Retail views

Nigeria

Wednesday, 27 May 2015

Daily Retail Report .

Market Review At today, the Nigerian Equity Market struggled for direction on a weak

gain as benchmark index appreciated by 17bps to return 34,355.31bps

with 5,386 deals. NSECNSM was the only sector monitored by the exchange that closed in negative territory with losses recorded in Nestle

(-0.43%,) Dangsugar (-1.06%) and Flourmill (-0.43%). Other sectorial

indices moved northward with NSEIND leasding the pack on the back

of Betaglas (4.91%), Dangccem (0.56%) and Wapco (0.51)

Decliners beat advancers 26 to 31 while 52 remained unchanged ASI year-to-date return currently stands at -0.86% as market capitalisation

appreciated by N21bn to close at 11.674Tril. Top in the gainers

territory are VONO (N1.61) UNITYBNK (N2.75) NPFMCRFBK

(N1.33)while MAYBAKER (N1.68) PREMBREW N3.26) INTERLINK

(N4.43) led the losers’ territory.

Great Nigeria Insurance Plc has released its FY results ended 31st

December, 2013. Gross premium of N3.046Bn and PAT (445m)

appreciated by 6% while PAT(N4.382) depreciated by 99.5%

respectively from prior year.

Computer Warehouse group proposed a 2kobo dividend payment for FY

ended December 2014. Closure date is 8th June - 12th june 2015.

We expect further positive movement as a new government take over

power at the end of this month

Sector Report Today(%) Month-To-Date(%) Year-To-Date(%)

NSE30 0.02 -0.57 105.54

NSE BNK10 -0.08 1.96 176.39

NSE CNSM10 -0.24 -3.75 87.82

NSE OILG5 0.49 -0.86 161.33

NSE INS10 0.28 1.74 15.88

NSE IND 0.56 1.36 18.06

Market Wrap

ASI 0.17% 34,355.31

Index year-to-date e -0.86%

Market Cap. N11.674Tril

Traded value 3.715Bn

Key gainers (%)

NASCON 4.73

TOTAL 4.19

DANGFLOUR 4.16

OANDO 1.00

HONYFLOUR 2.76

Key losers (%)

MAYBAKER -5.08

UBA -2.24

FIDELITYBK -2.13

NESTLE -1.26

CAP -1.20

NITTY

1M 13.6954

2M 13.7000

3M 13.7910

6M 14.2042

9M 14.7023

12M 14.8328

Crude oil spot price

Brent crude US$62.91

Contact information

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Mobile: 08068015502

Email: cslservice@fcmb.com

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Retail views

Banking Comment

Current

Price

Target

Price

Potential

Upside %

EPS

FY

2014

1 Yr

forward

EPS

Last

Dividend

(N)

P/BV

2014

Yield FY

2014

Yield FY

2015e

Shares

Outstanding

(millions)

Year

End

ACCESS BANK Buy 6.29 7.33 17% 1.90 0.40 0.60 0.70 9.19% 0.8% 22883.00 Dec.DIAMOND BANK Buy 4.44 5.27 19% 1.54* 0.30 0.10 0.43* 7.5*% 1.8% 14475.00 Dec.FIDELITY BANK PLC Under review 1.84 1.86 1% 0.45* 0.33 0.18 0.22* 10.8*% 6.9% 28974.00 Dec.FBN HOLDINGS Buy 9.20 12.86 40% 2.54 0.04 0.10 0.58 1.10% 0.0% 32632.00 Dec.GUARANTY TRUST BANK Buy 29.10 28.42 -2% 3.40 2.10 1.75 1.90 7.20% 7.3% 29431.00 Dec.STANBIC HOLDINGS Hold 30.35 32.37 7% 2.98* 3.60 1.25 2.3* 3.7*% 4.3% 10000.00 Dec.STERLING BANK Hold 2.17 1.57 -28% 0.34* 0.26 0.06 0.8* 6.5*% 5.2% 21592.00 Dec.SKYE BANK Under review 2.73 Under review Under review 0.30 Under review 20.7% 13219.00 Dec.U B A Buy 5.23 7.87 50% 1.29* 0.44 0.10 0.44* 11.3*% 4.0% 32981.00 Dec.

ZENITH BANK Buy 22.00 24.60 12% 3.17 2.16 1.75 1.20 8.20% 4.3% 31396.00 Dec.

Food & BeverageEV/EBITDA (x)

2014

Yield FY 2014

DANGOTE SUGAR REFINERY Under review 6.55 Under review 0.60 7.4% 12000.00 Dec.CADBURY NIG. Under review 40.00 Under review 0.65 4.7% 1878.00 Dec.FLOUR MILLS Hold 34.85 54.80 57% 1.93 3.50 1.60 7.10 3.60% 1.8% 2385.00 Mar.HONEYWELL FLOURMILLS Buy 3.72 5.20 40% 0.30 0.17 4.7% 7930.00 Mar.NESTLE FOODS NIG. Under review 860.00 Under review 38.00 17.50 34.5* 2.10% 4.6% 792.00 Dec.P Z INDUSTRIES Hold 28.66 34.60 21% 0.81 3.0% 3970.00 MayU A C N Buy 41.40 72.60 75% 1.75 4.7% 1920.00 Dec.UNILEVER NIGERIA PLC Sell 45.10 24.30 -46% 0.64 2.11 0.10 0.30% 5.0% 3783.00 Dec.

Building Materials EPS 2014eEV/EBITDA(x)

2014e

Yield FY

2014e

LAFARGE WAPCO PLC Under review 96.99 Under review 3.50 3.30% 3.3% 3001.00 Mar.

DANGOTE CEMENT Buy 180.00 198.40 9.07 9.87 6.00 13.00 3.60% 3.5% 17040.00 Dec.

Breweries EPS 2014EV/EBITDA(x)

2014

Yield FY 2014

GUINNESS NIG. Sell 155.72 111.00 -29% 6.30 2.70 7.00 9.30 5.40% 2.5% 1506.00 JuneINTERNATIONAL BREWERIES Hold 20.00 24.50 23% 0.30 1.5% 3263.00 Mar.NIGERIAN BREWERIES Sell 152.00 121.20 -20% 5.62 6.40 3.50 10.80 4.50% 3.5% 7562.00 June

Agriculture EPS 2013eEV/EBITDA(x)

2014e

Yield FY

2014e

OKOMU OIL Buy 29.50 41.50 41% 2.20 3.00 0.25 9.00 3.20% 6.7% 953.00 Dec.PRESCO PLC Buy 32.00 42.70 33% 1.29 1.60 0.10 9.20 0.40% 1.7% 1000.00 Dec.

PharmaceuticalsEV/EBITDA (x)

2013

Yield FY 2013

GLAXOSMITHKLINE BEECHAM NIG. Buy 44.00 78.60 79% 3.10 4.30 0.75 8.90 2.50% 3.8% 957.00 Dec.

Oil & GasEV/DACF(x)

2014Yield FY 2014

SEPLAT Buy 335.00 598.00 79% 0.58 0.87 3.10 4.70% 4.9% Dec.

Note – for full report on the recommended stocks kindly send an email to cslcsu@firstcitygroup.com

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Top Highlight

AMCON

AMCON levy on banks: No reduction in sight

Bloomberg reported on Monday that the Asset Management Corporation of Nigeria (AMCON) had recovered 57% of the bad debts it took on five

years ago to rescue banks in Nigeria. The managing director of AMCON, Mr Chike Obi, also noted that it is unlikely that lenders will be offered

another bail out.

AMCON was established in 2010 to buy the non-performing loans of Nigerian banks with a view to stabilising the banking system. To pay for this,

banks were initially mandated to contribute 0.3% of total assets to a sinking fund. This was further increased to 0.5% of total assets in 2013, and is gradually becoming a significant portion of bank’s total operating expenses (opex). Mr Chike Obi, however, mentioned that the levy on the banks

will not be eliminated or reduced until the agency is wound down.

An analysis of profits of 11 banks, excluding AMCON charges, shows that eradicating the AMCON charge would reduce the banks' 2014 opex by

N96.4bn (US$482m). Treating this increment for tax, we estimate it would add 17.8% to average Net Profits.

Going by Chike Obi’s comments, we see no possibility of a reduction in the levy. We are, however, encouraged by AMCON’s recovery rate as it suggests that a further increase in the levy may not be warranted.

Today’s news headlines

Fuel queues will disappear next week – Marketers: The nation may continue to grapple with the effect of the latest fuel crisis until next week as marketers of petroleum products have said the current supply challenge may not end this week. The marketers also confirmed in separate

interviews with one of our correspondents on Tuesday that loading of petrol had resumed across the board with members of the Major Oil

Marketers Association of Nigeria and Depot and Petroleum Products Marketers Association driving the exercise. Source: punchng.com

Oil workers want strategic alliance of OML 42 investigated: Although the strike action embarked upon by the Petroleum and Natural Gas

Senior Staff Association of Nigeria (PENGASSAN) and the National Union of Petroleum and Natural Gas Workers (NUPENG) has been suspended, they have, however, called on the incoming president, Muhammadu Buhari, to investigate the strategic alliance of the Oil Mining Lease (OML) 42.

The transfer of operatorship of OML 42, considered the most prolific block in the country, from the Nigeria Petroleum Development Company

(NPDC) to indigenous joint venture partner, Neconde, by the federal government, allegedly sparked a crisis which resulted to a near collapse of the

nation’s economy. Source: leadershipng.com

Power firms declare force majeure over tariffs, insurgency: Some electricity distribution companies popularly known as DISCOs have declared political force majeure, the Bureau of Public Enterprises has said. The Head of Public Communications at the privatisation agency, Mr. Alex Okoh,

who said this in a statement made available to our correspondent in Abuja on Tuesday, also disclosed that the Yola Electricity Distribution

Company had declared another force majeure as a result of insurgency in the area of its operation. Source: punchng.com

Daily Retail Report

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Retail views

Important Risk Warnings and Disclaimers

CSL STOCKBROKERS LIMITED (CSLS) is regulated and authorized by the Securities and Exchange Commission (SEC) of Nigeria and the Nigerian Stock Exchange (NSE). The details of the authorization can be viewed at the SEC Website at http://www.sec.gov.ng/consolidated-list-of-capital-market-operators.html and at the NSE Website at http://www.nse.com.ng/Regulation/ForBrokers/Pages/Dealing-Members.asp. RELIANCE ON THIS NOTE 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 CSLS. When distributing this document, CSLS or any member of the First City 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, CSLS will not be responsible to any recipient for providing the protections afforded to its clients.

If you are in the UK, the protections of the Financial Services and Markets Act 2000 (FSMA) or Financial Conduct Authority (FCA) do not apply to any investment activity engaged in as a result of this communication; and any resulting transaction would not fall within the jurisdiction of any FSMA or FCA dispute resolution or compensation scheme. By accepting this document you confirm that you are so aware of the above stated. If you do not accept the above stated and/or if the distribution of this document is otherwise unlawful where you are, you are required to return the document immediately to CSLS. This document is not an offer to buy or sell or to solicit an offer to buy or sell any security. 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. CSLS is a member of the FCMB Group Plc (“the Group”), a group of companies which includes First City Monument Bank Ltd., FCMB Capital Markets Ltd, First City Asset Management and FCMB UK. Either CSLS or any other member of the Group may effect transactions in shares mentioned herein, 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 CSLS or the Group, which is not reflected in this material. Further information on CSLS’ policy regarding potential conflicts of interest in the context of investment research and CSLS’ policy on disclosure and conflicts in general are available on request. This document is based on information obtained from sources it believes are reliable but which it has not independently verified. Neither CSLS nor its advisors, directors or employees make any guarantee, representation or warranty as to its accuracy, reasonableness or completeness and neither CSLS nor its 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 not to be relied upon and should not be used in substitution for the exercise of independent judgment.

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