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The Market Today - 21 July 2017

NNPC – Refineries generate ₦62 billion in May                                               

According to the monthly report released by the Nigerian National Petroleum Corporation (NNPC), Nigeria’s refineries realized ₦62 billion from the sale of its refined products in May. This resulted in a ₦2.7 billion operating surplus as crude & freight costs and operational expenses totaled ₦50.0 billion and ₦9.3 billion respectively. Consolidated capacity utilization was 23.09%, down from 24.59% in April following a shutdown in the Warri Refinery due to power failure. However, according to the report, ongoing refurbishment of the refineries should boost operational performance in the coming months. Also, ten more modular refineries have been licensed by the Department of Petroleum Resources in a bid to increase the country’s refining capacity in a cost effective, flexible and commercially viable way.  We believe such initiatives should help Nigeria on its quest for self-sufficiency in refined products.

Nigerian bourse sustains uptrend, ASI up 54bps

The Nigerian bourse garnered 54bps yesterday following green closes in all key sectors. With yesterday’s intraday chart showing a sustained bullish trend all through the session, we expect the ASI to extend gains to twelve straight sessions at week close.                    

Stock Watch: Following the release of a better-than-expected H1’17 result (with PAT coming in at ₦19.7 billion compared to a ₦30.2 billion loss in H1’16), WAPCO gained 500bps in yesterday’s session. The stock currently trades at ₦54.60 (Consensus target price: ₦68.42) and has returned 33% ytd.                

Liquidity boost sustains bullish sentiment in T-bills space                                        

The liquidity boost from the ₦97 billion OMO maturity swayed bulls in the T-bills market yesterday with yields in the space trending further southwards. Meanwhile, trading in the bond market turned mixed albeit with a bearish bias. We expect further yield moderation in the T-bills market at week close barring further liquidity mop up by the CBN. However in the bond market, we expect unimpressive yields to continue to cap demand.