Greenwich Stock Recommendations_may 9 - 13, 2011

8/6/2019 Greenwich Stock Recommendations_may 9 - 13, 2011

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Greenwich Trust LimitedPlot 1698A Oyin Jolayemi StreetP.M.B. 80074Victoria IslandLagos.Tel: 234-1-2715937Fax: 234-1-2700613E-mail: [email protected]: www.greenwichtrustgroup.com

Global Economy

Official data revealed that the United States (U.S) privatesector forged ahead in creating jobs in April, a sign the recov-

ery is gaining traction, despite a rise in the unemploymentrate to 9.0%. Private businesses added 268,000 jobs in April,

encouraging belief that the economy's recovery was on trackeven as federal and local governments cut spending and

payrolls. The economy created a net 244,000 nonfarm jobslast month, far more than expected, with the biggest growth

in the service sector. Furthermore, the Labor Departmentrevised upwards job creation figures for February and Marchto 235,000 and 221,000, respectively. The new data from the

department also showed that the country's unemploymentrate rose to 9.0% in April from 8.8% in March, an unex-

pected increase that signaled the challenges facing the gov-ernment's efforts to kick-start growth in the ailing labor mar-

ket. Experts had estimated the jobless rate would remain atMarch's 8.8% after falling for four consecutive months.

According to an industry report released during the week, the

pace of growth in the U.S. services sector unexpectedlyeased to its lowest level since August 2010 in April 2011. TheInstitute for Supply Management said its services index fell to

52.8 last month from 57.3 in March. The figure was beloweconomists' forecasts of 57.4 for the month of April. A read-

ing above 50 indicates expansion in the sector. According tothe reports, new orders index tumbled to its lowest level

since December 2009, falling to 52.7 from 64.1,, while em-ployment gauge dipped to 51.9 in March from 53.7 in Febru-

ary.

In Canada, Statistics Canada, the countrys statistics agency

revealed that the economy created 58,300 jobs in April,bringing the unemployment rate down to 7.6%, matching the

lowest jobless level since the early months of the recession.The agency stated that most of the gains were recorded in

the service sector. Although the job increase was dominatedby part-timers, there were 17,200 new full-time jobs created

in April. April's gains bring the year-over-year increase inemployment to 283,000, enabling the recovery of all the full-time jobs that were lost in the 2008-2009 recession.

In the Eurozone, the regions currency, the euro, retreated

from a 17-month peak against the dollar, and a 13-monthhigh against the pound sterling as the President of the Euro-

pean Central Bank (ECB), signaled that Eurozones interestrates would remain on hold next month. The single currency

had received support in recent weeks as the ECB, in contrastto the Federal Reserve and the Bank of England, was seen asbeing ready to tighten monetary policy further in the coming

months in a bid to stem inflationary pressures in the Euro-zone. The ECB left rates unchanged at its recent policy meet-

ing, compared to a 25 basis point rise in April. Investorsfocused on comments from ECBs President for clues as to

future monetary tightening. Ahead of his remarks, forecastswere split as to whether the ECB Chief would signal a move in

June or July.

In the United Kingdom (U.K), the Bank of Englands MonetaryPolicy Committee voted to maintain the official bank rate paidon commercial bank reserves at 0.5%. The Committee also

voted to maintain the stock of asset purchases financed bythe issuance of central bank reserves at 200 billion. With a

slowdown in growth of manufacturing, construction and ser-vices, it was widely expected that the rate would be kept at

the record low while recovery is still weak. The committeewas faced with a difficult choice, which was to either maintain

Executive Summary

STOCKRECOMMENDATIONSMay 9 - 13, 2011

Greenwich Research Team

Opeyemi Tella

[email protected]

Oladipupo Adekanmbi

[email protected]

Evelyn Taiwo

[email protected]

Olukayode Aladejebi

[email protected]


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Greenwich Stock Recommendations May 9 - 13, 2011

2

Executive Summary (Contd)

the low interest rate to aid economic growth, or raise the rate totry and counter the high inflation figures. Inflation currently

stands at 4%, which is double the bank's target rate. Raisingrates takes demand out of the economy and slows down infla-

tion. However, it also increases the cost of borrowing, with fearsthat this could put the country back into recession.

Data from the Customs office showed that France's trade gap

narrowed in March to 5.75 billion from 6.37 billion in Febru-ary. The deficit for March stayed well below the expected short-fall of 6.5 billion. A year ago, the shortfall totaled 4.49 billion,

while exports increased to 35.16 billion in March from 34.69billion in the previous month. Meanwhile, imports fell to 40.91

billion from 41.07 billion in February.

The Greek government unveiled a three-year national strategyplan against tax evasion, aiming to raise at least 11.8 billion

by 2014. The Greek foreign minister noted that wide-spread taxevasion in Greece is a crime against the country which still hasnot been solved, although major steps have been taken over

the last year and a half. The fight against tax evasion is a sig-nificant challenge in the overall national effort launched last

year to fix the debt-ridden country's finances.

Portugal reached a deal with the European Union (EU) and theInternational Monetary Fund (IMF) on a 78 billion 3-year bail-

out. This is the third Eurozone member to do so after Greeceand Ireland. Under the conditions of the loan, the country will

be given longer period to reduce its budget deficit targets thanprevious expectations. The deficit will need to be cut to 5.9 percent of GDP this year, followed by 4.5 per cent in 2010 and 3

per cent in 2013. This varies from previous targets for 4.6 percent, followed by 3 per cent and 2 per cent respectively. The

figure currently totals 9.1 per cent of the countrys GDP.

The Reserve Bank of Australia (RBA) announced that it wouldhold its benchmark rate steady at 4.75% despite the recent

surge in inflationary data releases. The result was a suddendownturn in Australian dollar (AUD) values across several of itscurrency pairings. Prices were prevented from sky-rocketing out

of control since interconnected costs and values would makesuch a rise unpalatable to consumers.

Statistics South Africa (Stats SA) disclosed that South Africas

unemployment rate increased to 25% in the first quarter of2011, from 24% in the final quarter of last year. The number of

unemployed grew by 227,000 quarter-on-quarter to 4.36-million, while discouraged work-seekers increased by 73,000 inthree months of January to March. Employment fell by 14,000

between the fourth quarter of 2010 and the first quarter of

2011, with an increase of 56,000 jobs in the formal non-agriculture sector, a loss of 46,000 jobs in the informal non-farming sector and a loss of 24, 000 farming jobs. Most of the

jobs were lost in the transport sector, which accounted for34,000 job losses, followed by 25,000 jobs in the construction

industry. There has been an increase of 37,000 in the financesector, 20,000 jobs in manufacturing and 15,000 in the miningindustry.

Domestic Economy

On the local scene, it was revealed that Nigerias external re-serves failed to sustain the appreciable increase recorded inMarch, as it advanced marginally by $300 million in April de-

spite the increase in the price of oil in the international market.External reserves stood at $33.5 billion as at April, as against

Major World Stock Market Indices (April 27 - 29, 2011)

IndexCurrent

Value1 WeekChange YTD Change

Dow Jones (DJA) 4,397.05 3.85% 9.02%

S&P 500 1,363.61 3.33% 8.43%

Nikkei 225 9,849.74 2.69% -3.71%

FTSE 100 6,069.90 1.23% 2.88%

GSE CompositeIndex 1,100.38 3.62% 10.07%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

Inflation Rates Across Countries (March 20 11)

Inflation Rates

0.00

50.00

100.00

150.00

3-May-11 4-May-11 5-May-11 6-May-11

Price Movement of Crude Oil (May 3- 6, 2011)

OPEC Basket

Country

QuaterlyGDP Growth

Rate (Q4,

2010)

Interest

Rate

(Mar)

Inflation

Rate

(Feb)

Current

Jobless

Rate

China 9.80% 4.27% 4.90% 9.60%

Nigeria 8.29% 10.00% 12.80% NA

India 8.20% 7.31% 9.30% 10.80%

Singapore 6.50% 0.44% 5.00% 2.20%

United

States 3.20% 0.23% 2.10% 8.90%

Germany 1.50% 1.19% 2.10% 7.30%

Euro A rea 1.20% 1.19% 2.40% 9.90%

Britain 1.70% 0.83% 4.40% 8.00%

LATEST GLOBAL ECONOM IC INDICATORS


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3

Executive Summary (Contd)

the $33.2 billion it recorded at the end of March, after it rose to$36.4 billion by mid March. The reserves had grown by $3.1

billion in March.

In a similar development, the CBN Governor, Mallam SanusiLamido Sanusi, said that improved oil output and rising oil

prices in the international market would contribute to economicgrowth and help rebuild external reserves, which are vital to

sustain consumer and investor confidence in the economy. Hefurther stated that the decline in the countrys reserves, waspartly due to spending to maintain a stable naira currency, huge

amounts spent on petroleum subsidies, expending of foreignexchange on import of food items such as rice, spending on the

power sector, as well as, spending for a planned sovereign

wealth fund.

In another development, the CBN governor also indicated he

may limit interest-rate increases to help spur lending in thecountry, as demand for foreign currency eases, reducing pres-sure on the naira. He stated that CBN frontloaded a lot of the

increase that people thought they will do gradually over theyears, when it raised its benchmark interest rate by 1 percent-

age point to 7.5% in March. While the central bank is aware ofrising price pressures it also wants to avoid undermining stabil-

ity in financial markets after using $4 billion to bail out banks in2009.

Liquidity pressure further eased in the financial system in the

week under review, as the Nigeria Interbank Offer Rates(NIBOR) decreased across all tenors. This was as a result ofliquidity inflow from the purchase of Non Performing Loans

(NPL) of banks by the Asset Management Company of Nigeria

(AMCON).

At the fixed income market, bond yields reversed and dipped

across most tenors in the week under review amid liquiditypressure brought about by injection from AMCONs purchase of

NPLs from banks. This resulted in a consequent rise in prices ofbonds.

On a Week-on-Week basis, the Naira depreciated against thedollar by 0.71 per cent at the official window to close at

N153.03/$ and by 0.24 per cent at the inter-bank forex marketto close at N155.30/$. However, it remained unchanged at the

Bureau de Change and parallel window to close at N156.00/$,each, in the week under review.

The Nigerian Stock Exchange (NSE) closed on a positive note onthe last trading session of the week. The All-Share Index (ASI)

and the Market Capitalization rose by 32 basis points (0.32 percent) each to close at 25,300.46 and N8.08 trillion, respectively,

when compared to their previous figures. On a Week-on-Week(WoW) basis, the ASI rose by 1.03 per cent, as against a mar-

ginal increase of 0.09 per cent recorded in the previous week.Consequently, the YTD change in the ASI increased to 2.14 per

cent from the previous weeks figure of 1.09 per cent.

OUTLOOK

Investors' level of confidence in the capital market is gradually

being restored, on the back of growing optimism of a successfulinauguration ceremony of the newly elected pol itical office hold-

ers. We expect increased level of activities in the coming week,although investors may still apply some level of caution. We

further expect long term investors to continue to take positionsin fundamentally viable stocks.

2.0000

4.0000

6.0000

8.0000

10.0000

12.0000

5/3/2011 5/4/2011 5/5/2011 5/6/2011

INTER-BANK CALL RATE (May 3 - 6, 2011)

INTER-BANK C ALL RATE

3.00%

5.00%

7.00%

9.00%

11.00%

13.00%

15.00%

3 5 7 10 20

Nigerian FGN Bond Yield Curve

Average Weighted (6/05/11) Average Weighted (29/04/11)

Ec onomic Indic a t or s Cur r e nt P r e v ious

YoY Inf lat ion (Mar'11) 12.80% 11.10%

MPR (Mar. ' 11) 7.50% 6.50%

External Reserves (May 5'11) 32.63 32.66

GDP Growth Rate YoY (Q4,

2010) 8.29% 7.86%

24,950.00

25,000.00

25,050.00

25,100.00

25,150.00

25,200.00

25,250.00

25,300.00

25,350.00

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

3-May-11 6-May-11

Movement of All Share Index Against VolumeTraded (May 3 - 6, 2011)

VOLUME INDEX


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FORECAST PERFORMANCE FOR LAST WEEK

Security Base Price Forecast Weeks HighForecast as a Per-centage of Actual

GUARANTY 16.21 16.32 16.59 101.65%

ACCESS 8.01 8.06 8.60 106.70%

UACN 38.5 38.75 39.00 100.65%

NAHCO 9.7 9.77 9.70 99.28%

MOBIL 148.2 149.1 148.20 99.40%

FIRSTBANK 13.43 13.52 13.86 102.51%

OANDO 53.6 53.96 53.60 99.33%

ZENITHBANK 15 15.1 15.50 102.65%

FIDELITYBK 2.71 2.73 2.70 98.90%

NB 86.48 87.05 87.00 99.94%

UBA 5.9 5.94 6.76 113.80%

ASHAKACEM 24.89 25.06 25.95 103.55%

NBC 37.05 37.29 37.05 99.36%

DANGSUGAR 13.1 13.19 13.30 100.83%

IBTC 9.56 9.63 10.05 104.36%

FCMB 7.39 7.44 7.60 102.15%

SPECULATIVE BUY

Security Current Price Best Entry Price Exit Price % Expected Returns

FIRSTINLND 0.76 0.71 0.98 38.03%

INTERCONT 1.42 1.36 1.75 28.68%

PLATINUM 1.24 1.19 1.52 27.73%

WEMABANK 1.28 1.23 1.54 25.20%

OCEANIC 1.96 1.87 2.33 24.60%

AIICO 0.90 0.89 1.09 22.47%

86.00% 93.00% 100.00% 107.00%

GUARANTY

ACCESS

UACN

NAHCO

MOBIL

FIRSTBANK

OANDO

ZENITHBANK

FIDELITYBK

NB

UBA

ASHAKACEM

NBC

DANGSUGAR

IBTC

FCMB

Percentage Forecast Achieved

Percentage Forecast Achieved


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5

Recommendation using fundamentalis based on analysis of the companys financial statements.

Recommendation using technicalis based on analyzing the stock price and volume trends.CAPM Capital Asset Pricing Model. See the Appendix for definitions of the technical tools used in this report.

YTD Year-to-date

SUMMARY

SecurityCurrent

Price (N)

Exit Price(AMCON Hurdle

Rate)

5-10 TradingDays Forecast

Expected Returns(Using AMCONs

Exit Price) Rationale

Buy List

UBA 6.76 14.78 6.82 118.66% Fund-Tech

OANDO 53.60 101.14 53.96 88.70% Fund-Tech

ACCESS 8.30 13.76 8.36 65.84% Fund-Tech

NAHCO 9.20 15.16 9.27 64.83% Fund-Tech

UACN 39.00 63.01 39.27 61.57% Fund-Tech

PZ 32.45 52.25 32.68 61.02% Fund-Tech

GUARANTY 16.25 25.44 16.37 56.53% Fund-Tech

FIDELITYBK 2.66 3.89 2.68 46.40% Fund-Tech

NBC 36.99 53.93 37.24 45.80% Fund-Tech

FIRSTBANK 13.86 19.88 13.97 43.41% Fund-Tech

ZENITHBANK 15.31 21.63 15.43 41.29% Fund-Tech

Hold List

DANGSUGAR 13.30 26.28 13.40 97.59% Fund-Tech

ASHAKACEM 25.95 36.74 26.15 41.60% Fund-Tech

Watch List

FCMB 7.60 10.87 7.65 43.09% Fund-Tech

Sell List

OASISINS 0.50 0.44 Fund-Tech

CAPHOTEL 3.13 2.64 Fund-Tech

Note: The Exit price derived for Oasisins using the AMCON Methodology is below the nominal value of

the share.


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UBA PLC

The Bank has 8 direct and 3 indirect subsidiaries, and it

was the first Nigerian bank to introduce the Nigerian

Government Bond Index. It also has established 131

international points of presence outside Nigeria.

The Bank is well diversified in the financial services sec-

tor and is poised to take full advantage of the universal

banking environment. It has an experienced, dynamic

and innovative management team. The Bank also main-

tains strong strategic alliances with international organi-

zations for synergy benefits.

In 2009, UBAs gross earnings stood at N246.73 billion

in its full year ended 2009, signifying a growth of

45.49% from N169.58 billion recorded in the previous

year. However, Profit After Tax (PAT) dipped signifi-

cantly by 94.18% to N2.38 billion from N40.83 billion.

This was as a result of huge write-offs as directed by

the Central Bank of Nigeria (CBN). Total Assets also

dropped by 7.45% from N1,672.99 billion in 2008 to

N1,548.28 billion in 2009.

However in 2010, the banks full year result was not as

impressive as the preceding year. Gross Earnings and

PAT declined by 24.94 per cent and 74.82 per cent,

respectively. The Net Profit Margin and Shareholders

funds also dipped by 66.45% and 3.96%, respectively.

Dividend yield was also below a full integer as it stood

at 0.85%.

Our technical analysis shows that the 100-day MA is

slightly above the 200 day MA. This indicates that the

stock is attractive for long term investment. The one-

year Standard Deviation of the stock price stood at

2.88%. The graph of the stock price against the NSE ASI

at the top right corner also show that stock is currently

below the signal line, and it seems that the price may

witness an upward movement in the next couple of trad-

ing sessions.

The stocks expected one-year return estimated with the

Capital Asset Pricing Model (CAPM) is 18.37% and the

stock is more volatile that the NSE with a beta of 1.43.

This shows that UBA is attractive for long term invest-

ment.

The fair price is skewed towards the Historical Divi-

dend Model. The fair value derived by the weighted

average of our valuation models is N7.73 per share.

UBA is trading at a discount of 14.35%, at the current

market price of N6.76. Therefore, we are upgrading

our recommendation on the stock to BUY. Also, we

expect the stock to trend towards AMCONs transfer

price of N14.78. This represents 118.66% discount at

the current market price.

R = 0.5196

0.00

50.00

100.00

150.00

200.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs UBA- Jan '10 - Date

NSE Reb ased UB A R ebased Po ly. (UBA Rebased)

Current Price 6.76Year High 11.70

Year Low 7.60

EPS 0.02

P/ E Ratio 365.52

Outstanding Shares 32,334,693,694

Dividend Yield 0.74%

Profit After Tax '000 (Full Year) 598,000

Year End September

UNITED BANK FOR AFR ICA PLC

2 0 10 ( ' 0 0 0 ) 2 0 0 9 ( ' 0 0 0 ) C H.

Turnover 185,186,000 246 ,725,000 -24.94 %

Net Profit A fter Tax 598,00 0 2,375,000 -74.82%Net Pofit M argin 0.32% 0.96% -66.45%

Shareholders' Funds 179,426,000 186,829,000 -3.96%

Total Assets 1,617,696,000 1,548,281,000 4.48%

ROSH 0.33% 2.54%

ROA 0.04% 0.31%

UNI TE D BANK FO R AF RI CA P LC

Valuation Weight Estimated Value

Earnings Basis 10 10.71

Forward Earnings Basis 30 5.80

Dividend Basis 30 12.40Price to Book Basis 30 3.99

Estimated Fair Value 100 7.73

UNITED BANK FOR AFRICA


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OANDO PLCOando Plc (formerly Unipetrol Nigeria Plc) is the second

largest oil marketing company by revenue in Nigeria.

The Company is an integrated energy solutions provider

as it operations scale across gas, international supply,

trading and energy services to its petroleum marketing

business. The Company is currently incubating explora-

tion, production and power initiatives.

The Group has strategic investments in a range of en-

ergy companies across West Africa, and it is envisioned

to become a leader in the African energy sector, deliver-

ing world-class services across the African continent. The

company has an upgraded terminal operations, massivemodernization and large number of trucking fleet, signifi-

cant pump deployment and forecourt improvement,

across the country.

Oando is the first Nigerian company to accomplish a

cross-border listing on the Johannesburg Stock Exchange

(JSE) in South Africa. Oandos drive into the refinery

business provides an advantage for further improving

and sustaining earnings growth over the medium-term.

The Company commenced the execution of its long-term

strategy with a Rights Issue of 301,694,876 Ordinary

Shares of N0.50k each at N70 per share to rank paripassu with the existing share capital of the company.

The Companys audited result for the financial year 2010

showed that the company increased its Profit After Tax

(PAT) by 42.37 per cent to N14.37 billion, compared to

N10.10 billion recorded in the corresponding period in

2009. Turnover for the year also grew by 12.49 per cent

from N336.86 billion in 2009 to N378.93 billion in 2010.

The Board of Directors of the company proposed a divi-

dend of N3.00k and a bonus of one ordinary share for

every four held as at 29th of April 2011. The dividend

yield stood at 5.60% at the current price of N53.60.

The technical analysis of Oando indicates that the stock

has become more attractive for long term investors, as

the 100-day MA is trading above the 200-day MA. The

estimated one-year Standard Deviation of the stock price

stood at 2.10%, from 2.18% recorded last week.

The stock has a relatively high long term return pros-

pect, given the one year expected return of 15.15% esti-

mated with the Capital Asset Pricing Model (CAPM).

A final fair value of N87.00 using the companys re-

cently released full year result and after adjustment

for bonus issue and dividend payment indicates that

Oando is trading at a discount of 62.31%. We there-

fore maintain our recommendation on the stock as

BUY.However, the stock may likely rally to a price

of N101.14 in the medium term, depicting a discount

of 44.49% from its AMCONs hurdle rate.

R = 0.5268

0.00

50.00

100.00

150.00

200.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs OANDO- Jan '10 -Date

NSE Rebased Oando RebasedPoly. (OandoRebased)




Dividend Basis 30 76.90

Price to Book Basis 30 149.24


OANDO PLC

2 0 10 ( '0 0 0 ) 2 0 0 9 ( '0 0 0 ) CH.Turnover 378,930,00 0 336,859,00 0 12.49%

Net Pr of it A fter Tax 14 ,374 ,0 00 10,0 96 ,00 0 42 .37%

Net Profit M argin 3.79% 3.00% 26.57%

Shareholders' Funds

Net Assets 95,004,000 53,319,000 78.18%

ROSH

RONA 19.38% 9.35%

OANDO PLC

Current Price 53.60

Year High 78.97

Year Low 56.60

EPS 6.35

P/E Ratio 8 .44



Profit Af ter Tax '000 (Full Year) 14,374,000

Year End December

OANDO PLC


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8

ACCESS BANK PLC

With the recently released full year report, the

weighted average valuation of the stock is N12.03,

indicating that the stock is trading at a discount of

44.94% at the current market price of N8.30. We

therefore maintain our recommendation on Access

Bank as LONG TERM BUY. Using AMCONs valua-

tion methodology, the market price may likely oscil-

late around the proposed transfer price of N13.76,

indicating a 65.84% growth in the medium term.

Access Bank operates through a network of 130 branches

located in all major commercial centers and cities across

Nigeria, and in eight other African countries, as it is

geared towards developing a world class retail banking

franchise in Nigeria.

The Bank has undergone a transformation process which

has positively impacted its every area of business and

propelled it into one of Nigeria's leading banks, with

Shareholders Funds in excess of N185billion, Assets and

Contingents in excess of N850 billion, and a deposit base

in excess of N450 billion.

The Bank is well positioned in a high growth market, withconsistent growth in all key performance indicators over

the past 7 years. It acquired Capital Bank and Marina

Bank during the 2005 Banking Reform and was one of

the first banks to completely integrate its operations with

the acquired banks. The Bank has an experienced and

aggressive management team, it operations are technol-

ogy driven and it has a high quality of branding and mar-

keting expertise.

The Banks profitability index measured by Return on

Asset (ROA) increased to 1.50% in 2010 from 0.82% in

2009, and the Return on Equity (ROE) increased from

4.26% in 2009 to 6.54% in 2010. The Banks smoothed

annualized return using the 5-year compound annual

growth rate (CAGR) stood at 16.14% at the end of 2010.

In the banks 2010 full year report, the banks gross

earnings increased by 7.25 per cent from N84.98 billion

in 2009 to N91.14 billion in 2010. The Profit After Tax

(PAT) also surged by 368 per cent from a loss of N4.19

billion recorded in 2009 due to provision for bad loans in

2009, to a profit of N11.24 billion in 2010. Total assets

increased by 16 per cent from N694 billion in 2009 to

N805 billion in 2010. The bank declared a dividend per

share of N0.30k in the year ended December 2010, re-

cording a dividend yield of 3.75% at the current market

price of N8.01. The banks result for the first quarter of

2011 saw PAT stand at N4.17 billion, from N3.99 billion

recorded in the same period in 2010.

The return prospect of the stock estimated with the one-

year Capital Asset Pricing Model (CAPM) is 16.80%. This

shows that the stock has become more attractive for

long term investment. Furthermore, the graph of the

stock price against the NSE ASI at the top right corner

shows that the stock price is currently trading below the

signal line. Thus a price rally may soon be witnessed.

Technically, the stock seems to be attractive for short

term investors as the 5-day MA is approaching the 10-

day MA. The one year standard deviation of the stock

declined to 2.64% from 2.67% recorded last week.





Price to Book Basis 30 6.82Estimated Fair Value 100 12.03

ACCESS BANK PLC

2010 FY 20 09 (9 M ONTHS) CH.

Turnover 91,142,064 84,980 ,554 7.25%

Net Profit After Tax 11,244,563 (4,194,582) 368.07%

Net Pofit Margin 12.34% -4.94% 349.95%Shareholders' Equity 175,370,457 168,346,048 4.17%

Total Assets 804,823,772 693,783,938 16.00%

ROSH 6.54% -4.26%

ROA 1.50% -0.82%

ACCESS BANK PLC

Current Price 8 .30

Year High 11.10Year Low 8.14

EPS 0 .63

P/E Rat io 13 .20



Prof it Af ter Tax '000 (Full Year) 11,244,563

Year End December

ACC ESS BANK PLC

R = 0.0154

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150.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs ACCESS- Jan '10 - Date

NSE Reba sed Acc ess Reba sed Poly. ( Acc ess Rebased)


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9

NAHCO PLCNAHCO was incorporated on December 6, 1979 as a pri-

vate limited company and converted to a public limited

company on August 4, 2005. The company operates in

the Airline Services Sector, and is ranked as a top indus-

try player in the sector.

Despite the challenges faced in the business environ-

ment during the year under review, the companys turn-

over increased from N3.66 billion the previous year to

N4.43 billion in 2009. Profit After Tax increased signifi-

cantly by 36.10%, when compared to the same period in

2008, rising from N589 million to N802 million. Net Profit

Margin also rose from 16.11% to 18.12%.

However, the companys profitability index measured by

Return on Average Equity (ROAE) decreased to 27.14%

in 2009 from 46.18% in 2008, and the Return on Aver-

age Asset (ROAA) decreased from 16.96% in 2008 to

14.71% during the year under review. Meanwhile, the

company declared a dividend of N0.45k per share, an

increase of N0.15k, when compared to the previous

years dividend of N0.30k.

In order to remain solidly afloat in the midst of the

emerging competitions from new entrants into the avia-

tion ground handling sector, the company has com-menced the process of diversifying its business, as a way

of creating alternative route of income generation and

reducing dependence on ground handling income.

Technically, the stock is attractive for long term invest-

ments, as the 100-day MA has crossed over and is now

trading above the 200-day MA.

The Standard Deviation of the stock price reduced to

2.57%, from 2.64% recorded last week. This indicates

that the stock volatility decreased during the week.Given that the one year return prospect of the stock, as

estimated with the Capital Asset Pricing Model (CAPM)

stood at 17.09%, the stock remains attractive for long

term investors.

The graph of the stock price against the NSE ASI at the

top right corner shows that the price is slightly above the

signal line. This suggests that the stock may not be at-

tractive for speculative trading.

A weighted average of the valuation models gave a

final fair price of N13.85. This seems to indicate that

NAHCO Plc is undervalued by 50.54% at the current

market price of N9.20. We therefore maintain our

recommendation on the stock as LONG TERM BUY.

Also, we expect the stock to trend towards AMCONs

transfer price of N15.16 in the medium term. This

represents 64.83% discount at the current market

price.

2 0 0 9 ( '0 0 0 ) 2 0 0 8 ( '0 0 0 ) CH.

Tur no ver 4 ,4 30 ,0 35 3 ,66 1,2 75 2 1.00 %

Net Profit A fter Tax 802,910 589 ,950 3 6.10%Net Pofit Margin 18.12% 16.11% 12.48%

Shareholders' Funds 4,216,984 1,699,636 148.11%

Total Assets 5,988,382 4,929,253 21.49%

ROSH 27.14% 46.18%

ROA 14.71% 16.96%

NAHCO PLC







NAHCO PLC

Current Price 9 .20

Year High 11.75

Year Low 8.84

EPS 1.01

P/E Ratio 9 .08




Year End December

NAHCO PLC

R = 0.1159

0.00

50.00

100.00

150.00

200.00

250.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs NAHCO- Jan '10 - Date

NSE Reb as ed NA HCO R ebas ed P oly. (NAH CO Reb as ed)


10/21


10

UAC OF NIGERIA PLCUAC Nigeria Plc was incorporated on April 22, 1931, and

has since remained a foremost private enterprise in Ni-

geria.

The Company is built on integrity and high standards,

with diverse business portfolios in UACN Property Devel-

opment Company Plc, Spring Waters Nigeria Plc, Grand

Cereals and Oil Mills Limited (GCOML) and Opticom

Leasing Company Limited. The Company also has inter-

ests in CAP Plc, UAC Registrars Limited and General Mo-

tors (GM) Nigeria Limited.

In 2008, UAC was licensed by the National Pension Com-

mission (PENCOM) to operate a Closed Pension Fund,

under the UNICO Closed Pension Fund Administrator

(CPFA) Limited.

The Company has a very strong financial base, and high

capability to meet its obligations at all times. UAC oper-

ates with good cash flow, low leverage and adequate

working capital, and is rated Aa by Augusto & Co., a

Research and Business Information Company in Nigeria.

Meanwhile, the Turnover in the audited result of the

Company for 2010 dropped by 7.40 per cent to N52.31

billion. The profit after Tax and Net Profit Margin (NPM)

rose by 35.60 per cent and 46.44 per cent, respectively.

The Total Assets and Shareholders fund also increased

by 8.80 per cent and 1.39 per cent, respectively.

Despite the challenging business environment and de-

clining aggregate demand, which impacted negatively on

the corporate earnings in 2010, the Directors of the

Company declared a dividend of N1.10k per share, and a

bonus of one ordinary share for every four ordinary

shares held as at May 20, 2011. The dividend yield at

the current market price is2.82%.

Our technical analysis shows that the 100-day MA is

moving above the 200-day MA, indicating that the stock

may be suitable for long term investors.

The one year return prospect of the stock as estimated

with the Capital Asset Pricing Model (CAPM) is 15.77%.

The one-year Standard Deviation of the stock price re-

duced to 2.41%, from 2.45% recorded last week, but

higher than the markets 0.88%.

A fair value derived by the weighted average of the

valuation models was N47.11 per share, which indi-

cates that UACN is trading at a significant discount

of 20.79%. We therefore maintain our recommenda-

tion on the stock as LONG TERM BUY. Also, we

expect market vagaries to push the stock price to

N63.01, representing 61.57% discount from AM-

CONs transfer price.


Year Low 31.35

EPS 2.51

P/E Ratio 15.53



Profit After Tax '000 (Full Year) 4,019,127

Year End December

UAC OF NIGERIA PLC

2 0 10 ( '0 0 0 ) 2 0 0 9 ( '0 0 0 ) CH.

Turnover 52,313,000 56,495,000 -7.40%

Net Profit A fter Tax 5,450 ,0 00 4 ,019 ,13 0 35.60 %

Net Pofit M argin 10.42% 7.11% 46 .44%


Total Assets 102,370,000 94,088,000 8.80%

ROSH 12.04% 17.88%

ROA 5.55% 8.54%

UAC OF NIGERIA PLC







UAC OF NIGERIA PLC

R = 0.444

0.00

50.00

100.00

150.00

200.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs UACN- Jan '10 -Date

NSE Rebased UACN Rebased Poly. (UACN Rebased)


11/21


11

PZ CUSSONS PLCPZ Industries is a well-diversified company With over

100 years' experience of trading in Africa and vast

knowledge of local markets including the consumer base

it developed over time, which has resulted in a strong

portfolio of local brands.

The Company operates across a large scale of industries

including the manufacturing and sale of consumer prod-

ucts, electronic appliances and the wholesale distribution

of general merchandise.

Its consumer products line includes such items as soaps,

detergents, cosmetics, pharmaceuticals and confection-ery items. The company's electronic products include

refrigerators, freezers, air conditioners and plastic con-

tainers.

PZ Cussons operates in selected markets that have the

potential for future growth, both in mature and emerging

markets all over Africa, Asia and Europe.

To enable it deliver developed leading brands quickly

and efficiently for the markets, the company has created

a world class supply chain networks with a great team of

people who are aligned with the companys values and

drive plans for growth.

The Companys audited result for the May 2010 shows

that the Turnover increased by 11.25% from N166.96

billion in 2009 to N185.75 billion in 2010. Profit after Tax

increased by 44.77% from N10.59 billion in 2009 to

N5.33 billion in 2010. The board of directors recom-

mended a dividend of 86k per Share.

In the companys recently Q3 result, Turnover increased

by 1.79% from N44.15 billion in 2010 to N44.95 billion

in 2011. Profit after Tax increased by 5.70% from N3.68

billion in 2010 to N3.89 billion in 2011.

The one-year standard deviation of the stock price is

2.38% YTD, which is significantly higher than the mar-

kets 0.99%. The beta of the stock is 0.64, and the

CAPM one year expected return of the stock is 12.25%.

This indicates that the stock is attractive for long term

investment.

Our technical analysis shows that the 100-day MA

moved above the 200 day MA, indicating a buy sig-

nal for long term investment.

A final fair value derived by the weighted average of

the valuation models was N38.48 per share, indicat-

ing a discount of 18.58% from the market price of

N32.45. We therefore revise our recommendation on

the stock to BUY. We also expect the share price to

oscillate around N52.25 in the medium term, repre-

senting 61.02% from AMCONs transfer price.


Year Low 30.00

EPS 1.68

P/ E Ratio 19.34




Year End M ay

PZ CUSSONS NIGERIA PLC

2 0 10 ( ' 00 0 ) 2 00 9 ( ' 0 0 0 ) CH.

Turnover 185,751,09 0 166,96 0,0 20 11.25%

Net Pro fit A fter Tax 15,3 34 ,8 20 10 ,59 2,500 4 4.77%

Net Pofit M argin 8.26% 6.34% 30.13%


Total Assets 190,685,310 180,217,900 5.81%

ROSH 13.79% 19.70%

ROA 8.27% 11.76%

PZ CUSSONS N IGERIA PLC







PZ CUSSONS NIGERIA PLC

R = 0.6598

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs PZ - Jan '10 - Date

NSE Rebased PZ Reb ased Poly.( PZ Rebased )


12/21


12

GTBANK PLC

GTBank is currently trading at a discount of 33.17%,

at the current market price of N16.25. The price

trend which has been relatively stable may rise, as

the price has been adjusted for the recent corporate

actions. We therefore our BUY recommendation on

the stock. Meanwhile, we expect market vagaries to

push the stock price to N25.44, representing a dis-

count of 56.53% from AMCONs transfer price.

Guaranty Trust Bank Plc has built up an impressive cor-

porate image for itself as a strong growth, customer

friendly, dependable and high performance institution.

The Bank is associated with high levels of professional-

ism and has a reputation for high quality service deliv-

ery. Growing at a strong pace over the years, it has es-

tablished itself among the most efficient and profitable

banks in the industry.

In 2006/2007 financial year, the Bank received a credit

line of $40million from African Development Bank, taking

total investments by international finance institutions in

the Bank to over $400million. Also in the same period,

the Bank signed an asset management joint venture

agreement with Morgan Stanley Investment Management

to meet part of the requirements for managing portions

of Nigerias external reserves.

The Bank floated a $350million Eurobond issue which

recorded a substantial oversubscription. The issue has

been listed on the London Stock Exchange. Similarly, the

Bank raised $750m to fund its growth programmes,

$500m from international investors by selling Global De-

positary Receipts (GDR) and the rest from Nigerians. The

GDR, which was fully subscribed has also been listed on

the London Stock Exchange.

The Bank recently released full year result indicated that

its gross earnings declined by 5.32 per cent from

N162.55 billion in 2009 to N153.91 billion in 2010. How-

ever, Profit After Tax (PAT) increased by 60.07 per cent


The banks result for the first quarter of 2011 saw PAT

stand at an impressive figure of N16.22 billion, from

N10.71 billion recorded in the same period in 2010.

At the current market price of N16.25, our technical

analysis using Moving Averages (MAs) indicates that the

stock is becoming more attractive for short and long

term investors, as the 5-day and 100-day trend lines are

above the 10-day and 200-day line, respectively. Theone-year Standard Deviation of the stock price decreased

to 2.43% from 2.46% recorded in the previous week.

From the graph of the stock price against the NSE ASI at

the top right corner, the price line appears to be below

the trend line. This suggests that the stock price may

rally in the next couple of trading days.

The beta of the stock is 1.07, and the long term return

prospect of the stock estimated using the Capital Asset

Pricing Model (CAPM) is 17.18%, signifying long term

return prospects for this stock.

Current Price 16.25

Year High 20.50

Year Low 18.26EPS 1.30

P/E Ratio 12 .49




Year End December

Dec. 20 10 ( '0 00 ) Dec. 2 00 9 ( ' 0 00 ) CH.

Turnover 153,908,00 0 162,550,418 -5.32%

Net Prof it A fter Tax 37,916 ,0 00 2 3,6 86 ,84 3 60 .07%

Net Pofit Margin 24.64% 14.57% 69.06%Shareholders' Funds 210,826,000 192,245,928 9.66%

Total Assets 1,152,002,000 1,006,503,718 14.46%

ROSH 18.81% 13.32%

ROA 3.51% 2.72%

GUARANTY TRUST BANK PLC


Income Capitalization Mode 10 26.67

Earnings Model 20 32.16

Discounted C ashflow (DCF) 20 14.58

Dividend Model 30 28.52



GUARANTY TRUST BANK PLC

R = 0.0843

0.00

50.00

100.00

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200.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs GUARANTY- Jan '10 -Date

NSE Rebased Guaranty Rebased Poly. (Guaranty Rebased)


13/21


13

FIDELITY BANK PLC

The current enlarged Fidelity Bank was a result of the

merger with the former FSB International Bank Plc and

Manny Bank Plc (under the Fidelity brand name) in

December 2005 during the consolidation era. The

Bank is ranked amongst the top 10 in the Nigerian

banking industry, with presence in the major cities

and commercial centers of the country.

Fidelity Bank has partnership with various off-shore

institutions, such as ANZ London, Afri-eximbank Cairo,

Egypt, ABSA South Africa, Commerce Bank, Frankfurt,

Citibank, N.A. London and New York, FBN Bank, UKLtd, SCB, London, HSBC, US Ex-im Bank, USAID, etc.

The Bank has international access to correspondent

banking, confirmation lines, credit and other relation-

ships with these multinationals and international finan-

cial organizations.

The Bank has an experienced and stable management

team, reputed for integrity and professionalism. The

Bank, having operated as an investment bank for 11

years, has a leverage on its pedigree in its structures

and service offerings for a retail populace.

The Banks Q3 result ended September 30, 2010 indi-

cated a turnover decline of 31.51 per cent, but Profit

After Tax increased by 5.97 per cent. However, Net

Profit Margin (NPM) declined from 18.83% to 6.93%.

The audited result of the Bank for the year ended De-

cember 31, 2010 showed a turnover of N56.05 billion,

as against N34.72 billion in the previous year, indicat-

ing a growth of 61.45 per cent. Profit After Tax surged

by 292.10 per cent from N1.56 billion in 2009 to

N6.11 billion in 2010.

Our technical analysis seems to indicate that the stock

price trend strengthened in the week under review, as

the 100-day MA is now above the 200-day MA, which

suggests that the stock is attractive for long term in-

vestment. The graph of the stock price against the

NSE ASI at the top right corner also show that stock is

currently below the signal line, and it seems that the

price may witness an upward movement in the next

couple of trading sessions.

The one year Standard Deviation of the stock price

reduced to 2.62%, from 2.67% recorded last week.

The expected one year Return of the stock as esti-

mated with the Capital Asset Pricing Model (CAPM) is

16.50%.

All our fundamental valuation models, excluding

the dividend discount model indicates that the

stock is underpriced. We therefore maintain a

BUY recommendation on Fidelity Bank Plc. The

stock may likely rally to a price of N3.89 in the

short to medium term, depicting a discount of

46.40% from AMCONs hurdle rate.

R = 0.1264

0.00

50.00

100.00

150.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs FIDELITYBK - Jan '10 -

Date

NSERebased Fidelityb k Rebased

Poly. (Fidelitybk Rebased)



Forward Earnings Basis 30 2.89Dividend Basis 30 3.90



FIDELITY BANK PLC


Year Low 2.63

EPS 0.21

P/E Ratio 12.62




Year End December

FIDELITY BA NK PLC

2 0 10 ( '0 0 0 ) 2 0 0 9 ( '0 0 0 ) CH.

Turnover 56,048,00 0 34,716,000 61.45%

Net Pr of it A ft er Tax 6 ,10 5,000 1,557,00 0 292 .10%

Net Pof it Margin 10.89% 4.48% 142.87%


Total Assets 481,614,000 435,666,000 10.55%

ROSH 4.58% 1.94%

ROA 1.33% 0.48%

FIDELITY BANK PLC


14/21


14

NIGERIAN BOTTLING COMPANY PLC

The stock is 31.71% undervalued at the current

market price of N36.99, as the weighted average of

all the valuation metrics produced a final fair price of

N48.72. The fair value notwithstanding, we expect

the market price to oscillate around the proposed

transfer price of N43.00 per share as cash compen-

sation to minority shareholders, which is 16.25%

return from the current market price. The final value

is tilted significantly towards the Price to Book

Model. We therefore recommend the stock as HOLD.

The Nigerian Bottling Company Plc (NBC) was incorpo-

rated in November 1951, as a subsidiary of A.G. Leventis

Group with the franchise to bottle and sell Coca-Cola

products in Nigeria.

Since production began in 1953 at a bottling facility in

Ebute-Metta, Lagos, production capacity has grown over

the years and it presently has 13 bottling facilities and

over 80 distribution warehouses located across the coun-

try.

NBC Plc is currently the largest bottler of non-alcoholic

beverages in the country and the second largest marketin Africa in terms of sales volume, with about 1.8 billion

bottles sold per year.

The company is part of the Coca-Cola Hellenic Bottling

company (CCHBC), one of The Coca-Cola Companys

largest anchor bottlers worldwide, which currently oper-

ates in 28 countries, serving 540 million consumers and

selling over 1.3 billion unit cases of beverage annually.

Despite the challenging business environment in 2009,

NBC recorded a growth of 12.63 per cent in its turnover,

when compared to the previous year and total assets

increased by 27.61 per cent to 66.37 billion in 2009while the Profit After Tax (PAT) increased by 32.38 per

cent.

The Nigerian Bottling Company has informed the Nige-

rian Stock Exchange (NSE) of a proposed scheme of ar-

rangement between the company and its members to

cancel part of its share capital, such that the company

would become a wholly owned subsidiary of Coca-Cola

Hellenic Bottling Company SA. Consequently, the Com-

panys shares would be delisted from the NSE Daily Offi-

cial List, and a cash compensation of N43.00 (Forty-three

Naira Only) per share would be paid to shareholders for

cancellation of the Shares of the company owned by the

minority shareholders.

The beta of the stock price stood at 0.50. The year-to-

date Standard Deviation of the stock price is 2.27%,

which is significantly higher than the markets 0.88%.

Given that the one year return prospect of the stock, as

estimated with the Capital Asset Pricing Model (CAPM) is

15.24%, the stock is relatively attractive for long term

investment.

R = 0.5214

0.00

50.00

100.00

150.00

200.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs NBC - Jan '10 - Date

NSE Reb ased NB C R ebased

Poly.( NBC Rebased)

Current Price 36 .99


EPS 2 .42

P/E Rat io 15.26



Prof it Af ter Tax '000 (Full Year) 3,172 ,264

Year End December


2 0 0 9 ( '0 0 0 ) 2 0 0 8 ( '0 0 0 ) CH.

Turnover 90,195,981 80,080 ,688 12.63%

Net Profit A fter Tax 2 ,88 8,10 9 2 ,18 1,6 95 32 .38 %

Net Pofit M argin 3.20% 2 .72% 17.53%


Total Assets 66,372,694 52,013,209 27.61%

ROSH 11.19% 19.96%

ROA 4.88% 8.39%

N I GER I A N B OT T LI N G C OM PA N Y PL C









15/21


15

FIRST BANK OF NIGERIA PLC

First Bank of Nigeria Plc (FBN) offers commercial banking

services and a variety of other financial services through

its subsidiaries, which include FBN Capital Limited, FBN

Mortgages Limited, First Funds Limited, First Trustees

Limited, First Pension Custodian Limited, First Registrars

Nigeria Limited, FBN Insurance Brokers Limited and FBN

Bank (UK) Limited.

It currently operates through 536 branches in Nigeria.

The branch network which cuts across all parts of Nige-

ria, gives the bank access to large market share, and

cheap funds.

The Bank has been in existence for about 115 years and

over the years, it has maintained a strong brand name,

solid capital base and high market share. Its experi-

enced, dynamic and competent management team, as

well as its consistent dividend and bonus policy has

made it possible for the bank to distinguish itself as the

leading financial institution and a major contributor to

the economic advancement and development in Nigeria.

First Bank has international presence through its subsidi-

ary FBN Bank (UK) in London and Paris. It also has of-

fices in Johannesburg and Beijing. The Bank is quoted on

the Nigerian Stock Exchange and currently has anunlisted Global Depository Receipt (GDR) Programme.

The beta of the stock stood at 1.24 in the week under

review, as the stock experienced reduced volatility, given

that the one-year Standard Deviation of the stock price

decreased to 2.22%, compared to 2.38% recorded last

week.

In the banks 2010 Full Year Report, gross earnings rose

by 5.64 per cent from N218.29 billion in 2009 to

N230.61 billion in 2010. The Profit After Tax (PAT) stood

at N33.41 billion at the end of 2010, as against N12.57

billion recorded in 2009. The banks result for the first

quarter of 2011 saw PAT grow to N12.60 billion, fromN12.34 billion recorded in the same period in 2010.

Our technical analysis shows that the stock price is at-

tractive for long term investment, as the 100-day MA is

slightly above the 200-day MA. The graph of the stock

price against the NSE ASI at the top right corner shows

the stock price is currently below the signal line and may

experience an upward rally in the next couple of days.

The stock is also attractive for long term investment,

given an expected one year return of 17.75% as esti-

mated with the Capital Asset Pricing Model (CAPM).

We maintain our recommendation on First Bank as

BUY, given an estimated weighted average final fair

price of N20.56 derived from all the valuation models.

The fair value has been upgraded based on the com-

panys recently released first quarter 2011 result.

This indicates that First Bank of Nigeria Plc is under-

valued by 48.34%. We also expect the share price to

gravitate towards AMCONs proposed transfer price of

N19.88 in the medium term.





Estimated F air Value 100 20.56


2 0 10 ( ' 0 0 0 ) 2 0 0 9 ( ' 0 0 0 ) C H.

Turnover 230,60 6,000 218,287,000 5.64%Net Pro fit A fter Tax 3 3,4 11,0 00 12 ,56 9,0 00 165.8 2%

Net Po fit M argin 14.49% 5.76% 151.62%


Total Assets 2,305,258,000 2,009,914,000 14.69%

ROSH 9.86% 5.97%

ROA 1.55% 0.86%

F I R ST B A N K OF N I GER I A PL C

Current Price 13.86

Year High 16.12

Year Low 12.82

EPS 1.02

P/E Ratio 13.54




Year End December


R = 0.2866

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100.00

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4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs FIRSTBANK- Jan '10 - Date

N SE Re base d F irstba nk Reba se d Poly . ( Fir stb ank Reba se d)


16/21


16

ZENITH BANK PLCThe banks business location strategy and infrastructure

deployment show its commitment to customer enthusi-

asm at all times, in all business offices across Nigeria.

The uniqueness of the Banks brand of financial services

has actually made it one of the choices in banking, to

most multinational companies in Nigeria, and this ac-

counted for its wide customer base.

As part of its vision to become a global leader in the in-

dustry, the Bank carries out its operations through a

number of subsidiaries, namely; Zenith General Insur-

ance Company Limited, Zenith Securities Limited, ZenithRegistrars Limited, Zenith Bank Ghana Limited, Zenith

Pension Limited, Zenith Bank (UK) Limited, Zenith Trust

Limited and Zenith Medicare Limited to offer a wide

range of financial services.

Zenith Banks growth and performance has continued to

earn excellent ratings from both local and international

rating agencies. The Bank was rated Aaa in Nigeria con-

secutively for six (6) years by Agusto & Co. Ltd. The

bank has consistently recorded impressive performance

on several parameters and this demonstrates the rising

customer patronage and an excellent approval and en-

dorsement all over the world.

The banks Turnover declined by 30.58 per cent from

N277 billion recorded in 2009 to N192 billion in 2010.

However, Profit After Tax (PAT) increased by 81.59 per

cent from N20.60 billion in 2009 to N37.41 billion in

2010. The bank declared a dividend per share of N0.85k.

The banks result for the first quarter of 2011 saw PAT

stand at N15.07 billion, from N9.51 billion recorded in

the same period in 2010.

Our technical analysis seems to indicate that the stock is

attractive for long and short term investors as the 200-

day MA is below the 100-day MA, just as the 5-day MA is

above the 10-day MA, respectively. The graph of the

stock price against the NSE ASI at the top right corner

also show that the stock is currently below the signal

line, and it seems that the price may witness an upward

movement in the next couple of trading sessions.

The beta of the stock price is 1.05 and one-year Stan-

dard Deviation is 2.45%, a decline from 2.49% recorded

the previous week. The expected one year return of the

stock as estimated with the Capital Asset Pricing Model

(CAPM) is 17.09%.

A weighted average of all the valuation metrics pro-

duced a reviewed final fair price of N20.40, using the

recently released full year results. This indicates that

the stock is 33.25% undervalued at the current mar-

ket price of N15.31. We therefore maintain our rec-

ommendation on Zenith Bank as LONG TERM BUY.

In the medium term, the market price is likely to

oscillate around the proposed transfer price of

N21.63 using AMCONs methodology. This repre-

sents a discount of 41.29% from the current price.

R = 0.2987

0.00

50.00

100.00

150.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs ZENITHBANK-Jan '10 -

Date

NSE Rebased Zenithbank RebasedPoly. (Zenithbank Rebased)

Current Price 15.31


EPS 1.19

P/E Ratio 12.85




Year End December

ZENITH BAN K PLC

2 0 10 ( '0 0 0 ) 2 0 0 9 ( '0 0 0 ) CH.

Turnover 192,488,000 277,300,000 -30.58%

Net Profit A fter Tax 37,414 ,0 00 2 0,6 03 ,00 0 8 1.59 %Net Pofit M argin 19.44% 7.43% 161.61%


Total Assets 1,895,027 1,659,703,000 -99.89%

ROSH 10.67% 12.20%

ROA 4.50% 2.48%

ZENITH BANK PLC







ZENITH BANK PLC


17/21


17

ASHAKA CEMENT PLC

A weighted average of all the valuation metrics pro-

duced a final fair price of N27.14. This indicates that

the stock is currently trading at a discount of 4.59%

at the current market price of N25.95. We therefore

review our recommendation on the stock to HOLD.

In the short to medium term, the market price is

likely to oscillate around the proposed transfer

price of N36.74, using AMCONs valuation methodol-

ogy, resulting to a growth of 41.60%.

Ashaka Cement Plc (Ashakacem) became a subsidiary of

Lafarge Group, the world leader in building materials in

July 2001 after the acquisition of Blue Circle Industries

Plc. The companys principal activities are the manufac-

turing and marketing of cement products. The company

has maintained a reputation of consistent dividend and

bonus history. Consequently, investors expectation of

bounty returns at the end of their financial year will trig-

ger the demand for the stock.

The company believes that ongoing advances in building

materials must integrate respect for people, their differ-

ent needs and their environment. This strong convictionis reflected in a strategy that combines industrial know-

how with performance, value creation, respect for em-

ployees & local cultures, environmental protection and

conservation of natural resources & energy.

The companys full year result ended December 31,

2010, shows that turnover increased by 11.40 per cent


Profit After Tax (PAT) surged by 218.35 per cent from

N943.62 million to N3.00 billion when compared to the

same period in the preceding year. Net Profit Margin

(NPM) also increased from 5.49 per cent in the corre-

sponding period of 2009 to 15.68 per cent in the 2010,indicating an increase of 185.61 per cent.

The increase in earnings has been attributed to the rise

in cement prices during the financial year as a result of

increased public projects in terms of infrastructural de-

velopment. It was also noted that the impact of the

global financial crisis, which crippled the economy in

2008 is beginning to ease.

Meanwhile, the strength of the Company resides in its

ownership of a completed power project for production,

the advantage it derives from the technical alliance with

other leading companies in the sector, its domineering

status in some regions of the country, and its capability

to expand and take advantage of emerging opportuni-

ties.

Our technical analysis shows that the 100-day MA is cur-

rently above the 200-day MA, just as the 5-day MA is

above the 10-day MA, indicating a buy signal. The

stock is more volatile as the market, given a beta of

1.03. The one-year Standard Deviation of 2.92%, which

is significantly higher than the markets 0.88%. Long

term return prospect of the stock estimated with the

Capital Asset Pricing Model (CAPM) is 17.04%.

Current Price 25.95


EPS 1.34

P/E Rat io 19.35




Year End December

ASHAKA CEMENT PLC

2 0 10 ( '0 0 0 ) 2 0 0 9 ( '0 0 0 ) CH.

Turnover 19,153,000 17,193,0 00 11.40%

Net Profit A fter Tax 3,00 4,0 00 94 3,6 18 218 .35%

Net Pofit M argin 15.68% 5.49% 185.77%Shareholders' Funds 16,146,000 13,141,000 22.87%

Total Assets 28,123,249 25,618,025 9.78%

ROSH 20.51% 14.36%

ROA 11.18% 7.37%

ASHAKA CEMENT PLC





Price to Book Basis 40 23.79Estimated Fair Value 100 27.14

ASHAKA CEMENT PLC

R = 0.655

0.00

50.00

100.00

150.00

200.00

250.00

300.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs Flourmill- Jan '10 - Date

NSE Rebased Flourmill Rebased

P oly . ( Flo urm ill Rebase d) Po ly . ( Flourm ill Reb ase d)


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DANGOTE SUGAR REFINERY PLCDangote Sugar Refinery (DSR) operates in two key busi-

ness areas which include: Refining Process and Market-

ing & Distribution. A total of 10 billion shares of N0.50

were listed on the 8th of March 2007. The company

whose offer was 139.5% over subscribed, returned over

N20 billion, with 10% per annum interest to investors

whose application were invalid.

The company intends to diversify into the upstream seg-

ment of the sugar business by acquiring and developing

Savannah Sugar Company Limited (SSCL), a subsidiary

of Dangote Industries Limited (DIL), to create synergiesand increase overall capacity. SSCL currently produces

white sugar from own grown sugarcane.

On successful combination, the potential synergies be-

tween DSR and its intended merger partner, SSCL, will

see it become a formidable institution within the Sugar

industry in Nigeria and beyond. The company expanded

its production capacity by 75% in the first quarter of

2008, through the production of 2.55 million metric

tones per annum from 1.44 million metric tones.

DSR has always relied mainly on retained earnings tosupport its growth in the past, and this strategy ac-

counted for the non-payment of dividend for some years.

This has helped the company to maintain consistent

growth.

Meanwhile, the Board of Directors of the company that

earlier promised quarterly dividend in 2009, resolved to

change the quarterly dividend policy of the company as a

result of difficulty in the payment process, and failure of

the policy to impact noticeably on the market valuation

of the shares of the company.

The graph of the stock price against the NSE ASI at the

top right corner shows that the stock has crossed the

signal line from below, and it seems that the price may

slightly reverse downwards. The one year return pros-

pect of the stock as estimated with the Capital Asset

Pricing Model (CAPM) is 17.12%.

The fundamental value of DSR is tilted towards the

Earnings Metric, as the weighted average of all the

valuation metrics produced a final fair price of

N13.99. This indicates that the stock is trading at a

discount of 5.19%. Therefore, we recommend the

stock as HOLD. From the technical viewpoint, we

expect the share price to trend towards AMCONs

hurdle price of N26.28 in the short to medium term,

representing a discount of 97.59%.

R = 0.6131

0.00

50.00

100.00

150.00

4-Jan-10 4-Jul-10 4-Jan-11

NSE All-Share Index Vs DANGSUGAR - Jan '10 -

Date

NSERebased Dan gsu gar Reb ased

Poly. (Dangsugar Rebased)

Current Price 13.30

Year High 16.20

Year Low 11.80

EPS 0.94

P/E Rat io 14.15




Year End December

D A N GOT E S U GA R R E F IN ER Y P LC

2 0 10 ( '0 0 0 ) 2 0 0 9 ( '0 0 0 ) CH.

Turnover 89,980 ,000 82,395,000 9.21%

Net Pr of it A ft er Tax 11,2 82 ,0 00 13 ,185,0 00 -14 .43 %Net Pofit Margin 12.54% 16.00% -21.65%

Shareholders' Funds 40,895,000 41,612,000 -1.72%

Total Assets 62,291,340 77,562,125 -19.69%

ROSH 27.35% 39.03%

ROA 16.13% 20.65%

DANGOTE SUGAR REFINERY PLC






DANGOTE SUGAR REFINERY PLC


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APPENDIX

DEFINITION OF TECHNICAL ANALYTICS TERMS

Moving Average - MAThis is an indicator frequently used to measure momentum and to define areas of possible supportand resistance. It shows the average value of a security's price over a set period. Moving averagesare used to emphasize the direction of a trend and to smooth out price and volume fluctuationsthat can confuse interpretation.

IMPORTANT DISCLOSURES

Information SourceThe data used in this report were sourced from the audited accounts of the companies for theirvarious financial year ends. Other sources included the Central Bank of Nigeria (CBN) monthly re-ports, the Nigerian Stock Exchange (NSE) Price List, Greenwich Research Database, and Nationaldailies.

Valuation Models and Methodology Applied in this Report

The equity analysis was conducted using a combination of valuation models, namely: Earnings(Historical), Forecasted Earnings, Dividends Basis, and Price to Book Basis. A weighted average ofall these valuation methods was taken as the final estimated fair value of the stock. The weightsapplied were based on our perceived applicability of the models to the different sectors of the Nige-rian economy.

The forecasted earnings were derived using CAGR as a forecast factor over a period of time. Themost recent profit after tax, which was used as the base, was forecasted five years into the futureand the average of these five years was taken as the normalized earnings in the forecasted valua-tion model after discounting for present value equivalent. A five year time horizon was used inmost cases in order to smoothen the returns as much as possible, so as to generate a realistic re-turns. Despite the five year forecast horizon, adjustments were still made where estimates seemedunrealistic. Good judgment and objectivity were displayed in deriving the estimates.

CAPM, which is the Capital Asset Pricing Model, was used in this report to derive the expected in-vestment returns for one year investment timeframe. Note that this is an expectation and that re-turns may be significantly higher or the expected returns may be achieved over a time periodmuch less than one year. The risk-free rate of return was the current yield on the 20-year FGNBond recently issued with a coupon rate of 10%, while market return is the weighted average ofthe sector returns on the Nigerian Stock Exchange. The betas of the stocks were calculated usingmarket data covering 36 months.

The price forecasts in the Report are for time horizon between 5 to 10 trading sessions. However,the forecasts may be achieved in a period less than 5 trading sessions. The forecast was based onan average of the CAGR for a 10-day trading period and the daily average growth rate of the stockprice for the corresponding period. Good judgment was exercised in determining the current mar-ket trend and adjustments were made when we felt that the observed trend might not be attain-able for the forecast horizon.


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IMPORTANT DISCLOSURES CONTD

Sector Basis of Projection

AGRICULTURE Earnings

AIRLINE SERVICES Earnings

AUTOMOBILE & TYRE Book Value

AVIATION Earnings

BANKING Historical Dividends / Book Value / Earnings

BREWERIES Historical Dividends

BUILDING MATERIALS Book Value

CHEMICAL & PAINTS Book Value

COMMERCIAL/SERVICES Book Value

COMPUTER & OFFICE EQUIPMENT Earnings

CONGLOMERATES Book Value

CONSTRUCTION Historical Dividends / Book Value

ENGINEERING TECHNOLOGY Book Value

FOOD/BEVERAGES & TOBACCO Earnings

FOOTWEAR Book Value

HEALTHCARE Earnings

HOTEL & TOURISM Book Value

INDUSTRIAL/DOMESTIC PRODUCTS Book Value

INFORMATION, COMMUNICATION & TELECOM-MUNICATIONS Book Value

INSURANCE Earnings

LEASING Earnings

MACHINERY(MARKETING) Book Value

MARITIME Earnings

MEDIA Book Value

MORTGAGE COMPANIES Earnings

OTHER FINANCIAL INSTITUTIONS Historical Dividends / Book Value

PACKAGING Book Value / Earnings

PETROLEUM(MARKETING) Historical Dividends / Earnings

PRINTING & PUBLISHING Book Value

REAL ESTATE Earnings

REAL ESTATE INVESTMENT TRUST Book Value

ROAD TRANSPORTATION Book Value

SECOND-TIER SECURITIES Earnings

TEXTILES Book Value

THE FOREIGN LISTINGS Book Value / Earnings


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Investment Timeframes

We refer to long term investment timeframe to be a period greater than one year and short terminvestment timeframe to be a period less than one year. We give a Buy recommendation when thestock has good technicals and strong fundamentals, implying that the stock can be used for specu-lating the market, and for fundamental investing where growth and income are the investment ob-jectives.

Hedge Clause

The report was prepared by Greenwich Research, and it is for information purposes only. Green-wich Trust Limited is under no obligation to accept any liabilities that may arise from the use of anypart of this report, as no representation is made on the accuracy of the sources used in preparingthe Report.

The price projections for the financial year in the report were generated based on the perceivednature of business of the respective sectors. In some cases, where more than one estimates werestated, the average of the estimates was taken as the price. Analyzed below is tabularized bases ofestimating the forecasts.

Documents

Greenwich Stock Recommendations_may 9 - 13, 2011