Investors swoops on Dangote Cement to take profit

Nigeria’s share index down 0.46% as investors swoops on Dangote Cement to take profit

A 35 basis points gain that would have seen Nigeria’s capital market All Share Index post positive outcome frittered away quickly as an appreciation in the price of the equities of Dangote Cement on Tuesday led to a swoop on Wednesday by investors who embarked on a spirited effort to take profit. The All-Share Index fell 0.46 percent as a result.

Dangote is the market’s most capitalised stock and tend to swing the market whenever it as much as catches a cold and sneezes.

DANGCEM recorded a share price decline of 2.4 percent while other market bellwethers such as FBNH (-2.8%) and STANBIC (-1.6%) contributed to the decline in the benchmark index which settled at 32,963.27 points.

The day’s performance worsened year-to-date loss to -13.8 percent while market capitalization fell by N55.2 billion to N12.0 trillion.

Activity level weakened as volume and value traded declined 22.8 percent and 37.5 percent to close at 172.2 million units and N2.1 billion respectively.

The top traded stocks by volume were FIDELITY (33.8 million units), UBA (19.8 million units) and ZENITH (12.3 million units) while GUARANTY (N1.0 billion), UBA (165.8 billion) and FBNH (71.7 billion) were the top traded stocks by value.

Performance across sectors was largely bearish as four out of five indices closed in the red.

The industrial goods index shed the most, down 1.4 percent as a result of price depreciation in DANGCEM (-2.4%) and CCNN (-0.8%).

The insurance and consumer goods indices followed, down 0.4 percent and 0.1 percent respectively on the back of profit taking in CUSTODIAN (-7.4%), CONTINSURE (-3.4%), NASCON (-3.1%) and FLOURMILL (-1.8%) while the oil & gas index marginally shed 4bps following sell-offs in OANDO (-1.2%).

On the flipside, the banking index advanced 1.9 percent as a result of buying interests in ZENITH (+4.7%) and UBN (+3.9%).

Investor sentiment as measured by market breadth (advance/decline ratio) weakened to 0.7x from 1.3x recorded the last session as 16 stocks appreciated against 23 decliners.

The best performing stocks were led by UACPROP (+10.0%), UPL (+7.3%) and ZENITH (+4.6%) while BERGER (-10.0%), ROYALEX (-9.1%) and UNIONDAC (-8.6%) were the worst performers.

In line with the day’s performance, analysts at CESL say they see a bearish outlook for the rest of the week.

Guidelines For Accessing Real Sector Support Facility Through CRR And Corporate Bonds

1.0 Introduction

At its 119th Meeting held on 23rd and 24th July, 2018, the Monetary Policy Committee (MPC) of Central Bank of Nigeria emphasized the need to increase the flow of credit to the real sector of the economy in order to consolidate and sustain economic recovery. To achieve this objective Deposit Money Banks (DMBs) would henceforth be incentivized to direct affordable, long-term bank credit to the manufacturing, agriculture, as well other sectors considered by the CBN as employment and growth stimulating, while Corporates/Triple-A-rated companies will be encouraged to issue Long-term Corporate Bonds (CBS). The CBN will therefore lay more emphasis on projects targeted not only at backward integration but also at those that will enhance Nigeria’s Import Substitution Strategy.

 

1.1 Differentiated Cash Reserves Requirement (DCRR) Regime

Under this programme, DMBs interested in providing Credit Financing to greenfield (new) and brownfield (new/expansion) projects in the real sector (Agriculture and Manufacturing) may request for the release of funds from their CRR to finance the projects subject to DMBs providing verifiable evidence that the funds shall be directed at the projects approved by the CBN.

 

1.2 Corporate Bonds (CB) Funding Programme

This programme involves investment by the CBN and the general public in CBs issued by corporates subject to the intensified transparency requirements for Triple A-rated entities. Such requirements would include publishing through printing of an Information Memorandum spelling out the details of the projects for which the funds are required together with terms and conditions showing that these are long term projects that are employment and growth stimulating.

 

2.0 Objectives of the Facility

The objectives of the Facility are to:

2.1 Improve access to affordable finance to the manufacturing, agricultural, and other related sectors that are employment and growth stimulating to the economy.

2.2 Stimulate growth in employment-elastic sectors.

 

3.0 Activities to be Covered

3.1 The activities to be covered under this program shall be Greenfield (new) and expansion (brownfield) projects in manufacturing, agriculture, and other related sectors approved by the CBN. Emphasis will however be placed on Greenfield (new) projects.

3.2 Priority shall be accorded projects with high local content, import substitution, foreign exchange earnings and potential for job creation.

3.3 Trading activities are PROHIBITED under the Facility and any attempt by a Deposit Money Bank (DMB) to falsify through presentation of projects that do not meet the eligibility criteria/specified terms and conditions shall attract severe penalties from the CBN.

 

4.0 Types of Facilities

4.1 Differentiated CRR (DCRR)

This shall comprise loans to Greenfield or expansion projects using CRR. Emphasis shall however be on new projects.

4.1.1 Tenor: Minimum of seven years.

4.1.2 Moratorium: Two years moratorium.

4.1.3 The participating financial institution (PFI) shall bear the credit risk.

4.1.4 refinancing of existing loans is PROHIBITED for funding under this program and any attempt to falsify information shall attract severe sanctions from the CBN.

4.2. Corporate Bonds (CBs) Program these are financing instruments issued by corporates and that meet eligibility criteria as specified by the CBN.

4.2.1 Tenor: As specified in the prospectus by the issuing corporate but not below seven (7) years.

4.2.2 Moratorium: As Specified in the prospectus by the issuing corporate.

 

5.0 Modalities of the Facility

5.1 Maximum Amount The maximum facility shall be ₦10 billion per project.

5.2 Interest rate Facilities are to be administered at an all-in interest rate/ charge of 9 per cent per annum. Bank Customers are encouraged to report any bank to the CBN’s Director of Banking Supervision, Where such DMB may have charged interest rates above the prescribed maximum of 9 percent per annum.

5.3 Repayment- Repayments shall be amortized and remitted on quarterly basis to the CBN.

 

6.0 Eligibility Criteria for Participation in the Facility/OP Programme

6.1    Participating Financial Institutions (PFIs)

6a)   Only CRR contributing DMBs shall be eligible to participate under the DCRR.

6b)   For CBS, all Financial Institutions and general public are eligible to participate in investing in Corporate Bonds.

6.2 Borrower under the CB programme a borrower shall be an entity incorporated in Nigeria under the Companies and Allied Matters Act of 1990. Such borrower must not have a non-performing facility with any financial institution.

 

7.0 Responsibilities of Stakeholders

For effective implementation of the Facility, the responsibilities of the stakeholders shall include:

7.1 Central Bank of Nigeria

  1. Articulate and review guidelines for the implementation of the
  2. Facility.
  • Review the CB for investment.
  1. Invest in CBs issued by corporates.
  2. Determine the limits of DCRR and CB investments.
  3. Appraise, monitor and evaluate projects and the Facility.
  • Render periodic reports on performance.
  • The CBN shall disburse funds to projects through DMBs in agreed TRANCHES.

 

7.2 Participating Financial Institution (PFI)

  1. Undertake due diligence based on normal business consideration.
  2. Forward an initial Credit request on the proposed project to the CBN for pre-funding assessment/ approval in- principle to proceed.
  • Forward final approved requests to CBN for funding after meeting all Conditions precedent to disbursement of the facility.
  1. Disburse funds to obligors through their DMBs in agreed TRANCHES based on disbursement schedules submitted by DMBs to the CBN within five working days of release from the CBN.
  2. Render periodic returns as specified by the CBN from time to time.
  3. Monitor the projects.
  • Comply with the guidelines of the Facility.

 

7 .3 Borrower

  1. Adhere strictly to the terms and conditions of the Facility.
  2. Utilize the funds for the purpose for which it was granted.
  • Make the project and records available for inspection/ verification by the CBN.
  1. Comply with the guidelines

 

8.0 Discontinuation of a Credit Facility

Where a facility is repaid or otherwise discontinued, the PFI shall advise the CBN immediately, giving particulars of the facility. Any outstanding amount under the facility is to be refunded to the CBN.

 

9.0 Amendments

These Guidelines shall be subject to review from time to time as may be deemed necessary by the CBN.

 

Capital Express Securities Ltd – Business News

The Securities and Exchange Commission has approved the reduction in the transaction costs of raising funds from the capital market. This action is aimed at making listing on the capital market attractive to companies. The commission has approved that the cost of listing equities should be reduced from 3.17% (of the value of what is being listed) to 2.83%. While fixed income securities should be reduced from 3.97% to 3.28%. The reduction has started having a positive impact on the capital market as more issuers of capital market securities were already coming into the market.

TOP GAINERS PRICE % CHANGE
INTBREW 35.20 10.00
PORTPAINT 2.47 9.78
SOVERENINS 0.26 8.33
MANSARD 2.55 7.14
UNILEVER 55.00 4.76
CUTIX 4.18 4.50
TOP LOSERS PRICE % CHANGE
NEIMETEH 0.60 -25.00
NSLTECH 0.23 -20.69
SKYEBANK 0.48 -18.64
BERGER 6.55 -18.13
CONTINSURE 1.40 -17.16
WAPIC 0.35 -12.50

 

The Statistician-General of the Federation, Yemi Kale, stated that Nigeria’s economy has not recovered from the 2016 recession. The conflicts between farmers and herdsmen dragged down the Gross Domestic Product (GDP) in the first quarter of 2018. The performance of the nation’s economy in the second quarter of the year is not encouraging. However, the projection of the International Monetary Fund (IMF) that the economy would grow by 2.1% by the end of 2018 is still achievable.

The Federal Government of Nigeria and the Republic of Korea have sealed an agreement for the construction of aid projects in various sectors of the economy. The Minister of State for Budget and National Planning, Mrs Zainab Ahmed, signed the agreement on behalf of the Federal Government while the Korean Ambassador to Nigeria, Major General In-Tac-Lee (retd) signed for the Korean government. This agreement captured projects that were in line with Nigeria’s development priorities as encapsulated in the Economic Recovery and Growth Plan and this will help achieve sustainable economic development in Nigeria.

The National Pension Commission has directed the Pension Fund Administrators to pay additional 5% lump sum to retirees that were initially paid 20% of total balance in their Retirement Savings Accounts on retirement. Those whose lump sum payment was as low as 16% would get extra 9% of their Retirement Savings Accounts. The decree was made after the commission had directed all Pension Fund Administrators to revert to the old template of 25% minimum lump sum payment.

The African Export-Import Bank has disbursed a total of $422million loans in six months. This represents a 5.07% increase in its loan disbursements as of December 2017. Also there was gross revenue of $343million, which amounted to a $21million increase over the gross revenue for the same period in 2017. The higher gross revenue is as a result of significant increase in fee income by 119% while interest and similar income recorded a 2% growth compared to the prior year performance.

INDICES 20/08/2018 13/08/2018 % CHANGE
NSE All-Share Index 35,266.29 35,446.47 -0.51
Market Capitalisation (N’Trillion) 12.875 12.941 -0.51
Crude Oil Price 71.76 72.93 -1.60

 

Market News

At the end of the week, International Breweries Plc tops the market at closing price of N35.20 while Neimeth International Pharmaceuticals Plc has the greatest loss in the market with a closing price of N0.60.

NIG TREASURY BILL DTM RATE (%) RATE (%)
15/08/2018 01/08/2018
91 10.00 10.00
182 10.40
364 11.22 11.30

 

The NSE All-Share Index and Market Capitalization valued 35,266.29 and N12.875 trillion respectively at the end of the week. This shows a depreciation by 0.51% for both indices’ last week value.

A total of 2,647units of Federal Government Bonds was traded during the week at N2.725million in 17 deals compared to 7,787units valued at N8.005million in 11 deals from last week’s value.

The Crude Oil price declined by –1.60 from its last week value of $72.93.

 

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