NIGERIA | DAILY Nigerian Banks Paying up for the ‘African footprint’ Although the performance of Nigerian banks over the past 18 months has generally been good – the banking sub-index is up over 25.0% since the beginning of 2013 – this hides considerable disparities among individual stocks. A good example of this trend can be seen in a comparison of Ecobank Transnational Inc (ETI, Not Rated), and First Bank of Nigeria Holdings (FBN, Hold, current price N15.4/s, target price N14.7/s).The former is up 56.5% since the beginning of 2013 while the latter is down 10.8%. From a valuation perspective ETI has seen its P/B ratio rise from 0.61x to 0.90x while FBNH’s has slipped from 1.15x to 1.07x. Arguably this is simply a case of convergence, but we think there is more to story than that. One recurring (and increasingly common) theme in our discussions with clients on the Nigerian market is the desire to own a bank with an ‘African footprint’. This a particularly the case for larger GEMs funds, which have more stringent liquidity constraints and find it difficult to own a selection of smaller banks, many of them listed on markets that are difficult to access. ETI, with operations in 36 countries and a full spectrum of retail, corporate and investment banking products, offers that convenience. FBNH, on the other hand, is seen as predominantly Nigerian bank, with a large exposure to a single industry (Oil & Gas). In a broader sense, ETI’s performance is also a reminder of how global asset allocation decisions often trump fundamental considerations in relatively shallow markets like Nigeria. Indeed, while ETI was initially punished over a corporate governance scandal – its Chairman resigned in late 2013 and its CEO was ousted several months later – the share price has made a full recovery. In our view, this was driven in large part by the re-weighting of the MSCI Frontier market in May, in the process of which ETI was assigned an initial weight of 0.66%. Today’s news headlines Dangote and GE to partner on power project: General Electric (GE) and the Dangote group have announced the conclusion of the GE-Dangote Framework Agreement for distributed power solutions. Under the agreement, GE is expected to supply aero-derivative gas turbines to the Dangote Group which will be used to generate power to support Dangote Group’s operation both within Nigeria and other African countries. Source: thisdaylive thisdaylive/articles/ge-dangote-to-partner-on-power-projects/186026/ NDPHC revokes contracts of three NIPP distribution contractors: Local newspapers reported today that the board of the Niger Delta Power Holding Company (NDPHC) has decided to revoke the licenses of three contractors executing distribution contracts under the National Integrated Power Project scheme (NIPPs) due to delays in execution of these contracts. The affected distribution contracts are the Jos-Yola, Enugu, and Benin distribution zones. Source:thisdaylive thisdaylive/articles/ndphc-revokes-distribution-jobs-of-three-defaulting-nipp-contractors/186031/ Important Risk Warnings and Disclaimers CSL STOCKBROKERS LIMITED (“CSL Stockbrokers”) is regulated by the Securities and Exchange Commission, Nigeria. FCMB (UK) LIMITED (“FCMB UK”), trading in the name of ‘CSL Stockbrokers’, is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority in the United Kingdom. The details of the authorisation can be viewed at the Financial Services Register at fsa.gov.uk/register/home.do by entering the Firm Reference Number 502704. FCMB UK is registered in England and Wales No. 6621225. Both CSL Stockbrokers and FCMB UK are members of the FCMB Group (“the Group”) of Nigeria, a group of companies which also includes First City Monument Bank Ltd. RELIANCE ON THIS PUBLICATION 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 CSL Stockbrokers and FCMB UK. When distributing this document, CSL Stockbrokers, FCMB UK or any member of the 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, CSL Stockbrokers, FCMB UK or any member of the Group will not be responsible to any recipient for providing the protections afforded to its clients. If you are in the UK, you are a person to whom either Articles 19 or 49 of the Financial Services and Markets 2000 (Financial Promotion) Order 2005 apply or a person to whom this communication may otherwise be lawfully made. In the United Kingdom, this document is available only to such persons described above and persons of any other description should not rely on this document. Transmission of this document to any other person in the United Kingdom is unauthorized and may contravene the Financial Services and Markets Act 2000 (FSMA). If you are not such a person or if the distribution of this document is otherwise unlawful where you are, you are required to return the document immediately to CSL Stockbrokers. In the UK, the content of this document has been approved by an authorised person within the meaning of FSMA. . This document is not intended for Retail Clients in the UK. This document is not an offer to buy or sell or to solicit an offer to buy or sell any securities. 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. CSL Stockbrokers, FCMB UK or any other member of the Group may effect transactions in shares mentioned herein and 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 CSL Stockbrokers, FCMB UK or the Group, which is not reflected in this material. Further information on CSL Stockbrokers’ and FCMB UK’s policy regarding potential conflicts of interest in the context of investment research and CSL Stockbrokers and FCMB UK’s policy on disclosure and conflicts in general are available on request. This document is based on publicly available information obtained from sources which CSL Stockbrokers believes are reliable, but which it has not independently verified. Neither CSL Stockbrokers and FCMB UK nor their advisors, directors or employees make any guarantee, representation or warranty as to the accuracy, reasonableness or completeness of this information and neither CSL Stockbrokers and FCMB UK nor their 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. Nothing herein excludes or restricts any duty or liability to a customer which FCMB UK has under the Financial Services and Markets Act 2000 or under the Rules of the FCA. A recipient who chooses to deal with any person who is not a representative of FCMB UK in the UK may not enjoy the protections afforded under the UK regulatory regime.
Posted on: Mon, 11 Aug 2014 14:07:41 +0000
Trending Topics
Recently Viewed Topics
© 2015