Despite the sell-offs in the equities market, which caused stock prices to slid towards their year-lows in May, Mutual Benefit Assurance, Ikeja Hotel and 22 others stocks recorded price appreciation for the month.
For the month of May, market breadth remained negative, albeit broader, with 24 gainers compared to 71 losers, while prices in 74 equities remained unchanged. LEADERSHIP checks showed that those stocks have given investors significant returns within the month of May. For instance, investors who bought Mutual Benefit Assurance have gained about 54.17 per cent of their share value.
Similarly, Ikeja Hotel jumped by 41.01 per cent, Cement Company of Northern Nigeria appreciated by 30.32 per cent, MRS Oils gained 20.81 per cent, Law Union and Rocks up by 20.51 per cent, while Sovereign Trust Insurance up by 18.18 per cent per share.
Fidson Healthcare recorded a growth of 14.29 per cent, Veritas Kapital Assurance gained 10.39 per cent, while Beta Glass rose by 10.22 per cent. Some other stocks that gain during the month are Red Star Express, NPF Microfinance Bank, Lasaco Assurance, Presco, Cutix and AXA Mansard Insurance up by 9.09 per cent, 8.43 per cent, 8.33 per cent, 8.23 per cent, 6.76 per cent and 6.38 per cent, respectively.
The selloffs which persisted in the Nigerian equities market show the All-Share Index (ASI) declined by 7.67 per cent to 38,104.54 points in May, while market capitalisation fell below the N14 trillion mark to close at NGN13.67 trillion.
The loss suffered was largely hinged on investors’ negative sentiments, as well as the rise in US Treasury yields, which averted foreign inflows from risky assets in emerging markets (including Nigeria) to the more attractive risk-less US treasuries.
The aforementioned led investors to ignoring the notable positives in the Nigerian economy, continued GDP growth, although at a slower pace, accretion to the foreign reserves and stability of the naira, supported by increased oil prices and stable production, continued decline in monthly inflation and expansion of the Nigerian PMI (Manufacturing and non-Manufacturing sectors).
Reviewing the stocks that gained during the month showed that Mutual Benefit which released its year end result for December 2017 proposed a dividend of N160 million for its shareholders as the company returned to profitability to break its nine-year dividend drought. The company was plunged into a loss position in 2016 due to a foreign loan denominated in dollar, which was affected by the depreciation of the naira that year. However, the firm has bounced back to profitability in 2017 with a profit of N1.023 billion.
Ikeja Hotel posted significant gain, the second-highest gainer of the month, following the lift of the suspension which was imposed on November 10, 2016 on the trading of its shares on May 21, 2018.
For CCNN, the company announced a dividend payment of N1.571 billion for the year ended December 31, 2017, which translates to N1.25 per share. According to results, CCNN recorded revenue of N19.588 billion, up 39 per cent from N14.088 billion posted in 2016. Cost of sales rose by 18 per cent to N11.983 billion, from N10.151 billion, while gross profit improved by 93 per cent to N7.6 billion, up from N3.936 billion in 2016. Profit before tax jumped by 141 per cent from N1.741 billion to N4.203 billion, while profit after tax grew faster by 157 per cent from N1.254 billion in 2016 to N3.223 billion in 2017.
Stocks market analysts noted that while the present selloffs call for cautious trading in the short term, they also call for investors to focus on fundamentally sound stocks for long term investment.
Speaking on market performance for June and July, the chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion said market outlook for June remain mixed as the month has been in decline in two of the past four years, saying that but there may be tie breaker this time, with the negative sentiment and losing momentum changing, as the market expects strengthening of economic recovery with the faithful implementation of 2018 budget, just as payment of government’s contractual obligations as promised flows into the system.
He noted that the Central Bank of Nigeria (CBN) has so far sustained its intervention in the FX market, supporting the naira and indeed, economic recovery which continues to impact business activities ahead of second half of the year as liquidity level is likely to rise due to spending in the days leading to the 2019 general elections.
According to Omordion, with the inflow, low Price to Earnings ratio in the market may trigger more demand for stocks. However, investors should ensure to invest wisely, using bids, offers and volume when taking decisions as a trader. “Managing risk and protecting capital at this point is very important, so investors will be able to determine when to buy or sell, by watching the stocks and the market, using technical analysis.”
He urged investors to allow numbers released by companies guide their decision and how long they stay in a position, saying that June being the last month of the second quarter and first half of the year, activities are likely to look up as players, including fund managers, institutional investors reposition for second quarter earnings season and second half of the year.