Nigeria | NGX

In its latest communique, the Central Bank of Nigeria (CBN) announced an increase in the minimum interest rate on savings deposits to 30% of the monetary policy rate (MPR), currently pegged at 14.0%. Thus, savings depositors would effectively get a minimum of 4.2% per annum on their investments (vs 1.4% previously). This material revision was linked to the satisfactory recovery of the economy from COVID-19-related concerns. We, however, believe that the adjustment may be linked to the apex bank’s prior stated objective to arrest demand side triggers of inflation via a tighter monetary policy stance.

FCMB's H1'22 performance reflected sustained improvements from the previous quarter. As expected, the result rode on higher yields and better NIR. In this report, we examine the impact of the bank's continued efforts to drive its digital initiative and its intention to improve capital ratios.

DANGSUGAR's H1'22 results revealed sturdy revenue growth and operating efficiency. The robust top-line primarily reflected the impact of higher-than-expected volume outturn and pricing. Specifically, the company recorded a 40.5% and 60.6% surge in revenue PAT to N91.0 billion and N11.3 billion, outpacing our projections. Following adjustments to our model and assumptions, we revise our FY'22 topline and PAT forecast to N365.2 billion and N33.8 billion, respectively (vs N358.9 billion and N26.5 billion previously). We revise our gross margin expectations 3.5 ppts higher to 18.5ppts on a back of a pacier growth in revenue and improved production efficiency. Our revised revenue projection primarily reflects higher price assumptions, cued by the outcome of our retail price survey, which indicates that 50kg sugar prices have risen by 25.1% YoY in July 2022. In our view, this higher pricing dynamic underscores DANGSUGAR's ability to transfer costs to its customers. On costs, while we expect commodity prices to remain elevated year-on-year, the observed Q2 moderation in raw sugar prices (-5.7% QoQ) suggests that these pressures are likely to be relatively tamer in H2'22 (vs H1'22). ...

Following the release of its H1'22 unaudited results and subsequent conversations with management, we raise our earnings forecast for FY'22 to N24.1 billion (vs N20.1 billion). Our PAT adjustments reflect projected volume increases and sustenance of higher CPO prices on the back of parallel market FX weaknesses. These adjustments resulted in an increase in our 12-month target price (TP) to N223.25 (N183.22 previously) and a HOLD rating on the counter. ...

In its full-year results, GUINNESS recorded 28.9% and over eleven-fold growths in revenue and PAT to N206.8 billion and N15.7 billion, respectively. Notably, the bottom line reached its highest level in ten years, aided by price increases, cost efficiency, and a material slump in net finance cost. On the back of the company's consistently positive results, its share price has rallied by 132.1% and 187.2% on a year-to-date and year-on-year basis, making it one of the best-performing stocks on the NGX.

FLOURMILL's Q1'22/23 results revealed continued top-line growth momentum across all its segments (with the inclusion of Honeywell Flour), driven by stronger B2B and B2C strategies. We highlight the key drivers of Q1'22/23 performance across the different segments as well as our expectations for the same going forward: