Retail views

UBA Q4 results

Nigeria

Thursday, 26 March 2015

Daily Retail Report .

Market Review

The Nigerian Equity market continues to sustain the positive trend that

has prevailed the market in five straight sessions. The benchmark

index appreciated by 61bps to return 30,073.10 with 4,531 deals. Most

sub-sectors monitored by the NSE moved northward, except NSEIND

and NSEINS. On the back of gains recorded by Seplat (5.00%), FO

(2.26%), Mobil (0.71%) OILGAS led the gainers chart.

ASI year-to-date return currently stands at -11.01%, while market

capitalization added N61billion to return N10.035trillion. At the close of

today’s session, 26 stocks advanced relative to 30 decliners while 42

remained unchanged. Top in the gainers’ chart are UNILIVER (N37.48),

DANGFLOUR (N3.66) and TRANSEXPR (N1.06) while UBA (N3.83),

ETERNA (N2.59) and PRESCO (N26.47) led the losers’ chart.

See below for results announced today;

Company PAT Change% Dividend Closure Date

TOTAL NIGERIA PLC. 4.423bn -17 N9.00K 20 - 24 April 2015

UBA PLC 47.907bn 2.8 10K 07 - 09 April 2015

DANGOTE CEMENT PLC. 159.501bn -20.72

UNILEVER NIGERIA PLC. 2.412bn 49 10K 13 - 17 April 2015

The Trader still reiterates that value investors are advised to take up buying opportunities as stock prices remain fairly priced.

Sector Report Today(%) Month-To-Date(%) Year-To-Date(%)

NSE30 0.93 1.69 -7.49

NSE BNK10 0.97 5.59 -6.61

NSE CNSM10 2.25 1.41 -7.98

NSE OILG5 2.02 -4.47 -7.19

NSE INS10 -0.36 3.20 -17.14

NSE IND -0.39 -2.03 -12.94

Market Wrap

ASI +0.61% 30,073.10

Index year-to-date e -11.01%

Market Cap. N10.035Tril

Traded value 7.188Bn

Key gainers (%)

UNILEVER 10.24

DANGFLOUR 9.91

SEPLAT 5.00

PZ 4.97

DANGSUGAR 4.96

Key losers (%)

UBA -4.96

PRESCO -4.72

STERLNBANK -4.59

STANBIC -3.45

DIAMONDBNK -2.68

NITTY

1M 14.4323

2M 14.5382

3M 15.0196

6M 15.4919

9M 15.8146

12M 16.4979

Crude oil spot price

Brent crude US$57.77

Contact information

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Mobile: 08068015502

Email: cslservice@fcmb.com

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Stock Recommendations

Banking Comment

Current

Price

Target

Price

Potential

Upside %

EPS

FY

2013

1 Yr

forward

EPS

Last

Dividend

(N)

P/BV

2013

Yield FY

2013

Yield FY

2014e

Shares

Outstanding

(millions)

Year

End

ACCESS BANK Buy 5.65 7.70 36% 1.60 1.90 0.35 0.80 7.10% 11.5% 22883.00 Dec.DIAMOND BANK Buy 3.99 5.30 33% 2.00 1.70 0.30 0.60 5.40% 5.4% 14475.00 Dec.FIDELITY BANK PLC Buy 1.54 1.90 23% 0.30 0.50 0.14 0.30 7.40% 11.6% 28974.00 Dec.FBN HOLDINGS Buy 8.51 12.90 52% 2.20 2.30 1.10 0.80 10.00% 10.0% 32632.00 Dec.GUARANTY TRUST BANK Buy 23.20 28.40 22% 3.20 3.30 1.45 2.20 6.90% 7.3% 29431.00 Dec.STANBIC HOLDINGS Hold 29.00 32.40 12% 1.90 2.60 1.20 3.10 2.70% 3.5% 10000.00 Dec.STERLING BANK Hold 2.18 1.60 -27% 0.40 0.40 0.25 0.80 10.90% 8.7% 21592.00 Dec.SKYE BANK Under review 2.45 Under review #VALUE! 1.20 1.10 0.30 0.30 11.10% 20.7% 13219.00 Dec.U B A Buy 3.83 5.70 49% 1.40 1.50 0.50 0.70 10.10% 10.1% 32981.00 Dec.

ZENITH BANK Buy 17.01 24.60 45% 3.00 3.00 1.75 1.30 8.10% 8.3% 31396.00 Dec.

Food & BeverageEV/EBITDA (x)

2013

Yield FY

2013eDANGOTE SUGAR REFINERY Under review 6.77 Under review N/A 0.89 1.20 0.60 4.70 7.40% 7.4% 12000.00 Dec.CADBURY NIG. Under review 39.23 Under review N/A 2.90 3.20 1.30 7.60 0.00% 4.7% 1878.00 Dec.FLOUR MILLS Hold 33.50 54.80 64% 2.90 3.50 1.60 8.90 3.30% 4.0% 2385.00 Mar.HONEYWELL FLOURMILLS Buy 3.00 5.20 73% 0.40 0.30 0.17 12.00 5.70% 4.7% 7930.00 Mar.NESTLE FOODS NIG. Hold 800.00 777.60 -3% 28.10 31.30 24.00 24.90 2.60% 3.0% 792.00 Dec.P Z INDUSTRIES Hold 26.82 34.60 29% 1.20 1.30 0.19 7.80 2.70% 3.0% 3970.00 MayU A C N Buy 33.49 72.60 117% 2.90 3.60 1.75 5.40 4.00% 4.7% 1920.00 Dec.UNILEVER NIGERIA PLC Sell 34.00 31.80 -6% 1.30 1.60 1.25 13.70 3.80% 3.8% 3783.00 Dec.

Building Materials EPS 2013eEV/EBITDA(x)

2013e

Yield FY

2013e

LAFARGE WAPCO PLC Under review 84.00 Under review N/A 9.40 9.40 3.30 8.20 3.30% 3.3% 3001.00 Mar.

DANGOTE CEMENT Buy 151.35 198.40 N/A 11.80 11.90 7.00 16.10 3.40% 3.5% 17040.00 Dec.

Breweries EPS 2013eEV/EBITDA(x)

2013e

Yield FY

2013eGUINNESS NIG. Sell 127.00 111.00 -13% 7.90 5.90 7.00 14.50 4.30% 3.0% 1506.00 JuneINTERNATIONAL BREWERIES Hold 18.00 24.50 36% 0.90 1.30 0.30 16.20 1.00% 1.5% 3263.00 Mar.NIGERIAN BREWERIES Sell 140.07 121.20 -13% 5.70 5.60 4.50 13.30 2.90% 2.1% 7562.00 June

Agriculture EPS 2013eEV/EBITDA (x)

2013e

Yield FY

2013e

OKOMU OIL Buy 28.42 41.50 46% 2.20 3.00 1.00 9.00 3.20% 6.7% 953.00 Dec.PRESCO PLC Buy 26.47 42.70 61% 1.29 1.60 0.10 9.20 0.40% 1.7% 1000.00 Dec.Pharmaceuticals EV/EBITDA (x)

2013

Yield FY 2013

GLAXOSMITHKLINE BEECHAM NIG. Buy 42.00 78.60 0.87 3.10 4.30 1.30 8.90 2.50% 3.8% 957.00 Dec.

Note – for full report on the recommended stocks kindly send an email to cslcsu@firstcitygroup.com

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Top Highlight

Credit Rating (2) - Standard & Poor’s downgrade of banks follows sovereign downgrade

On Friday, after market close, we published on Nigerian banks. It may come as a surprise, given the mounting risks facing the Nigerian economy,

but we are now positive on bank stocks, moving from six Hold and three Buy recommendations to seven Buy and two Hold recommendations. We

believe that the market is currently over discounting the risks facing the sector.

To test this thesis we model in an aggregate cost of risk (COR) for the sector, of 4.5% of Gross Loans in 2015e, which has the effect of reducing our

forecasts of Net Profits in 2015e by 56% in aggregate. This cost of risk is much higher than our previous forecast (1.1%), and much higher than recent guidance (which is generally below 1.5%), though significantly lower than what the same banks reported during the 2008-9 banking crisis

(in aggregate 6.9%).

Our point is that, in most cases, the banks will be able to absorb charges for non-performing loans (which is the COR) within their 2015e earnings,

according to our new forecasts.

By contrast the market, in some cases, is pricing in not only a loss of all earnings in 2015, but a contraction in equity bases too. The result is that some banks are trading at extremely low price-to-book (P/BV) valuations. For example, FBNH (Buy, current price N7.09/s, target price N12.86/s),

at 0.5x P/BV, is priced as if it will lose roughly half its equity. It trades at almost three standard deviations below its four-year average historic

P/BV rating.

Among the many risks to our investment thesis (which are detailed in the report) is the threat of currency devaluation. But we would term this the

threat of further currency devaluation, since at N189.7/US$1, the currency has already fallen 16.7% from the average N162.5/US$1 level of the first nine months of 2015e. We think that the medium-term floor to its value is N220.0/US$1, which is a further 16.0% lower. By contrast we see

much more potential upside in some bank stocks. The report, Nigerian Bank, Disaster Price in. Buy, 30 Jan 2015, is available to clients.

News Headlines

Buhari cleared to contest, eligibility suit deferred: By adjourning further hearing in the suit seeking to disqualify the presidential candidate of

the All Progressives Congress (APC), Major-General Muhammadu Buhari, to April 22 and 23, a Federal High Court in Abuja has finally cleared the

hurdle for him to participate in Saturday’s presidential poll. Four different plaintiffs had approached the court seeking to disqualify Buhari from

participating in the presidential poll over alleged certificate forgery and perjury. Source: thisdaylive.com

FG to secure $2bn World Bank, AfDB loan to fund budget: The Federal Government has said it will source $2 billion from the World Bank and

the African Development Bank (AfDB) under the 2012-2015 External Borrowing Plan to help in the implementation of the 2015 budget. The loan is

primarily targeted at addressing foreign exchange demand and strengthening of the naira, which has been devalued by the Central Bank of Nigeria

(CBN) following the increasing pressure on the local currency largely precipitated by a fall in the price of oil. Source: thisdaylive.com

Shell sells $1.7bn Nigerian assets to Aiteo: The Shell Petroleum Development Company of Nigeria Limited has announced the completion of the sale of its interest in Oil Mining Lease 29, the Nembe Creek Trunk Line and related facilities in the eastern Niger Delta. The company said its

interests in OML 29 and the NCTL were sold to Aiteo Eastern E&P Company Limited, with total cash proceeds of $1.7bn. The NCTL, which is

Nigeria’s major onshore pipeline, has been frequently attacked by oil thieves who drill holes into the pipeline to siphon off fuel. The persistent

sabotage of the pipeline, according to industry analysts, may have triggered the company’s divestment of its interest. Source: punchng.com

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Important Risk Warnings and Disclaimers CSL STOCKBROKERS LIMITED (CSLS) is regulated and authorized by the Securities and Exchange Commission (SEC) of Nigeria and the Nigerian Stock Exchange (NSE). The details of the authorization can be viewed at the SEC Website at http://www.sec.gov.ng/consolidated-list-of-capital-market-operators.html and at the NSE Website at http://www.nse.com.ng/Regulation/ForBrokers/Pages/Dealing-Members.asp. RELIANCE ON THIS NOTE FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE YOU TO A SIGNIFICANT RISK OF LOSS. By receiving this document, you will not be deemed a client or provided with the protections afforded to clients of CSLS. When distributing this document, CSLS or any member of the First City Group is not acting for any recipient of this document and will not be responsible for providing advice to any recipient in relation to this document. Accordingly, CSLS will not be responsible to any recipient for providing the protections afforded to its clients. If you are in the UK, the protections of the Financial Services and Markets Act 2000 (FSMA) or Financial Conduct Authority (FCA) do not apply to any investment activity engaged in as a result of this communication; and any resulting transaction would not fall within the jurisdiction of any FSMA or FCA dispute resolution or compensation scheme. By accepting this document you confirm that you are so aware of the above stated. If you do not accept the above stated and/or if the distribution of this document is otherwise unlawful where you are, you are required to return the document immediately to CSLS. This document is not an offer to buy or sell or to solicit an offer to buy or sell any security. This document does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The appropriateness of a particular investment will depend on an investor’s individual circumstances and objectives. The investments and shares referred to in this document may not be suitable for all investors. CSLS is a member of the FCMB Group Plc (“the Group”), a group of companies which includes First City Monument Bank Ltd., FCMB Capital Markets Ltd, First City Asset Management and FCMB UK. Either CSLS or any other member of the Group may effect transactions in shares mentioned herein, may take proprietary trading positions in those shares, and may receive remuneration for the publication of its research and for other services. Accordingly, this document may not be considered as objective or impartial. Additionally, information may be available to CSLS or the Group, which is not reflected in this material. Further information on CSLS’ policy regarding potential conflicts of interest in the context of investment research and CSLS’ policy on disclosure and conflicts in general are available on request. This document is based on information obtained from sources it believes are reliable but which it has not independently verified. Neither CSLS nor its advisors, directors or employees make any guarantee, representation or warranty as to its accuracy, reasonableness or completeness and neither CSLS nor its advisors, directors or employees accepts any responsibility or liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The opinions contained in this document are subject to change without notice and not to be relied upon and should not be used in substitution for the exercise of independent judgment. Past performance is not a guarantee of future performance. Investments may go down in value as well as up and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price or income of that investment. In case of investments for which there is no recognized market it may be difficult for investors to sell their investments or to obtain reliable information about its value or the extent of the risk to which it is exposed.

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