Newspaper Review - Monday, May 6, 2013
NSE Targets $1tn Market Capitalisation by 2016
The Nigerian Stock Exchange (NSE) has revealed that it is targeting a market capitalisation of $1 trillion by 2016. The Head of Strategy, NSE, Ms Yvonne Emordi, explained at the weekend that NSE had so far raised about $100 billion out of the earmarked target to be achieved. Emordi, during the business Clinic of the Financial Services Group of the Lagos Chamber of Commerce and Industry (LCCI) tagged the ‘The Nigerian Capital Market: The Outlook’ said the NSE is doing well and expressed optimism in the exchange's task to achieve its 2016 feat. She added that the way forward is to focus more on targeted business development efforts; stronger regulatory environment and utilising the 21st century technologies. She also stressed that other factors needed to forge ahead include the need to provide a growth enabling market structure and also develop a first-rate investor protection programme. In her words, “We have focused very much on the regulatory framework as well as enforcement. We have come out with new products to boost investors' confidence.”
All-Share Index crosses 35,000 mark in five years
The Nigerian Stock Exchange (NSE) reported on Friday that its All-Share Index crossed to 35,000 mark for the first time after the capital market crashed in 2008. The index appreciated by 606.95 points or 1.76 per cent to close at 35,109.33 on Friday from the 34,502.38 posted on Thursday. Similarly, the market capitalisation, which opened at N11.03 trillion, grew by N194 billion to close at N11.23 trillion as a result of price appreciation. Guinness led the gainers' table by N7.87 to close at N274.02 per share. Dangote Cement appreciated by N6.80 to close at N185, while UACN inched by N5.88 to close at N64.68 per share. Total gained N5 to close at N143, while Nigerian Breweries rose by N1.49 to close at N161.50 per share.
NSE, CAC Collaborate on Company Information
The Corporate Affairs Commission is to establish a contact centre at the Nigerian Stock Exchange (NSE) as part of a new partnership between CAC and the NSE aimed at providing adequate information on companies to assist investors in decision making. The Chief Executive Officer of the NSE, Mr. Oscar Onyema, disclosed this when the board of CAC visited the exchange in Lagos. According to him, there are many ways both organisations would collaborate to facilitate the registration of new companies, search conduct and how listed companies would comply with the statutory requirements on the side of the commission. In his remarks, the Chairman of CAC, Chief Funsho Lawal, assured the stockbroking community of the commission’s determination to ensure that adequate information needed to assist investors to make vital decisions would be available through the NSE. He said one of the principal aims of the commission was to ensure that more companies are registered and quoted on the NSE, hence the need for adequate information to assist investors in making decisions.
Stock Market Hits 52-week High
The Nigerian equities market followed the positive trend around the world last week as it hit a new-year and 52-week high at the close of business last week. The growth recorded in the market was influenced by Dangote Cement Plc’s 16.46 per cent price appreciation during the week. The stock contributed the most to the 1,950.23 points growth in the all share index to touch its 52-week high of 35,109 points (it last reached that level in November 2008). Fast Moving Consumer Goods (FMCG) such as UACN Plc, Nigerian Breweries Plc and Guinness Nigeria Plc, amongst others contributed to the market's performance during the week under review. The Nigerian equities market had reversed its negative performance the previous week helped by traders’ positive response to the first quarter earnings results released by the banks. However, the performance during the week was not spectacular as profit-taking activity persisted. The market resumed the trading week on a negative note last Monday as index dip marginally by 0.39 per cent following weaker-than-expected result released by First City Monument Bank.
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Banks’ loan-to-deposit ratio drops in 2012, lowest in four years
Year end financials released by half of Nigeria’s money deposit banks indicate that lending in 2012 went down as against expectations. The top banks that have released their results so far, include FirstBank, Zenith, GTBank, Sterling, ETI, StanbiIBTC, Union and Access. The financials of the banks all show that they lent a smaller portion of their deposits in 2012 compared to 2011, representing a four-year low. This, according to analysts, may be as a result of the banking reforms, which have made banks slow down in risk assets creation and focus more on deposit liabilities. The trend has also been attributed to high interest rates which have precluded many from borrowing. The average loan-to-deposit ratio for the nine major commercial banks which have so far released full year 2012 results, fell to 57.96 percent in the fourth quarter, from 63.18 percent a year earlier. Lending as a proportion of deposits dropped in eight of the nine banks under review, while remaining flat in only one, an analysis of the data shows.
Skill dearth, poor access to capital slow growth of 19m SME
A shortage of requisite skills and poor access to capital are responsible for the dismal performance and contribution of small and medium scale businesses to Nigeria’s Gross Domestic Product (GDP). This is the consensus of industry watchers who spoke to BusinessDay. They defined skills as including technical or vocational skills to carry out each business, as well as managerial know-how. The small and medium scale business operators in Nigeria, currently put at about 19 million, contribute less than 10 percent to the nation’s GDP and less than 30 percent to the nation’s exports. The limited contributions to exports and GDP was also attributed to poor technology content in the products of SMEs which also are affected by technological innovations. Unlike the case in Nigeria, SMEs in the United States of America contribute over 70 to the economy of that country. Ngozi Bell, Region III Advocate for American Small Businesses, who spoke to BusinessDay at the Africa University of Science and Technology, Abuja, Tuesday, however berated wealthy and privileged Nigerians for their inability to support the development of small businesses in the country.
Heritage Oil nets $234.5mn from OML 30, eyes growth in Nigeria
United Kingdom-based Heritage Oil Plc, an independent upstream exploration and production company, has said a sum of $234.5 million has been generated from the recently acquired Oil Mining Lease (OML) 30. The company stated that it was looking forward to further increases in production from the field, even as it is set to make inroads into new regions of the country. The company, in its results for the twelve months ended 31 December 2012, revealed that key items of equipment have been identified and ordered to bring about the expected increase in production from the field. Last year, the company acquired an interest in OML 30 through Shoreline Natural Resources Limited whose ownership interests are held by Heritage Oil SNR (Nigeria B.V.), a wholly owned subsidiary of Heritage and a local Nigerian partner, Shoreline Power Company.
Chinese Mayor leads trade delegation to Lagos Motor Fair
Gui Guangli Deputy Mayor of Changchun Municipal People’s Government, Jilin Province of the People’s Republic of China is leading a trade delegation to the 8th Lagos Motor Fair and Autoparts Expo Nigeria; coming up at the Federal Palace Hotel, Victoria Island from May 10-16, 2013. The visit which is facilitated by one of the new entrants into the fair First Automobile Works [FAW] of China through its Nigerian office is aimed at demonstrating the desire of the franchisee to make positive impact in the local automotive industry. Guangli who is also the Head Economic and Trade Delegation of Chang Chung City will be at the event arena with major players in the auto business from the Province who are interested in investing in the country’s automotive sector. According to the organisers, this visit which is to further cement the robust economic relationship between Nigeria and China seeks to deploy the wealth of experience and resources of the private and public sector of the province in developing the local automotive industry.
Bond Yields Widen as Oil Prices Decline
Yields on the federal government’s bonds increased in April as a result of the relative decline in oil prices as well as a negative shift in global sentiment during the month. Data compiled by THISDAY showed that yields on all the seven actively traded FGN bonds increased during the month. While confirming the development, fixed income market analysts attributed it partly to the aggressive mop up of liquidity by the Central Bank of Nigeria (CBN). For instance, while yield on the 4 per cent FGN April 2015 climbed by 50 basis points to 11.70 per cent as at April 30, from 11.20 per cent as at April 2, yield on the 15.10 per cent FGN bond due April 2017 also increased by 141 basis points to 11.84 per cent on April 30, from 10.43 per cent as at April 2. Also, just as the 10.70 per cent FGN May 2018 jumped by 114 basis points to 11.83 per cent as at April 30, from 10.69 per cent on April 2, the 16 per cent FGN June 2019 also increased by 139 basis points to 12.04 per cent as at April 30, from 10.65 per cen
Diamond bank’s shareholders approve share capital raise to N15bn
Shareholders of Diamond bank plc have approved the raising up of the company’s share capital to N15 billion from N10 billion currently. The bank intends to achieve this through the creation of additional N10 billion ordinary shares of 50 kobo each, ranking pari-passu in all respects with the existing ordinary shares of the company. The shareholders also approved the raising of additional capital up to $750 million through the issuance of any form of debt and/or equity and/or any other instrument which may be appropriate to meet the bank’s capital requirements, to be undertaken by way of a rights issue and/or an offer for subscription with or without a preferential allotment, either locally or internationally and upon such terms and conditions as the directors may deem fit in the interest of the bank for purposes of enhancing the bank’s working capital and financing business development initiatives. Speaking at the 22nd annual general meeting in Lagos, Alex Otti, group managing director, said, “We intend to use it to expand our business, shore up our capital adequacy so that we will be stronger; we can expand the way we have planed, a few branches that we must build and a few places that we want to be so that we can reach our customers, faster easier and better”.
NAHCO’s Profit Rises by 55% in Three Months
The Shareholders of Nigerian Aviation Handing Company (NAHCO) should expect an impressive performance in the current year going by the first quarter results ended March 31 2013. The aviation services firm has reported a growth of 55 per cent in profit after tax in the first quarter (Q1) of 2013 compared with the corresponding period of 2012. According to the results made available by the Nigerian Stock Exchange (NSE) last week, NAHCO posted a turnover of N1.795 billion, showing a 15 per cent growth from N1.561billion recorded in the corresponding period of 2012. Profit before tax rose from N158.935 million in 2012 to N220.214 million in 2013 while profit after tax grew by 55 per cent from N101.48 million to N157.751 million. The Managing Director of NAHCO, Mr. Kayode Oluwasegun-Ojo, attributed the impressive growth to the general improvement in efficiency and cost containment of the company. He said: “The change in the bottom-line reflects gains from our transformation programme, cost containment initiatives and long-term strategy for investment in human resource development, equipment renewal, cargo modernisation and process improvement.”
Infrastructure is Necessary to Investment in the Nigerian Economy
President and Chief Executive Officer of General Electric (GE) Nigeria, Dr. Lazarus Angbazo, has described sustainable development of infrastructure as a key factor to attracting foreign direct investment into the Nigerian economy. He spoke recently during the ‘Investment Africa’ Conference organised by CNBC Africa and Forbes Africa. Angbazo, in a presentation titled ‘Infrastructure as a Catalyst to Attracting Foreign Direct Investment into the African Economy’ said in 2012 Nigeria emerged Africa’s biggest destination for Foreign Direct Investment with FDI inflow of $8.92bn according to the World Investment Report 2012 by the United Nations Conference on Trade and Development. He added that investment in infrastructure would ensure that Africa remains on a sustainable growth curve. According to him, more FDI is likely to occur in countries with good physical infrastructure such as electricity, rail transportation and bridges. Good infrastructure increases the productivity of investments and therefore stimulates FDI flows.
JSE Opens Door to Nigerian Investors
Nigerian investors have been called upon to take advantage of the $55million share capital of the Johannesburg Stock Exchange (JSE), with its regulation Securities Exchange valued at $347 billion. The call was made by the Director Issuer and Investor Relations Division of JSE, Zeona Jacobs, during a breakfast meeting with theme: ‘Listing Requirements and Corporate Governance’, organised by Society for Corporate Governance Nigeria (SCGN), recently in Lagos. According to her, “our clients are looking to us to assist them with accessing opportunities outside of South Africa via the JSE.” She said they are ready to collaborate with the Nigeria Stock Exchange (NSE) for possible ways of secondary listing for both ways. While underscoring the importance of corporate governance for companies, Jacobs said, “ultimately establishing good corporate governance is very much in the interests of African countries and all the key economic stakeholders including the securities exchanges.” Adding that one of the functions of corporate governance is to assist companies to achieve success.
Startup Entrepreneurs Compete for LAN Investment Support
Five startup entrepreneurs will be showcasing their talents in web application development as they compete for investment support from members of the Lagos Angel Network (LAN). The investment support is expected to help to grow their businesses to the next stage. The pitch event for the competition is slated to hold tomorrow at the Digital Bridge Institute, Oshodi, Lagos, and the shortlisted companies are Fix My Gadget, Cashenvoy, BookNowNow, SkinIT and Giga layer. The companies have already passed through a screening round enabling them to pitch for LAN investment. The Lagos Angel Network brings together high networth individuals seeking to invest in and mentor Nigerian technology start-ups. With current membership strength of 15, LAN members are expected to commit at least one million naira per year to the investment pool, and there is no upper limit in their commitment abilities.
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