By Yakubu LAAH InvestAdvocate

Lagos (INVESTADVOCATE)-The bulls on Wednesday returned to the Nigerian Stock Exchange (NSE) as all-share index (ASI) climbed up by 0.41 percent to close at 26,763.86 points, while market capitalisation added N19.75 billion to N9.19 trillion.

“Today’s gain extended the Month-to-Date gain to 6.79 percent and cut the Year-to-Date loss to 6.56 percent, Cordros daily market update affirmed.

According to the update at the close of the session, the Banking sector closed positive by 1.73 percent, following price appreciations in the shares of Nigeria’s top tier lenders, Zenith Bank Plc and Guaranty Trust Bank Plc by 4.02 percent and 2.68 percent each.

In the same vein, the Consumer Goods index gained 0.35 percent, benefitting from positive investor interest in the shares of top brewer, Nigerian Breweries Plc by 1.98 percent.

On the flipside, selloffs in the shares of cement producers, Lafarge Cement Wapco Nigeria Plc and Dangote Cement Plc caused the companies to lose 0.68 percent and 0.01 percent apiece, weighed down on the Industrial Goods sector by a loss of 0.25 percent.

Insurers, Custodian & Allied Insurance Plc and Axa Mansard Insurance Plc lost by 4.50 percent and 3.67 percent respectively to impact negatively on the Insurance index by a loss of 0.38 percent.

Similarly, oil marketing majors, Oando Plc and Total Nigeria Plc depreciated by 3.10 percent and 0.59 percent each; weighing negatively on the Oil & Gas index by 0.45 percent.

At the close of today’s trading on the Nigerian bourse, market breadth was negative, with 22 gainers and 23 losers recorded in terms of equities. African Prudential Registrars topped the gainers chart with a gain of 0.14 kobo per share; while Tiger Branded Consumer Goods Plc emerged the top loser with a loss of 0.55 kobo per share.

In terms of turnover, total volume traded on the Nigerian Equities Market jumped by 69.38 percent to 670.80 million shares, valued at N2.06 billion, and traded in 3,976 deals.

“With no positive catalyst on the horizon, we do not see today’s gain being sustained in tomorrow’s session,” the Cordros update affirmed.

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By Yakubu LAAH InvestAdvocate

Lagos (INVESTADVOCATE)-The Nigerian equities on Monday reeled under sustained losses as it opened the week on a bearish note, closing 0.34 percent lower on investment declines.

At the close of the day’s session, the all share index (ASI) closed at 24,765.10 points, while market capitalisation dropped by N29.24 billion to N8.52 trillion.

“Today’s loss further increased the Month-to-Date and Year-to-Date losses to 2.14 percent and 13.54 percent respectively,” Cordros daily market update affirmed.

According to the report, sell-offs in the shares of oil marketing firms, Forte Oil Plc and Oando Plc led to declines by 9.13 percent and 1.13 percent, causing the Oil & Gas index to loss 4.19 percent.

In the same vein, declines recorded in the shares of insurer, AIICO Insurance Plc and reinsurer, Continental Reinsurance Plc by 2.56 percent and 1.96 percent apiece led to the Insurance sector closing in red by 1.54 percent.

On the contrary, the Banking, Consumer and Industrial Goods indices gained 0.25 percent, 0.15 percent and 0.04 percent respectively, following price appreciations in the shares of Nigeria’s top tier lender, Guaranty Trust Bank Plc by 1.13 percent, beermaker, Nigerian Breweries Plc 0.37 percent and cement producer, Cement Company of Northern Nigeria Plc gaining 4.93 percent each.

The Cordros update reports that at the close of the session on the Nigerian Stock Exchange (NSE), market breadth posted a negative outlook with 15 gainers and 25 losers, according to the NSE’s daily market statistics. Educational publishing firm, Learn Africa Plc emerged the top gainer with a gain of 0.04 kobo per share; while Forte Oil topped the losers table with a loss of N25.12 per share.

In terms of turnover, total volume traded on the Nigerian Bourse dipped by 23.34 percent to 144.68 million shares, worth N766.02 million, and traded in 2,729 deals.

“We expect the bulls to resurface in tomorrow’s session, as we await the release of additional Q1-2016 earnings results,” the Cordros report added.

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Wednesday, April 20, 2016 6:07PM/ FBNQuest

Event: GT Bank reports Q1 2016 results

Implications: Market reaction likely to be neutral to slightly negative

Positives: Limited to provisions coming in 4% lower y/y

Negatives: Significant (N5.3bn) loss on the other comprehensive income line

GT Bank’s Q1 2016 results which have just been published by the NSE show that both PBT of N30.7bn and PAT of N20bn were down y/y, by -6% and -26% respectively. The greater decline in PAT stemmed from a significant loss of –N5.3bn on the other comprehensive income (OCI) line, driven by fair value loss on available for sale securities.

Although this may be linked to yields having inched up on fixed income securities in Q1, the magnitude suggests that some other explanation is probably behind this loss. Returning to the PBT line, although both loan loss provisions (-4% y/y) and operating expenses (-2% y/y) both declined, these were not material relative to a -4.1% y/y decline in profit before provisions.

As to the drivers behind the latter, it was really non-interest income of N19bn that weighed on the result, coming in -18% below the Q1 2015 figure. In contrast, net interest income grew by 4.2% y/y to N40.8bn. On a sequential basis, the OCI loss was responsible for the PAT showing a decline of -12% q/q.

However, PBT grew by 7.1% q/q, reflecting growth of 8.6% q/q in profit before provisions. Q/q growth of 14% in operating expenses was offset by a -13% q/q decline in loan loss provisions. As to contributions from the revenue lines, non-interest income showed a strong 25% q/q growth.

However, this reflects the fact that Q1 is a seasonally strong quarter for non-interest income. Net interest income grew modestly, by 2.5% q/q.

The Q1 2016 PBT figure of N30.7bn suggests that GT Bank has started the year on a good footing. However, since the rest of the year typically sees a reduction in the PBT as non-interest income falls to normalised levels, this implies that the bank will need to deliver stronger than expected q/q growth than we were expecting to achieve its N125bn target for the full year (this is also our published estimate).

Given the continued weakness in the macro environment – and that this has probably worsened since the Q4 2015 results conference call – we suspect that the market will have slight doubts regarding this target. We note that loan growth was -0.7% vs December levels in Q1. Full year guidance by management is ”a maximum of 10%.”

However, given that the ‘underperformance’ of the underlying results relative to expectations was not significant, we do not expect the market to be fixated with this line. In contrast, we expect focus to be on the –N5.3bn loss on the OCI line. We await management’s comments on this.

All in all, we believe that management will continue to reiterate its full year PBT guidance of N125bn despite the slight weakness in Q1. We rate GT shares Outperform.

Click here to read full report

Culled—–Proshare

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