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Breakfast Report - 30 April, 2018

The Week Ahead                                                                            

Driven largely by relatively positive first quarter earnings, market activity was on a slight uptrend at week close. So far, a huge number of large cap stocks have released their first quarter results, with earnings either coming in line or outpacing expectations. Whilst reactions to earnings have not been as intense as would have been expected, we highlight the steady accretion in year-to-date returns (March end: 6.69%, Ytd: 7.85%) as a signal of overall positive sentiment since the results have begun rolling in. Barring the arrival of a significant market catalyst, we expect activity in the market to slow down in coming weeks and market sentiment should trend sideways as the Q1’18 earnings season winds down.                

Equity: The Nigerian equity market closed out last week on a bright note, climbing 115bps to notch a 105bps w/w gain. Market sentiment at the end of last week was largely positive – evidenced by markedly positive market breadth and a strong green close. We expect this sentiment to lift the ASI in today’s session.

Stock Watch: JBERGER released its Q1’18 results last week, reporting Revenue of ₦35 billion (+3% y/y), 7% below our estimate and PAT of ₦1.5 billion (Q1’17: ₦420 million LAT) – 94% above our estimates. The stock gained 487bps on Friday to close at ₦26.90 and has lost 4% ytd.                                                     

Fixed Income: We expect a pause in OMO auctions today. Hence, we expect buoyant liquidity to offer some support to the system and consequently demand for fixed income securities.