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The Market Today - 30 August 2017

PMS production improves in June, 2017                                    

According to the media, Nigeria’s three refineries produced about six million litres of Premium Motor Spirit daily in the month of June, an improvement from the 5 million litres produced in May. The improvement comes on the back of improvement in capacity utilization at the plants – 25% in (May Ytd) vs 14% in 2016 amidst NNPC’s continued efforts to improve operations at the plants. Notwithstanding, we see the corporation’s target of 60% by year end quite over ambitious, and thus expect PMS import to remain the main source of supply at least for the remaining part of the year.                                    

No bulls in sight as ASI downtrend continues                                      

Sentiment remained cold on the Nigerian bourse yesterday with the NSE ASI shedding further 42bps amidst red closes across most key sectors. In our view, the down trading across key sectors, persistent negative market breadth amidst softening market volumes continue to signal weak market sentiment. We believe this would drive the ASI to another weak close today.                                 

Stock Watch: STANBIC released H1’17 earnings yesterday, showing 36% y/y growth in Gross Earnings to ₦97.2 billion and 113% growth in PAT to ₦24.1 billion - 10% and 7% ahead of Vetiva estimates respectively. Also, the board of directors proposed an interim dividend of ₦0.60/share, lower than Vetiva’s ₦0.90/share dividend expectation. The stock currently trades at ₦40.50 and has returned 170% Ytd.                                    

Buying strengthens ahead of T-bills PMA                                             

The CBN conducted an OMO auction yesterday, offering ₦20 billion and ₦50 billion across the 100DTM and 177DTM bills respectively. The CBN conducted an OMO auction yesterday, offering ₦20 billion and ₦50 billion across the 100DTM and 177DTM bills respectively. Buying strengthened in the T-bills market yesterday, with yields declining 13bps on average across the curve. Similarly, buying sentiment remained skewed to the short-end of the bond market, whilst maturities on the mid-long end remained quiet. The CBN would be conducting a ₦167 billion T-bills Primary Market Auction today across the 182DTM and 364DTM bills. We expect effective auction yields to come in below secondary market levels. Also, given the persistent liquidity squeeze, we foresee a mixed trading in the secondary market even as traders await the auction results.