Nigeria | NGX

While PRESCO’s Q1’21 price-inspired revenue of N7.92 billion (47.5% YoY) was good, the Q2’21 sales of N13.5 billion (67.5% YoY) was a company record. In our view, the sustained rally in CPO prices suggests that this robust topline performance could subsist for the rest of the year. Aided by recent improvements in cost efficiency and moderation in leverage, we, therefore, raise our 12-month TP to N84.96 (vs N74.59 previously). Our new TP suggests a 17.0% upside relative to our reference price and a BUY recommendation on the ticker. ...

Last week, trading in the equities market was broadly tight with a bearish bias. Buyers appeared to remain cautious following the previous week’s rally while sellers were determined not to book profits following the sustained decline in fixed income yields. That said, the local bourse ended the week on a bearish note, posting a weekly loss of 0.1%. The All-Share Index closed the week at 39,483.1 points while YTD loss moderated to 1.8%. Similarly, investors’ wealth was pressured as market capitalisation dropped N20.5bn w/w to settle at N20.6tn. Activity level improved last week as average volume and value traded weakened by 46.2% w/w and 2.6% w/w to 173.0m units and N2.5tn, respectively.

Following the release of its H1’21 numbers and subsequent conversation with management, we retain our optimism for OKOMU, raising our FY’21 earnings forecast to N17.6 billion (vs N14.6 billion previously). Our PAT adjustment reflects higher than expected CPO prices and output. On the whole, the adjustments resulted in an increase in our 12-month target price to N131.55 (N111.25 previously) and a BUY rating on the counter.

Following the release of Q1’21/22 unaudited results and our call with the management, we adjust our FY’21/22 forecasts for Flour Mills of Nigeria Plc. These adjustments result in a relatively unchanged target price of N33.75. Nevertheless, we revise our recommendation to a BUY (HOLD previously) on impact of recent sell pressures post earnings release.

Following the release of H1'21 unaudited results and our contact with management, we adjust our FY'21 forecasts for Lafarge Africa Plc. Our earnings estimate of N45.8 billion is hinged on expected higher sales, tamer administrative expense and lower finance costs. We retain our BUY rating on the ticker.

Last week, the domestic equities market benefitted from bargain hunting activities on Telecoms, Banking, and Oil & Gas stocks as investors continue to ride the momentum of positive H1-2021 numbers as well as declining fixed income yields. As a result, the local bourse ended the week on a bullish note, posting a weekly gain of 1.9%. The All-Share Index closed at 38,522.3 points while YTD loss moderated to -1.8%, and market capitalisation gained N370.8bn w/w to settle at N20.6tn. Activity level improved last week as average volume and value traded climbed 62.7% w/w and 53.8% w/w to 322.0m units and N2.5tn, respectively.