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Breakfast Report - 06 January, 2020

• Last week Monday, Dangote Cement Plc revealed plans to buy back 10% (1.7 billion shares) of its shares in issue from shareholders. In a notice filed at the Nigerian Stock Exchange, the firm stated that the aim of the share buyback is to improve the company’s return on equity (ROE). The terms and conditions of the repurchase program, which are to be determined by the company’s board of directors, are expected to be completed within 12 months from the date of approval by shareholders, which will be sought at the extraordinary general meeting to be held on January 22, 2020. Share repurchase programmes serve as a means for firms to return cash to their shareholders. However, the programmes also impact the per-share profitability of the firm, most notably the Earnings Per-share (EPS) positively due to the reduction in issued shares. Thus, we expect this to be value-accretive for the firm, especially given the current attractive valuation of DANGCEM.
• Equity: While last week was positive for the index overall due to some portfolio re-balancing activities, profit-taking was observed in the Industrial Goods and Consumer Goods sectors towards the latter part of the week. Thus, we expect trading in the coming week to remain mixed, as investors continue to seek attractive markers, while profit-taking activity is likely to persist.
• Stock Watch: Gaining 7.32% year to date and 5.6% WoW, FBNH was the best performing stock in the banking sector, as it also gained 1.54% on Friday to close at ₦6.60.
• Fixed Income: At the start of next week, we foresee further yield moderations in NTB space, driven by the level of system liquidity. Meanwhile, in the bond market, we expect sentiment to remain positive as investors seek higher yields.