WEEKLY REPORTS REGENCY-03062011regencyng.net/Reports/WEEKLY REPORTS REGENCY-03062011.pdf · 2011. 6. 7. · Title: Microsoft Word - WEEKLY REPORTS REGENCY-03062011 Author: RAMLIT

REGENCY ASSETS MANAGEMENT LIMITED

(Member of The Nigerian Stock Exchange)

STOCK MARKET REPORT FOR THE WEEK ENDED JUNE 03, 2011 MARKET BRIEFS

As in the preceding week, the Nigerian Capital Mark et appreciated slightly during the week ended 03/06/2011. The All Share Index and Market Capitalization of listed equities appreciate d by 0.52% and 0.48% from the opening figures of 25,829.75 and N8.26 tri llion to 25,963.50 and N=8.30 trillion respectively. Also,the NSE 30 I ndex and two out of the four sectoral indices the NSE Insurance and NSE Oil & Gas appreciated by 1.10%, 0.07% and 1.11% to close at 1 ,162.64, 169.66 and 335.79 respectively. However, NSE Food & Beverages, NSE Banking depreciated by 0.02% and 0.22% to close at 849.23 a nd 395.89 respectively. The slight increase in All Share Index and Market C apitalization may be attributed to: • Low prices of stocks coupled with good corporate re sults and

corporate actions posted by some quoted companies. Investors were able to invest and make reasonable gain on these st ocks.

• The current political dispensation is expected to i ncrease investor’s confidence in the market. The expectation is high t hat the market prices will pick up normally as soon as possible. MARKET SUMMARY

Last Week Previous Week

% Change

Volume 1.15 B 1.36 B -15.44 Value N= N=11.52 B N=10.20 B 12.94 Total Gain 31 31 0.00 Total Loss 49 52 5.77 Deals 20,708 27,440 -24.53 All Share Index 25,963.50 25,829.75 0.52 Market Cap. N=8.30

trillion N=8.26 trillion

0.48

NSE All Share Index and Market Capitalization Movement (01/06/11-03/06/11)

Committed to grow your wealth

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PRICE MOVEMENT

� Thirty one stocks appreciated in price during the w eek, same as in the preceding week. The top ten price gainers durin g the week are:


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� Forty Nine stocks depreciated in price during the w eek, lower than Fifty Two in the preceding week. The top ten price losers during the week are:

BOND MARKET

A turnover of 103.3 million units worth N86,382.78 in 841 deals was recorded this week in contrast to 138.2 million uni ts worth


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N123,054.87 million in 1,092 deals recorded during the week ended Thursday May 26, 2011. The most active bond is 4.00 % FGN April 2015 with traded volume of 30.48 million units valued at N26.310.96 million in 312 deals. This was followed by 10.00% F GN July 2030.

OUTLOOK AND STOCK RECOMMENDATION FOR THE WEEK (06/06/11-10/06/2011) The under-listed stocks are suitable for investment during the week with six month outlook. The reasons being:

� Expectation of reasonable returns � Comparatively low prices; and � Sound fundamentals.

Stocks Opening Price N

Maximum Price for Entry N

3-Month Target Price N

% change

UACN PLC 40.95 41.00 45.00-50.00 21.95 CAP PLC 28.09 29.00 35.00- 40.00 20.68 NASCON 6.40 6.50 8.00 23.08 ACCESS BANK 7.55 8.50 11.00 29.41 PRESCO PLC 8,30 8.50 10.00 17.65 PZ PLC 35.70 36.00 40.00 11.11 VITAFOAM PLC 5.83 6.00 8.00 33.33 SPECULATIVE STOCKS TRANATIONAL CORPORATION OF NIGERIA PLC FORTE OIL PLC/AP) PLC @ Current Market Price. INTERCONTINENTAL BANK @ Current Market Price. Financial highlights of the recommended stocks for Buys are as follows: Company Result Turnover PAT Bonus Dividend

Current N

Last yr N

Current N

Last yr N Current

Last yr

NASCON PLC 1st qter 31/03/2011 2.21 B 2.0 B 396.32 M 304.06 M N/A N/A

ACCESS BANK 1st qter 31/3/2011 24.30 B 27.78 B 4.18 B 4.02 B N/A N/A

UNILEVER PLC 1st qter 31/03/2011 13.04 B 10.93 B 1.63 B 957.9 M N/A N/A

GTBANK PLC 1st qter 31/3/2011 46.59 B 49.11 B 16.22 B 10.71 B N/A N/A

PRESCO PLC 1st qter 31/3/2011 1.50 B 1.15 B 539.60 M 309.11 M N/A N/A

PZ PLC 3RD qter 31/12/2010 44.95 B 44.15 B 3.89 B 3.68 B 1 FOE 4 0.75

VITAFOAM PLC 2nd qter 31/03/2011 6.80 B 5.23 B 465.29 M 416.17 M N/A N/A


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Outlook for the year 2011

� The expected deepening of the market by N2 trillion bond from Assets Management

Company of Nigeria (AMCON) by March, 2011 is expected to impact positively on the

market and also increasing investor’s confidence.

� The renewed interest of Institutional Investors (Pension Funds and Foreign Investors) is

impacting positively on the stock prices and deepening the market for the remaining

part of the year;

� The CBN debt recovery strategy has produced positive results to the affected banks.

This is impacting positively on the performance and also serving as a driving force to

the price of other quoted shares;

� The discipline instilled by the regulatory authorities of the NSE has resulted to prompt

release of market information. This is impacting positively on the market and

increasing investor’s confidence;

� The successful completion of the current electoral process and subsequent swearing in

of acceptable Government is expected to impact positively on the market.

� The current market fluctuations, oscillations and volatility are expected to continue.

This will create opportunities for income generation for individual investors and

investment companies.

COMMENTS UACN NIGERIA PLC

UACN PLC

� Current market price is N=40.95 � First quarter result of N12.53 billion turnover and N464.3 million

PAT in March 31,2011 as against N10.91 billion tur nover and N422.09 million PAT in 2010;


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� Good brand name, good market perception; � A multinational company with foreign affiliate;

� A well diversified conglomerate in Foods, Manufactu ring and Automobile sectors of the economy;

� 5years consistent increase in turnover; � 5-years consistent and robust dividend policy; � Price to book ratio of 1.21 shows that the stock is undervalued at

the current price of N40.95 � There is therefore high possibility for reasonable capital

appreciation as the company turn out its final resu lt. � UACN new joint venture arrangement with Tiger Brands Limited (the largest food company quoted on

the Johannesburg Stock Exchange) is expected to impact positively on the profitability and market

price of the company; and

This year high and low values of N=58.48 and N36.75 shows that there is high prospect for capital

appreciation at the current market price.

.

Company

Price as at Jan 2010

Current Market Price 03/6/11

% Change EPS

PE RATIO

Book Value

Price to book ratio

UACN Plc

36.75

40.95

11.42 N1.44

28.44

N=33.84

1.21


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CAP PLC

� Current market price is N=28.09 � Good final year result with good ROI. � First quarter result of N1.0 billion Turnover and N 201.7 million PAT

in March 31, 2011 compared with N838.2 million Turn over and N149.6 million in 2010

� Good Return on Capital Employed of 86.44%. Good bon us and dividend history

� On April 27, the NSE adjusted the price for the bon us and dividend declared which brought the price down to N20.99. Th e price has going up consistently since then. We expect this trend to continue moving the price upward to about N30 and above within the next few weeks.

� Very good brand name; Leader in paint industry; � The current market price of N28.99 is still conside red okay for new

entry. � Presence of royalty and commercial service agreemen t with Akzo Nobel

and UACN Plc are impacting positively on the stock, � The lower number of shares in issue make the shares to be on constant

demand in the market, � This year high and low values of N43.98 and N20.99 shows that there

is prospect for capital appreciation; � The fundamental is very sound.

Company



% Change

EPS

FWD PE RATIO

Book Value

Price to Book Ratio

CAP Plc

34.03

28.09

-17.46 N3.84

7.32

N=6.29

4.47


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NATIONAL SALT PLC

� Current market price of N6.40 � Good return on investment at year end result. Declaration of N0.50 dividend � Good first quarter result of N2.2 billion Turnover and N396.32 million PAT in

March 31, 2011 compared to N2.00 billion and N304 million PAT in March 2010

� Good reserve, high prospect for bonus declaration in subsequent results.

� High price to book ratio 3.16 shows that the price is high at N6.40. � However, the declaration of improved quarterly results may impact positively

on the price and bottom line in the long run. � The completion of new Satchet production line will increase the revenue profile

of the company. This will impact positively on fundamentals, price and market


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share of the company

Company



% Change

FWD EPS

PE RATIO

Book Value

Price to Book Ratio

Nascon Plc

6.39

6.40

0.16 N0.60

10.67

N=2.02

3.16

ACCESS BANK PLC

� Current Market Price = N7.55

� First quarter result of N24.30 billion turnover and N4.18 Billion PAT in March 31 , 2011 as against

N27.78 billion turnover and N4.02 billion PAT in 2010;

� Comparative low price of N7.55, there is expectation of capital appreciation


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� The price to book ratio of 0.70 shows that the stock is undervalued

� High performing loan of 97.81%

� Good quarterly returns in term of dividend and reasonable capital appreciation

� This year high and low value of N11.10 and N7.96 shows there is room for capital appreciation

Company



% Change EPS

PE RATIO

BOOK VALUE

PRICE TO BOOK RATIO

Access Bank Plc

9.80

7.55

-22.96 N1.00

7.55

N=10.83

0.70

PZ CUSSONS NIGERIA PLC

� Current Market Price = N35.70 � Third quarter result of N44.95 billion gross earni ngs and N3.89

billion PAT in March 31 , 2011 as against N44.15 b illion gross earnings and N3.68 billion PAT in 2010;

� Good quarterly performances


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�

� The FYE is May 31. There is expectation of better r eturns in terms of bonus and dividend;

� With over N27 billion reserves, the prospect for bo nus is high � Consistent price appreciation in the last few month s � Good market perception, good brand name; � Good bonus and dividend history;

Company



% Change

3rd qter EPS

PE RATIO

Book Value

Price to Book Ratio

PZ Plc

31.50

35.70

13.33 N1.60

22.31

N=12.47

2.86


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� Current market price of N5.83 � Impressive second quarter result of N6.80 Billion Turnover and N465.29 Million PAT in March 31 ,

2011 as against N5.23 Billion Turnover and N=416.17 million PAT in 2010;

� Leader in Foam Industry ; � The company maintain a partnership arrangement with South Africa for technical support and and

supply of equipments

� Newly acquired and installed machines is enhancing emerging opportunities in foam business in Nigeria

� Take of Vitafoam Ghana and expansion of Ikeja, Jos and Kano plants will impact positively on the bottom line

� Good return policy in terms bonus and dividend history; � Price to book ratio of 1.76 shows that the stock is undervalued. There is high potential for capital

appreciation;

� Sound fundamental, good brand name;

Company



% Change

EPS

PE RATIO

Book Value

Price to book ratio

Vitafoam Plc

5.37

5,83

8.57 N1.14

5.11

N=3.32

1.76


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PRESCO OIL PLC

� Current market price is N=8.30 � First quarter result of N1.50 billion turnover and N539.60 million

PAT in March 31, 2011 as against N1.15 billion tur nover and N309.11 million PAT in march 31, 2010;

� The secotor where the company is operating is favou red by government policy

� Price to book ratio of 2.04 shows the stock is unde rvalued at current market price of N8.30

� The current market price of N8.30 is considered to be a good price for new entry because there is high possibility for price appreciation as the company continues to turn out i ts quarterly results.

Company



% Change FWD

EPS

PE RATIO

Book Value

Price to Book Ratio

PRESCO

5.60

8.30

48.21

N2.16

3.84

N=4.06

2.04


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INVESTMENT BASICS

VALUE INVESTING

Value investing is a process of seeking securities that are undervalued relative to their intrinsic worth or

future prospects,

A value investor hopes that others will eventually recognize the true worth of the security causing its price to

rise. When the stock appears to be fully valued or even overpriced, the typical value investor will sell it and

look around for another stock, starting the cycle again.

While the principle of value investing is easy to understand, identifying undervalued opportunities can

require considerable research. Low price alone do not denote an undervalued stock; quality is also important.

Accurate accessing quality requires a thorough understanding of the company, its business, balance sheet,

and future prospects,

A search for value always starts with a review of basic, widely available financial indicators, such as Price

Earnings Ratio, Price per Book Value , Dividend Yield. Etc

Price earnings Ratio means dividing a stock’s price per share by earnings per share.

A stock that has a P/E Ratio that is significantly below that of its peers, or market as a whole, or its own

historical norm may be a valued stock. Further research is necessary to determine if the low P/E Ratio

indicates fundamental problems.

Price per book value is calculated by dividing a stock’s price by its book value per share. This ratio tells us

whether a stock accurately reflects the accounting value of the company’s historic real and financial assets

per share. A ratio of 1 means the stock’s price is thesame as the value of such assets per share. A ratio below

1, or that of the industry could indicate a cheap stock. Also further research is necessary to find

out if the assets are valued accurately.

Advantages of Value Investing

A principal advantage of this technique is that a careful stock selection will limit the overall risk of a stock

portfolio over time.

Valued situation may offer above average dividend yield. The system generates good return to investors in

term of capital appreciation.

For other information on Stockbroking and other Investment Services, please Contact: REGENCY Assets Management Limited Investment House (1st Floor Rear Wing) 21/25 Broad Street Lagos. Telephone- 01-7368471, 01-9502308 E-mail : [email protected] Website: www.regencyng.net NOTE:


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While due care has been taken in preparing this rep ort, investors are reminded that the stock prices fluctu ate based on stock market forces. Regency Assets Management Limi ted accepts neither responsibility nor liability whatsoever for any loss arising from the use of this report. Investors are reminded that they have the primary responsibility to make t heir investment decisions

Documents

WEEKLY REPORTS REGENCY-03062011regencyng.net/Reports/WEEKLY REPORTS REGENCY-03062011.pdf · 2011. 6. 7. · Title: Microsoft Word - WEEKLY REPORTS REGENCY-03062011 Author: RAMLIT