The Nigerian stock market last week closed on a bearish note, returning -1.20% week to date. Year to date, the market has returned 5.82% with the All Share Index and Market Capitalisation at 54,232.34 points and N29.544 trillion respectively.
In a stock market review with the MD/CEO of Global View Capital Limited, Aruna Kebira, the following were discussed:
• The stock market last week closed on a bearish note, declining by 1.20% week on week. Year to date, the market has returned 5.82%. What is the outlook for the new month?
The Nigerian Exchange gives issuers a moratorium to return Unaudited accounts within 60 days after the end of each year or 90 days after the end of each year to return Audited accounts.
The moratorium lapsed on March 31, 2023, and April is the first month after the lapse, and most results were released at the end of March by the issuers to be able to beat the deadline.
Consequently, the month of April is bound to receive the reaction of investors to the quality of the earnings reports released and because most issuers declared a dividend, the market will react positively and we could see a positive outing of the market in the month of April.
Also take note that the decline of the market in the month of March was grossly occasioned by the shedding of weight by the SWOOT stocks, that to an extent determined the direction of the market.
• Why are the heavy-weight stocks: Dangote Cement, Airtel, and Seplat trending down?
Rational Investors at any point in time would benchmark earnings in any investment space with that of the other, they would benchmark their ROI in the capital market with that of the debt and the money market. Also, they do that to each stock listed on the exchange.
Dangote Cement was marked down for its final dividend of N20 for the week while the market and nay the investor consider that the dividend yields in both Seplat and Airtel Africa are not commensurate to that available with other stocks like Zenith and they are relinquishing their positions. The move for the exit is what is creating the decline in the prices of the stocks.
• FCMB declared 25 kobo, BUA Foods declared N4.50, and UACN declared 22 kobo dividends to shareholders. How attractive are these stocks?
These declarations were after the market on the last trading of March 2023. By that extension, the market will move to either punish or reward the prices of these stocks depending on the dividend yield at the end of the day.
At N4.15 FCMB’s dividend yield stands at 6%, BUA Foods is 4% while that of UACN is 2.3%. An investor would weigh these yields and determine what is good for each, whether they would take them on their surfaces, than considering them in absolute terms. Then accordingly, the market would react
• Oando is delisting soon, what is the fate of the existing shareholders
Oando notified the market of its intention to delist from the Exchange but the time of the delisting and other modalities has not been spelled out.
Because the delisting price is greater than that of the current market price, definitely the market would want to move its price to equate to that of the delisting price.
If a stock wants to delist from the exchange, save the fact that it would subsequently be listed on the NASD, such a company is going private.
At that, dealing on the shares of the company also becomes private, to the extent that if you want to sell your position, you would need to approach the secretariat to find someone who is in turn willing to buy.
Except also that Oando launches a Mandatory Tender Offer to buy out the minority shareholders, any shareholder that still continues to maintain his/her position on the share register of Oando, though will be receiving dividends and other benefits as a shareholder will find it difficult to exit their positions.
• What are the possibilities in UBA, Zenith and WAPCO?
UBA declared a dividend of N0.90 for a stock currently trading at N8.35, a yield of 10.7%, one of the highest in the market. It surely looks attractive at that.
Zenith has earlier declared N2.90 final dividend which is currently among the very best in the market. Whether for both absolute and relative yields, Zenith is looking attractive.
Wapco has always been the cheapest Cement stock on the exchange and it is believed by the market that they are in the process of moving to even up with the rest, at that Wapco is attractive any day.
• What are the stocks to watch?
Nigerian Breweries, Guinness, Presco, Okomuoil and Flourmill