,000 19,926,400 4.5% -1.2% -7% -6 -115

Lafarge Africa 35,420,000 42,275,200 9.5% -2.2% 19% -21 171

Dangote Cem 164,780,000 102,096,810 23.0% -0.3% -11% -8 -568

Flour Mills 3,998,400 1,785,000 0.4% 0.0% -11% 0 -12

Nestle 37,434,750 16,739,000 3.8% -2.1% -13% -8 -155

Unilever 6,444,000 8,100,000 1.8% -0.1% 26% -0 41

Comm. -14

Total 400,370,778 443,095,181 100% -0.36% 10.67% -36 1,067

Performance attribution

(bp)


Strategy


Share Price performance

Source: Bloomberg, as at 25 May 2015.

Company Sector Price (N) 52Wk high 52Wk low 1M (%) 3M (%) 6M (%) 12M (%) YTD (%) 2014(%)

Okomu Agriculture 30.3 36.5 23.3 10.8 -10.5 7.5 -6.3 19.4 -42.4

Presco Agriculture 30.0 38.1 20.9 15.4 -7.3 14.8 -15.0 22.5 -36.4

AVERAGE n/a n/a n/a 13.1 -8.9 11.2 -10.7 20.9 -39.4


Access Banks 6.3 9.6 4.5 -0.3 -4.0 -21.4 -28.6 -4.7 -31.3

Diamond Banks 4.4 6.8 3.5 -5.3 5.7 -22.9 -28.1 -20.4 -20.1

Fidelity Banks 1.9 2.3 1.1 -2.6 48.0 13.5 -11.1 14.2 -39.8

First bank Banks 9.0 15.0 5.8 -5.7 26.9 3.9 -28.8 12.5 -46.0

GT Bank Banks 29.1 31.9 16.7 3.3 25.2 17.6 4.9 15.4 -6.8

StanbicIBTC Banks 30.0 35.0 22.1 4.7 19.7 5.4 33.9 11.1 26.5

Skye Banks 2.6 3.5 1.6 3.0 29.0 12.3 -17.1 3.8 -39.5

UBA Banks 5.2 8.3 2.9 -2.4 41.8 11.6 -27.9 20.7 -51.7

Union Banks 10.1 11.7 6.5 -8.8 7.4 23.9 -1.5 18.2 -11.7

Zenith Banks 22.0 25.8 14.5 0.0 17.3 5.5 -6.0 19.5 -32.8

ETI Banks 21.7 24.6 14.0 5.9 31.5 26.2 43.4 16.8 14.7

FCMB Banks 3.1 4.6 1.9 -8.0 47.6 -3.1 -21.7 24.5 -32.5

Sterling Banks 2.1 2.5 2.1 -11.0 -6.7 -11.8 -7.5 -17.3 1.6

Unity Banks 2.4 5.0 2.1 -52.0 -52.0 -52.0 -52.0 -52.0 0.0

Wema Banks 1.0 1.2 0.9 3.1 4.2 -1.0 0.0 3.1 -21.3

AVERAGE n/a n/a n/a -5.1 16.1 0.5 -9.9 4.4 -19.4


Ashaka Cement Cement 21.5 34.7 17.2 4.5 13.3 -6.1 8.0 -1.8 4.3

Dangote Cement Cement 177.0 250.0 139.1 1.1 14.9 -4.3 -20.8 -11.5 -8.7

Lafarge Wapco Cement 96.5 136.7 66.5 3.8 13.0 23.7 -14.2 19.9 -30.0

CCNN Cement 10.5 16.0 8.4 -9.4 -2.0 -4.5 8.2 1.1 -11.6

AVERAGE n/a n/a n/a 0.0 9.8 2.2 -4.7 1.9 -11.5


Conoil Petroleum marketing 41.0 79.5 29.5 13.2 25.1 -16.7 -12.3 7.6 -43.9

Forte Oil** Petroleum marketing 177.8 216.6 141.7 -10.0 -1.3 4.5 14.4 -6.4 133.1

Mobil Petroleum marketing 150.0 182.0 125.0 -1.3 -0.1 0.1 15.4 -5.1 33.2

Oando* Petroleum marketing 18.2 35.9 12.8 -7.1 36.3 -15.6 -6.5 13.0 -31.7

Total Petroleum marketing 152.6 195.5 134.1 -6.1 9.0 -3.1 -2.2 7.1 -16.2

Eterna oil Petroleum marketing 2.7 5.4 2.4 -6.9 0.4 -12.3 -25.2 -9.4 -33.9

AVERAGE n/a n/a n/a -3.0 11.6 -7.2 -2.7 1.1 6.8


NB Breweries 154.0 189.0 122.6 2.0 11.8 -3.8 -12.6 -6.8 -1.5

Guinness Breweries 155.7 215.0 110.0 -7.3 24.6 -1.4 -12.8 -7.4 -28.8

Inter. Breweries Breweries 20.0 32.0 17.0 -7.8 16.3 -24.8 -22.3 -14.4 -18.6

AVERAGE n/a n/a n/a -4.4 17.5 -10.0 -15.9 -9.5 -16.3


PZ Fast moving cons. goods 28.7 39.0 16.6 -8.2 0.9 17.5 -17.7 20.4 -35.7

Unilever Fast moving cons. goods 45.0 55.0 27.0 12.5 31.2 36.4 -9.1 25.7 -33.5

AVERAGE n/a n/a n/a 2.1 16.0 26.9 -13.4 23.1 -34.6


Cadbury Food & Bev. 39.9 81.9 34.8 -0.3 2.8 -5.2 -46.0 -0.3 -59.3

DFM Food & Bev. 3.9 8.8 2.9 -19.4 10.1 -37.2 -51.1 -14.1 -55.6

DSR Food & Bev. 6.5 10.2 4.7 -10.0 4.3 5.9 -33.9 2.5 -45.7

Flourmill Food & Bev. 35.0 73.5 26.6 -5.4 -0.6 -19.7 -45.4 -10.7 -50.4

Honeywell Food & Bev. 3.7 4.5 2.6 8.8 27.6 17.5 -3.9 6.9 -5.7

Nestle Food & Bev. 870.0 1150.0 743.0 -8.2 5.6 0.6 -19.4 -14.0 -15.7

UACN Food & Bev. 41.3 67.9 26.0 3.2 6.3 -1.7 -28.8 21.4 -49.3

AVERAGE n/a n/a n/a -4.5 8.0 -5.7 -32.7 -1.2 -40.2


Strategy


Important Risk Warnings and Disclaimers CSL STOCKBROKERS LIMITED (“CSL Stockbrokers”) is regulated by the Securities and Exchange Commission, Nigeria. FCMB (UK) LIMITED (“FCMB UK”), trading in the name of ‘CSL Stockbrokers’, is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA in the United Kingdom. The details of the authorisation can be viewed at the Financial Services Register at http://www.fsa.gov.uk/register/home.do by entering the Firm Reference Number 502704. FCMB UK is registered in England and Wales No. 6621225. Both CSL Stockbrokers and FCMB UK are members of the FCMB Group (“the Group”) of Nigeria, a group of companies which also includes First City Monument Bank Ltd. RELIANCE ON THIS PUBLICATION FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE YOU TO A SIGNIFICANT RISK OF LOSS. By receiving this document, you will not be deemed a client or provided with the protections afforded to clients of CSL Stockbrokers and FCMB UK. When distributing this document, CSL Stockbrokers, FCMB UK or any member of the Group is not acting for any recipient of this document and will not be responsible for providing advice to any recipient in relation to this document. Accordingly, CSL Stockbrokers, FCMB UK or any member of the Group will not be responsible to any recipient for providing the protections afforded to its clients. If you are in the UK, you are a person to whom either Articles 19 or 49 of the Financial Services and Markets 2000 (Financial Promotion) Order 2005 apply or a person to whom this communication may otherwise be lawfully made. In the United Kingdom, this document is available only to such persons described above and persons of any other description should not rely on this document. Transmission of this document to any other person in the United Kingdom is unauthorized and may contravene the Financial Services and Markets Act 2000 (FSMA). If you are not such a person or if the distribution of this document is otherwise unlawful where you are, you are required to return the document immediately to CSL Stockbrokers. In the UK, the content of this document has been approved by an authorised person within the meaning of FSMA. This document is not intended for Retail Clients in the UK. This document is not an offer to buy or sell or to solicit an offer to buy or sell any securities. This document does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The appropriateness of a particular investment will depend on an investor’s individual circumstances and objectives. The investments and shares referred to in this document may not be suitable for all investors. CSL Stockbrokers, FCMB UK or any other member of the Group may effect transactions in shares mentioned herein and may take proprietary trading positions in those shares, and may receive remuneration for the publication of its research and for other services. Accordingly, this document may not be considered as objective or impartial. Additionally, information may be available to CSL Stockbrokers, FCMB UK or the Group, which is not reflected in this material. Further information on CSL Stockbrokers’ and FCMB UK’s policy regarding potential conflicts of interest in the context of investment research and CSL Stockbrokers and FCMB UK’s policy on disclosure and conflicts in general are available on request. This document is based on publicly available information obtained from sources which CSL Stockbrokers believes are reliable, but which it has not independently verified. Neither CSL Stockbrokers, FCMB UK nor their advisors, directors or employees make any guarantee, representation or warranty as to the accuracy, reasonableness or completeness of this information and neither CSL Stockbrokers and FCMB UK nor their advisors, directors or employees accepts any responsibility or liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The opinions contained in this document are subject to change without notice and are not to be relied upon and should not be used in substitution for the exercise of independent judgment. Nothing herein excludes or restricts any duty or liability to a customer which FCMB UK has under the FSMA or under the Rules of the FCA. A recipient who chooses to deal with any person who is not an authorised representative of FCMB UK in the UK may not enjoy the protections afforded under the UK regulatory regime. Past performance is not a guarantee of future performance. Investments may go down in value as well as up and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price or income of

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that investment. In case of an investment for which there is no recognised market it may be difficult for investors to sell their investment or to obtain reliable information about their value or the extent of the risk to which they are exposed. The information contained in this document is confidential and is solely for use of those persons to whom it is addressed and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purpose. @Copyright CSL STOCKBROKERS LIMITED, 2015. All rights reserved. CSL STOCKBROKERS LIMITED FCMB (UK) LIMITED Member of the Nigerian Stock Exchange (Trading as CSL Stockbrokers) First City Plaza, 44 Marina 81 Gracechurch Street PO Box 9117 London EC3V 0AU Lagos State United Kingdom NIGERIA

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