Breakfast Report - 25 March, 2019
The Week Ahead
In a bid to trim down the country’s petroleum importation bill, the Nigerian National Petroleum Corporation (NNPC) has inked a $50 million-dollar contract with an Italian firm, Maire Tecnimont to overhaul the 210,000 b/d Port Harcourt refinery plant. The NNPC asserted that this would be the first overhaul of the Port Harcourt refinery since the last revamp was carried out 19 years ago. Maire Tecnimont will commence maintenance operations by the end of March and the entire overhaul is expected to last for six months, following comments revealed by the Corporation. The refinery is expected to reach 60% capacity utilization at the end of the first phase, increasing to 90% after completion. While we think this is a positive development for Nigeria’s oil and gas industry as it can help the government save funds spent on imports, we are not quite optimistic about its impact, given the history of rapidly declining capacity utilization after an overhaul.
Equity: After recording four negative sessions, the NSE ASI gained 82bps on Friday, erasing last week’s losses to a mere 1bp. However, despite the positive close on Friday, we highlight that the sentiment in the market still remains weak. On the back of this, we expect seesaw trading this week, as the interplay between bargain hunting and sell-offs continues.
Stock Watch: JBERGER released its FY'18 results on Friday, posting topline and bottom line figures of ₦194.6 billion (+37% y/y) and at ₦6.1 billion (+142% y/y) respectively. The stock closed thea week at ₦27.50, a 37% return ytd.
Fixed Income: We expect the bond market to start this week quiet, as investors await the MPC announcement on Tuesday and the bond auction scheduled for Wednesday. Also, we expect mild demand in the T-bills market in the likely absence of an OMO auction at week start.
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