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The Market Today - 19 March 2019

5 firms bid to acquire AFam Power and Yola Electricity Distro                                           

The Head, Public Communications at the Bureau of Public Enterprises, Amina Othman, announced yesterday that five companies beat the deadline (March 15, 2019) for the submission of financial and technical proposals by prospective core investors for the acquisition of the Yola Electricity Distribution Company and Afam Electricity Generation Company (Afam Power Plc & Afam Three Fast Power Limited).  We recall that during the privatization exercise in 2013, Yola Distribution Company was handed over to a core investor. However, due to the unrest in the location of the plant, the investor declared a force majeure in 2015. As a result, the distribution company was duly repossessed by the government. Elsewhere, Transcorp Power, which was one of the bidders for Afam Electricity Generation Company, aims to consolidate its strategy of establishing a power hub in Southern Nigeria. We believe Transcorp Power’s impressive operations track record, particularly in this same region would support its bid for Afam Electricity Generation Company. With a current capacity of about 1300 MW, the Afam Power Plant, if acquired by Transcorp, holds the prospect of making Transcorp the biggest power producer in Nigeria with a capacity of about 2200 MW.                             

Losses in the banking sector turn ASI negative                                              

Despite the Banking sector recording the only negative performance in yesterday’s session, the ASI moderated 6bps at week start. In the same vein, market activity was at its lowest levels since January 2019, printing at ₦1.9 billion in value of trades. Market breadth remained negative with 10 advances to 20 declines. We foresee another mixed session today, as continued sell-off in the market is matched by bargain hunting on undervalued stock.                                   

Stock Watch: After losing 140bps yesterday, FIDELITYBK has shed 9% of its value in the last 6 sessions, settling at a price of ₦2.11. The stock has posted a year-to-date loss of 3.94%.                                     

T-bills market trades bullish at week start                                          

The CBN once again, took up a less aggressive liquidity stance by holding off on OMO auctions at week start. Meanwhile, the Interbank Call rate declined 59bps to settle at 10.58%. In the secondary market, yields continued to decline in the T-bills space, with buy-side activity once again observed. Meanwhile, trading was tepid in the bond space, with mild sell-off leading to average benchmark yields advancing 1bp. We foresee continued tepid activity in the fixed income space as investors continue to hold back from taking active interest in the market.