Market to Continue Upward Movement
- By Business World
- Published April 6th, 2010
- Back Page
- Unrated
THE market is sure to continue its upward movement this week. All the factors that have helped its upward climb are still there: good earnings per share, good dividend payout, bonuses and strong fundamentals. Factors from outside the market include tighter regulations and enforcement, better investor education programmes and reduced cost of transaction. Take it or leave it, the on-going banking reforms are instilling a great sense of confidence into the public. It is helping and will continue to help the market to be on the bullish path. “The internal factors, anyway more than the external factors drive the market forward”, says Mr. Aaron Oleka of Shelong Investment Services Limited, a stockbroking house. He continues, “if all the external factors do not guarantee good dividend, bonus and price appreciation, they will amount to nothing, but you can be sure that without the reforms, as long as the companies keep rewarding shareholders, the market will be up always. If the internal conditions are not okay, no external factors can work right on the company.
The yield across all fixed income sources still remains below the yield from the capital market. Thus there will still be more income hunters flocking to the stock market. The budget has been passed to create liquidity in the economy. As the budget is disbursed operators believe that the money will find its way to the stock market one way or the other.
But operators believe that one of the biggest factors will be the coming on stream of the AMC (Asset Management Company) which will buy off the toxic assets that have been hampering banks from lending to the public. They believe that as soon as these debts are bought funds will be available for lending to the public for business. Thus, in the month of April, the strong belief is that indices of the stock market will be on the rise.
The uniform full year December 31, 2009 result of banks will be released in this second quarter of the year 2010. Those that have released have rewarded their shareholders handsomely. Some of those that have not released are also poised to also reward their shareholders handsomely.
Below are some that have yet to release their results, and they are most likely to reward their shareholders handsomely. Investors are advised to take position cheaply before the release.
Stanbic IBTC Bank
Perhaps why Stanbic IBTC was never caught in the web of the CBN reform was because it is entrenched in investment banking. Its strength is in investment banking. Hence even with its foray into the capital market, it never burnt its fingers. Its investment and banking horns became better sharpened when it merged with Standard Bank of South Africa to form Stanbic IBTC. Again, it was not caught napping when the uniform year was announced because it had already adjusted its accounting year in 2007 from March to December.
For Stanbic IBTC, there was little or no toxic waste on account of its savvy investment banking when the stock market crashed on account of excessive margin loans. Every quarter, it has been increasing its earnings which have always culminated in yielding dividend yearly in the last five years. It has consistently presented both its quarterly and yearly financial reports for the investing public to scrutinize. Its relatively small outstanding shares of 18.1billion units show that it still has a lot of room for growth in terms of dividend and bonus. It has been known that Stanbic IBTC gives out between 40-50 per cent of its earnings as dividend making it one of the top paying stocks.
Operators believe that dividend payment will not be out of place as the last quarter earnings which is expected to hit 40kobo can support a dividend of 20-30kobo. Thus for short term medium and long term investors, this stock is attractive even for the long term investor.
Fidelity Bank
From the data available, Fidelity Bank has been very consistent in providing all its quarterly and yearly reports. In the last five years, its earnings pattern has been increasing until the third quarter of 2009 when it dipped to as low as 5kobo from a high of 42kobo in 2008.
Since consolidation, Fidelity Bank has been paying dividend. Kudos must be given to the bank on the ground that even with its large outstanding shares - 28.9billion units - it increases its profitability yearly to pay dividend to its shareholders.
During the auditing exercise in the banking sector, the the bank was found to have relatively minimal non-performing margin loans. Again, its capital adequacy ratio crossed the 36 per cent level.
Having made adequate provision for loan losses in its unaudited accounts published last year, there are strong indications that its financial results for the year ended December 31, 2009 will be a marked improvement from the unaudited accounts. Consequently, its EPS is likely to rise far above the 5kobo reported in the unaudited accounts but will certainly not get to the 2008 level of 42kobo. With this, the bank will still declare a profit and give dividend to its shareholders. This will make it one of the few banks that will declare dividend for the accounting year ended December 31, 2009.
For investors who are expecting some dividend, the time to take a position is now before the result is released.
Access Bank
It has been a very good friend of bank regulators in SEC and CBN as it has regularly provided its reports to the public, regulatory bodies and operators to ensure that wise investment decisions are made.
It has also been increasing its earnings quarterly and annually except in the second quarter of 2009 when it had to mandatorily provision for toxic loans as directed by the CBN. In the last five years, it has consistently paid dividend to its shareholders.
Having changed its financial year end from March 31 to December 31 as directed by the CBN, Access Bank will be presenting a nine-month audited account.
A plus for the bank is its small outstanding shares -16billion units, which came as a result of reconstruction in 2008.
Another plus is that it passed the financial stress test of the CBN and therefore is good for medium and long term investment. The possibility of a dividend is slim but price appreciation or gain is possible.
The yield across all fixed income sources still remains below the yield from the capital market. Thus there will still be more income hunters flocking to the stock market. The budget has been passed to create liquidity in the economy. As the budget is disbursed operators believe that the money will find its way to the stock market one way or the other.
But operators believe that one of the biggest factors will be the coming on stream of the AMC (Asset Management Company) which will buy off the toxic assets that have been hampering banks from lending to the public. They believe that as soon as these debts are bought funds will be available for lending to the public for business. Thus, in the month of April, the strong belief is that indices of the stock market will be on the rise.
The uniform full year December 31, 2009 result of banks will be released in this second quarter of the year 2010. Those that have released have rewarded their shareholders handsomely. Some of those that have not released are also poised to also reward their shareholders handsomely.
Below are some that have yet to release their results, and they are most likely to reward their shareholders handsomely. Investors are advised to take position cheaply before the release.
Stanbic IBTC Bank
Perhaps why Stanbic IBTC was never caught in the web of the CBN reform was because it is entrenched in investment banking. Its strength is in investment banking. Hence even with its foray into the capital market, it never burnt its fingers. Its investment and banking horns became better sharpened when it merged with Standard Bank of South Africa to form Stanbic IBTC. Again, it was not caught napping when the uniform year was announced because it had already adjusted its accounting year in 2007 from March to December.
For Stanbic IBTC, there was little or no toxic waste on account of its savvy investment banking when the stock market crashed on account of excessive margin loans. Every quarter, it has been increasing its earnings which have always culminated in yielding dividend yearly in the last five years. It has consistently presented both its quarterly and yearly financial reports for the investing public to scrutinize. Its relatively small outstanding shares of 18.1billion units show that it still has a lot of room for growth in terms of dividend and bonus. It has been known that Stanbic IBTC gives out between 40-50 per cent of its earnings as dividend making it one of the top paying stocks.
Operators believe that dividend payment will not be out of place as the last quarter earnings which is expected to hit 40kobo can support a dividend of 20-30kobo. Thus for short term medium and long term investors, this stock is attractive even for the long term investor.
Fidelity Bank
From the data available, Fidelity Bank has been very consistent in providing all its quarterly and yearly reports. In the last five years, its earnings pattern has been increasing until the third quarter of 2009 when it dipped to as low as 5kobo from a high of 42kobo in 2008.
Since consolidation, Fidelity Bank has been paying dividend. Kudos must be given to the bank on the ground that even with its large outstanding shares - 28.9billion units - it increases its profitability yearly to pay dividend to its shareholders.
During the auditing exercise in the banking sector, the the bank was found to have relatively minimal non-performing margin loans. Again, its capital adequacy ratio crossed the 36 per cent level.
Having made adequate provision for loan losses in its unaudited accounts published last year, there are strong indications that its financial results for the year ended December 31, 2009 will be a marked improvement from the unaudited accounts. Consequently, its EPS is likely to rise far above the 5kobo reported in the unaudited accounts but will certainly not get to the 2008 level of 42kobo. With this, the bank will still declare a profit and give dividend to its shareholders. This will make it one of the few banks that will declare dividend for the accounting year ended December 31, 2009.
For investors who are expecting some dividend, the time to take a position is now before the result is released.
Access Bank
It has been a very good friend of bank regulators in SEC and CBN as it has regularly provided its reports to the public, regulatory bodies and operators to ensure that wise investment decisions are made.
It has also been increasing its earnings quarterly and annually except in the second quarter of 2009 when it had to mandatorily provision for toxic loans as directed by the CBN. In the last five years, it has consistently paid dividend to its shareholders.
Having changed its financial year end from March 31 to December 31 as directed by the CBN, Access Bank will be presenting a nine-month audited account.
A plus for the bank is its small outstanding shares -16billion units, which came as a result of reconstruction in 2008.
Another plus is that it passed the financial stress test of the CBN and therefore is good for medium and long term investment. The possibility of a dividend is slim but price appreciation or gain is possible.
