Nigeria Equities Market Review and Outlook Week Ending 14th October

LAGOS (Capital Markets in Africa) – Mixed sentiments trailed the Nigerian equities market this week amid expectations for weak Q3:2016 earnings results. The All Share Index (ASI) gained marginally on 3 trading sessions while declining on 2. Thus, the ASI inched 9bps higher W-o-W.  YTD loss pared to 2.7% while market capitalization improved by N8.9bn to settle at N9.6tn. Activity level also improved as average volume and value rose 24.4% and 45.5% to 232.5m units and N1.8bn W-o-W respectively.

Overall performance across sectors remained mixed. The Banking index led sector gainers, advancing 1.9% on account of gains in ZENITH (+5.4%), ACCESS (+4.6%) and UBA (+1.9%). This may be linked to an impressive earnings scorecard submitted by UBA, which reported a nine month Gross Earnings and PAT growth of 8.2% (N265.5bn from N245.5bn) and 7.6% (N52.3bn from N48.6bn) Y-o-Y respectively. In the same vein, the Consumer Goods index closed 0.6% higher on account of NIGERIAN BREWERIES (+2.0%), DANGSUGAR (+1.9%) and NESTLE (+0.7%). Likewise, the Oil & Gas index added 2bps despite negative reactions to FORTE (-9.2%), which submitted an unimpressive 9 month result, with Revenue expanding 32.2% Y-o-Y (N121.1bn from N91.6bn)  while PAT tumbled 34.7% (N2.8bn from N4.3bn) due to a surge (663.1%) in Finance cost. Conversely, the Industrial Goods index dived 3.6% W-o-W on account of persistent sell-offs in WAPCO (-9.9%), while the Insurance index lost 5bps on the back of AIICO (-6.2%) and NEM (-5.9%).

Investor sentiment remained weak as market breadth – advancers/decliners ratio – retreated to the negative region at 0.5x (from 1.0x in the previous week) as 20 stocks advanced while 42 stocks declined. Top performers for the week were CAVERTON (+13.4%), SEPLAT (+10.3%) and TRANSEXPR (+9.8%) while UAC-PROP (-13.6%), WAPCO (-9.9%) and ETRANZACT (-9.6%) topped the losers chart. With the anticipation of more Q3:2016 earnings yet to be submitted, we expect performance to be broadly driven by further influx of Q3:2016 earnings.