News Column

BDC Recapitalisation - Nass Moves to Test Emefiele's Will

July 2, 2014

Kingsley Ighomwenghian

The basic indicators of the Nigerian Stock Exchange (NSE) closed in the month of June on a positive note, helped by blue-chip stocks such as Nestle, Guinness Nigeria and Dangote Cement.

The benchmark All-Share index (average price movement on the bourse) rose by 1,008.08 basis points or 2.43 per cent, closing at 42,482.48 points, while equities' capitalisation grew by N332.874 billion, all of which came from price movement in the absence of new listings within the month.

The NSE's gain during the period came mainly from the NSE oil & gas index, which led other sectorial indices chalking all of 21 per cent to close at 468.24 basis points, followed from afar by the LotusII index, which rose 3.8 per cent up; while the banking index mustered 2.48 per cent. The industrial index rose 2.39 per cent; consumer index, 2.56 per cent and insurance index, 2.07 per cent, while the ASEm index closed flat for the period. This means that there was no index that closed in the red, unlike some other times.

This means that the oil and gas stocks were the shining stars of the period under review, dominating the top 10 gainers' table in percentage and absolute terms.

Oando emerged biggest riser in percentage terms, with its share price up by 60.63 per cent during the month, the highest in recallable history, to close at 29.25 per cent, helped by its gradual transformation from a major petroleum products marketer to an integrated energy company.

The company's bid to acquire the Nigerian assets of ConocoPhilips in a $1.65 billion deal, through its exploration and production subsidiary (Oando Energy Resources), would now be concluded by this month end.

In absolute terms, Oando gained N11.04 on the back of the June 18 approval by the Federal Government of the bid with the much sought after consent of the Petroleum Resources Minister for the deal to proceed.

A terse statement by Oando, on Monday, said: "Having received consent of the Minister of Petroleum Resources in Nigeria, both parties have extended the outside closing date for completion of the acquisition to enable them finalise activities required to conclude the transaction."

In its June 18 announcement of the approval, Oando said, following the delay, the deal is now subject to customary adjustments.

The approval came barely one month after Petroleum Resources Minister; Mrs. Deziani Alison-Madueke told a panel discussion at the World Economic Forum for Africa in Abuja, May 12, 2014, that she was reviewing the transaction.

In answer to a question on the transaction for which Oando had raised a princely N200 billion from the capital market, she debunked claims that her consent was delaying the deal. She said it is after the Department of Petroleum Resources (DPR) ensures that the processes have been followed in the divestment, among others, that she would take a decision based on DPR's findings and recommendations.

"I am looking into it as we speak," she assured, raising hope that the logjam would soon be over.

A statement by Oando on Wednesday, said with the approval, Oando Energy Resources (OER) "and ConocoPhillips are now positioned to complete the ConocoPhillips transaction."

The statement quoted an obviously elated Wale Tinubu, chairman as expressing delight "to receive the approval of the Honourable Minister of Petroleum Resources for the completion of the acquisition. It has been a long journey, wherein we kept faith with our strategy and executed every milestone diligently. This acquisition satisfies our criteria for assets in production, as well as excellent appraisal and exploration prospects. The coast now stands clear for us to immediately complete the acquisition".

Other gainers, laggards

According to data by the Nigerian Stock Exchange (NSE), other major gainers in June included MRS Oil, whose share price grew 35.95 per cent; followed closely by Conoil with 35.1 per cent gain; Eterna, 29.63 per cent; and Transnational Corporation of Nigeria (Transcorp).

Leading the gainers' table in absolute terms was food beverages giant- Nestle Nigeria, which was the biggest riser with N77.00; followed by newly listed operator in the oil and gas industry's upstream operators- Seplat Petroleum Development Company with N41.05 each. Guinness chalked a total of N20.01; MRS closed N18.51 up; ahead of fellow petroleum products marketing giant- Conoil, which grabbed N16.99; just as Total climbed N11.04 up. Mobil Oil, another petroleum products giant notched 757 kobo; 7-Up closed 720 kobo up; Ashaka Cement, 604 kobo; and Dangote Cement, 500 kobo.

There was however profit taking in the shares of Forte Oil, which had in previous months reported juicy growth in share price on the back of its transformation into a total energy provider with its acquisition, last year, of the Geregu Power Distribution plant. The company's 2014 first quarter profit before tax inched 101 per cent from N633 million to N1.26 billion within the period.

A statement by the company linked this growth, which if sustained would result in juicier dividend to shareholders, to the strong performance from the group's Geregu Power Plant, despite operational challenges.

In the month of June, Forte Oil shed 758 kobo; ahead of Glaxo Smithkline Consumers' 415 kobo; while Nigerian Breweries, the exchange's biggest company by capitalisation after Dangote Cement, dropped 410 kobo; just as Champion Breweries lost 362 kobo; ahead of 300 kobo loss by UAC of Nigeria; among others. In percentage terms however, NPF Microfinance Bank took the lead, losing 27.68 per cent; followed by Champion Breweries' 26.25 per cent; Jos Breweries shed 16.23 per cent; National Salt Company's share price was down by 15.25 per cent; Learn Africa, 14. 29 per cent; Nigerian National Flour Mills, 10.27 per cent; Berger Paints, 10 per cent; BOC Gases, 9.58 per cent; while Ikeja Hotels lost 8.89 per cent of its share price.

Transactions

Meanwhile, stockbrokers acting on behalf of investors crossed a total of 9.437 billion shares valued at N112.75 billion in 117,834 deals in the month of June, an improvement by about 1.866 billion or 24.64 per cent over the 7.571 billion units exchanged in the month of May for N100.805 billion in 95,998 deals.

Shares of financial services stocks were the most active within the period, accounting for 5.003 billion units, which changed hands for N76.141 billion in 54,097 deals, with the banking contributing 2.737 billion shares worth N34.875 billion in 32,556 deals. Oil and gas stocks contributed 702.274 million units valued at N7.474 billion; just as building materials pooled 197.917 million shares worth N8.172 billion.

According to the trading data for the period, trading volume and value remained heavily skewed in favour of the top-10 stockbrokerage firms.

While the top-10 firms accounted for 10.224 billion shares or 54.72 per cent of the total traded for the period, they were responsible for N141.327 billion or 64.46 per cent of equities' value.

In volume terms, BGL Securities Limited took the lead with 3.747 billion or 20.06 per cent of transactions during the month; followed by Stanbic IBTC Stockbrokers Limited from afar with 1.489 billion units or 7.97 per cent; CSL Stockbrokers Limited recorded 1.191 billion units or 6.37 per cent; FBN Securities Limited traded a total of 972.769 million or 5.21 per cent; and Rencap Securities (Nig) Limited pooled 688.654 million units or 3.69 per cent.

In value terms, CSL Stockbrokers led the top 10 table with transactions worth N36.996 billion or 16.87 per cent; closely followed by Stanbic IBTC Stockbrokers' N29.735 billion or 13.56 per cent; while BGL Securities Limited came third with N20.047 billion, representing 9.14 per cent of total value staked during the period. Recap Securities traded equities worth N12.653 billion or 5.77 per cent; while FBN Securities pooled N12.46 billion or 5.68 per cent.

Outlook

Going by the positive end of the first half, analysts believe that going forward, the year may likely end with the All-Share index at a minimum of 44,039.55 points, representing a year-to-date return of 6.55 per cent.


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Source: AllAfrica


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