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Breakfast Report - 18 March, 2019

The Week Ahead                                                       

The Nigerian National Petroleum Corporation (NNPC) reported a trading surplus of ₦12.13 billion in December 2018 (November: ₦2.06 billion), according to its monthly financial and operations report. The report noted that the improvement in trading surplus by the NNPC was mainly a result of higher revenue numbers posted by the corporation’s upstream subsidiary, the Nigerian Petroleum Development Company (NPDC). The report also cited the NPDC’s production drive, as the division recently achieved an average weekly production of 332,000 bpd (November: 130,000 bpd). We recall that President Buhari recently signed over the operation of OML 11 to the NPDC for operation beginning in April 2019. This will increase the state-owned firm’s production rate, moving closer to its target of 500,000 bpd by 2020. However, the report also noted an increase in pipeline vandalism in December, with the number of pipeline points affected rising from 197 in November to 257 in December. Should the NPDC continue to maintain its impressive production, as well as curb pipeline vandalism, the state-owned oil firm could see increased revenues in the coming months.                                                    

Equity: To close a broadly negative week, the NSE ASI lost 22bps on Friday leading to a w/w loss of 245bps and turning year-to-date returns negative (-97bps). Although we foresee bearish sentiment continuing this week, we expect the sell-offs to ease, leading to a mixed week.                                                           

Stock Watch: ACCESS released its FY’18 results on Friday, posting topline and bottom line figures of ₦542.9 billion (+15% y/y) and ₦94.0 billion (+96% y/y) respectively. The stock lost 2.5% on Friday to settle at ₦5.80, 14.7% below its year-open price.                                                       

Fixed Income: Following an adjustment of secondary market rates to auction levels, we expect activities in the T-bills market to turn tepid at the start of the week, as investors trade cautiously. Also, we foresee this sentiment trickling in to the bond market leading to a quiet session today.