FREE

Breakfast Report - 13th March, 2017

Last week, the Ministry of Budget & National Planning released the much anticipated Economic Recovery & Growth Plan (ERGP) which will serve as a Medium Term framework to restore Nigeria to the path of economic growth. The ERGP will run through 2017-2020 and identifies five key top priorities; Macroeconomic Stability, Agriculture and Food Security, Energy (power and petroleum product sufficiency), Transportation Infrastructure, and Industrialization focusing on Small and Medium Scale Enterprises. Notable initiatives, specifically within the all-important energy space include ramping up oil production to 2.5mbpd by 2020, privatizing selected public enterprises/assets, and revamping local refineries to reduce petroleum product imports by 60% by 2018. Whilst the ERGP appears appealing, we highlight that the poor implementation of previous economic plans could cap market confidence and optimism on the ERGP. We also highlight that Nigeria’s proposal for $1 billion World Bank facility and the release of the second tranche ($400 million) of its $1 billion loan from African Development Bank are hinged on the submission of the ERGP.

The Nigerian bourse traded sideways last week. Having opened the week lower largely on the back of sell-offs in DANGCEM, the NSE ASI rebounded sharply last Tuesday buoyed by a rebound in the Cement giant, coupled with sustained gains across other market blue chips. Although the market reversed by mid-week as sell-off resumed in DANGCEM and Consumer Goods blue chip NESTLE traded lower, the NSE ASI sharply rebounded once again, led by turnaround in the aforementioned market heavyweights. Overall, the NSE ASI gained 90bps w/w, cutting ytd loss to 6.09%.

Closing positions across a handful of mid-large cap stocks suggest that their appeal to investors remain quite decent. On the back of this, we believe the NSE ASI will open this week on a positive note.

Stock Watch: After nine consecutive sessions of losses (shedding 40% in the process), UCAP inched 41bps higher last Friday to close at ₦2.42 – still 58% off its year high. We foresee some buying interest in the stock during the week ahead as investors buy the dip.

Last Friday, the Board of Directors of TOTAL approved the FY’16 Directors Report and Financial Statements of the company and a dividend payment to shareholders. Given consensus estimate of a total dividend payment of ₦30/share (2015: ₦14/share) – translating to a dividend yield of 11% (Last Friday’s price: ₦272.00). We believe the stock could attract fairly strong buying interest in the coming days.