Nigeria Equity Watch | 29 July 2015 : Benchmark Index Records Marginal Decline… NSE ASI down 34bps

Lagos, Nigeria (Capital Markets in Africa) — Market volumes came in slightly lower than previous day; down (-10.65%) with a turnover of $22.05mn. Block trades shrouded real liquidity with Zenith (about 50m shares), Guaranty (about 34m shares), Nestle (about 1m shares) and NB (about 5m shares) recording substantial volumes.

Market breathe continues to signal weak sentiments towards equities; with only 16 stocks appreciating, 29 declining and 52 stocks remaining unchanged, affirming the obvious bearish stance. Guaranty (-1.63%), Access (-1.60%) and FBN (-0.66%) pulled banking counters south; while Brewers NB (-0.83%) and Guinness (-3.32%) waned further on distress selling.

On the flip side industrial giant Dangote Cement appreciated (+0.30%) on thin volumes returning to a three-week high of N170.52; Flourmill recovered from previous day sell-off, up +(3.50%) to close N28.98 and Mobil Oil (+3.99%) rallied on the back of its H’1 numbers but these did not salvage the index from declining (-34bps).

H’1, 2015 earnings continue to swarm the market with very little impact. Oil & Gas sector stocks however, returned positive earnings save for Seplat – which eventually succumb to sell pressure shedding (-1.25%). Mobil reported strong Q’2 numbers similar to what we saw with Total; gross margin was strong, expanding 641bp y/y in addition to significant y/y growth on other operating income line. The stock rallied +3.99% to close N155.99.

The banking space had FCMB H’1 figures in lower than expected. Relative to our forecasts, PBT and PAT both missed by 39%. y/y due to lower non-interest income, higher funding costs and loan impairment expenses. Ironically the stock rallied at the close – up +3.70% as numbers were in after the bell. We however anticipate a sell-off in the near term.

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