Continued Upswing Expected in the Weeks Ahead
- By Business World
- Published June 7th, 2010
- Back Page
- Unrated
THE market, last week, did a quick correctional measure after the lull due mainly from the profit- taking of the previous two weeks. After that correction, it adjusted to moving upwards again.
This upswing will continue into the weeks ahead as corporate results outside the banking sector continue to impress the investing public. The market will continue to ride on the wings of these corporate performances this quarter. Profit-taking will always set in; no doubt, to temporarily slow down the upward swing but after every profit- taking there is always a resurgence. The trend of the last four months of northward movement will be sustained.
The month of June and most probably the rest of the year has a progressive market outlook. Both operators and regulators are happier now than they were at about the same period last year. operators and regulators believe that this is a normal market because investors are responding positively to both the bonus and dividend rewards given.
These rewards have, in addition to the good performances, been attracting both the aficionados and gurus back to the market. They are also optimistic that with the two handed billion naira N200bn small and medium Enterprises (SME) fund already approved to banks by the CBN will go a long way in providing liquidity in the market.
Further more, the AMC bill is almost ready to be signed into law which will free all the banks from any loan encumbrance. This will therefore leave money in the coffers of the banks to lend out to businesses.
In this month of June, more audited reports are going to be released and operators believe they will be as equally impressive as the previously released ones.
The following companies are among those whose audited results are eagerly expected. Investors are advised to buy into them before prices rally upwards.
Crusader Nig Plc
This company which was reclassified from the insurance sector into the financial Institutions sub sector of the market is into insurance, property development and other businesses. A cursory look at its historical data shows that it is grossly inconsistent in making its reports available to the public. Its annual earnings as well has not been consistent. It moves up and down. The heart-warming story is that it has been paying dividend consecutively within the last four years. This was crowned in year 2008 with a bonus of one new share for every ten previously held.
On the average, it has been paying 50 percent of its earnings as dividend. Operators believe that this is not too good as it restricts further increase in dividend payment. But operators also believe that with the expansion of its businesses, it can still maintain its level of payment. Its working capital was increased in year 2008 by way of rights issue but results have not started showing that.
Its number of outstanding shares, 3billion units is too large for its kind of business and this has been causing the decline in its earnings. This share is good for long term players.
National Salt Company Plc
This company is listed in the food, beverage and tobacco sub sector of the capital market. It processes raw salt into edible salt. It also imports tomato paste with an aim to establishing its own paste factory. Untill the taking over by Dangote group, this company used to be a laggard. But with funds and managerial know-how of the Dangote group injected into it, it came back to life.
Before Dangote group stepped in, the release of results was irregular, dividend payment was non-existent, though it puts forward one of the most essential ingredients in cooking- edible salt. When the group took over in 2007 with a special offer of N22, it paid a dividend of four kobo and a bonus of one for four at the end of the 2007 financial year.
The entrance of the group has engendered positive earnings, enlarged market share and profitability. Two things are going very well for National salt- small outstanding units of shares-2.9billion units and the inelastic nature of its products. The products are in constant demand. They are not seasonal.
As the investing public and operators look forward to this audited report, income hunters should take position for either a dividend, bonus or price appreciation.
The earnings forecast by operators is in the region of 60-65 kobo out of which 45 – 50kobo could be given out as dividend.
BCC (Benue Cement Company)Plc
This is yet another company with great value but terribly under-priced. Since a new management was put in place in 2006, it has consistently been regulation friendly, releasing reports as and when due and also rewarding shareholders with bonus issue since 2006, except 2009 when it paid a dividend of 200 kobo.
The earnings have also been bouncing back handsomely. The new management obviously knew that this stock has been one of the most undervalued stock on the floor of exchange considering the sector in which it is placed—building material sector.
The re-engineered, restructured and re-tooled BCC just began to fly; issuing bonus on three consecutive occasions and crowning it with a dividend of 200 kobo in 2009. Its products are in high demand and with concessions given to them (Cement manufacturing company) by the Federal Government, profitability is guaranteed.
With the expected expansion of the company’s production line, BCC is poised to improve on its already superb performances. The first quarter EPS of 2008/2009 was 170kobo. This time, 2009/2010 , the EPs is expected to hit 180kobo.
Investors are advised to queue in to buy.
This upswing will continue into the weeks ahead as corporate results outside the banking sector continue to impress the investing public. The market will continue to ride on the wings of these corporate performances this quarter. Profit-taking will always set in; no doubt, to temporarily slow down the upward swing but after every profit- taking there is always a resurgence. The trend of the last four months of northward movement will be sustained.
The month of June and most probably the rest of the year has a progressive market outlook. Both operators and regulators are happier now than they were at about the same period last year. operators and regulators believe that this is a normal market because investors are responding positively to both the bonus and dividend rewards given.
These rewards have, in addition to the good performances, been attracting both the aficionados and gurus back to the market. They are also optimistic that with the two handed billion naira N200bn small and medium Enterprises (SME) fund already approved to banks by the CBN will go a long way in providing liquidity in the market.
Further more, the AMC bill is almost ready to be signed into law which will free all the banks from any loan encumbrance. This will therefore leave money in the coffers of the banks to lend out to businesses.
In this month of June, more audited reports are going to be released and operators believe they will be as equally impressive as the previously released ones.
The following companies are among those whose audited results are eagerly expected. Investors are advised to buy into them before prices rally upwards.
Crusader Nig Plc
This company which was reclassified from the insurance sector into the financial Institutions sub sector of the market is into insurance, property development and other businesses. A cursory look at its historical data shows that it is grossly inconsistent in making its reports available to the public. Its annual earnings as well has not been consistent. It moves up and down. The heart-warming story is that it has been paying dividend consecutively within the last four years. This was crowned in year 2008 with a bonus of one new share for every ten previously held.
On the average, it has been paying 50 percent of its earnings as dividend. Operators believe that this is not too good as it restricts further increase in dividend payment. But operators also believe that with the expansion of its businesses, it can still maintain its level of payment. Its working capital was increased in year 2008 by way of rights issue but results have not started showing that.
Its number of outstanding shares, 3billion units is too large for its kind of business and this has been causing the decline in its earnings. This share is good for long term players.
National Salt Company Plc
This company is listed in the food, beverage and tobacco sub sector of the capital market. It processes raw salt into edible salt. It also imports tomato paste with an aim to establishing its own paste factory. Untill the taking over by Dangote group, this company used to be a laggard. But with funds and managerial know-how of the Dangote group injected into it, it came back to life.
Before Dangote group stepped in, the release of results was irregular, dividend payment was non-existent, though it puts forward one of the most essential ingredients in cooking- edible salt. When the group took over in 2007 with a special offer of N22, it paid a dividend of four kobo and a bonus of one for four at the end of the 2007 financial year.
The entrance of the group has engendered positive earnings, enlarged market share and profitability. Two things are going very well for National salt- small outstanding units of shares-2.9billion units and the inelastic nature of its products. The products are in constant demand. They are not seasonal.
As the investing public and operators look forward to this audited report, income hunters should take position for either a dividend, bonus or price appreciation.
The earnings forecast by operators is in the region of 60-65 kobo out of which 45 – 50kobo could be given out as dividend.
BCC (Benue Cement Company)Plc
This is yet another company with great value but terribly under-priced. Since a new management was put in place in 2006, it has consistently been regulation friendly, releasing reports as and when due and also rewarding shareholders with bonus issue since 2006, except 2009 when it paid a dividend of 200 kobo.
The earnings have also been bouncing back handsomely. The new management obviously knew that this stock has been one of the most undervalued stock on the floor of exchange considering the sector in which it is placed—building material sector.
The re-engineered, restructured and re-tooled BCC just began to fly; issuing bonus on three consecutive occasions and crowning it with a dividend of 200 kobo in 2009. Its products are in high demand and with concessions given to them (Cement manufacturing company) by the Federal Government, profitability is guaranteed.
With the expected expansion of the company’s production line, BCC is poised to improve on its already superb performances. The first quarter EPS of 2008/2009 was 170kobo. This time, 2009/2010 , the EPs is expected to hit 180kobo.
Investors are advised to queue in to buy.
