Nigeria | NGX

In FY’24, we expect FCMB’s gross earnings to improve, as the uptick in interest income (+55.4%) will likely mask the 17.8% decline in non-interest revenue (NIR).

UBA’s PBT reached a record high of N818.8 billion (+259.2% YoY) in FY’23. The performance was driven by the impact of FX movements on the bank’s derivative assets, which resulted in a 62.9x surge in fair value gains on derivatives to N457.2 billion.

Unilever Nigeria Plc (NGX: UNILEVER) retains a compelling investment case supported by years of spontaneous financing (i.e., the cash conversion cycle reveals sustained supplier financing) and consistently improving profitability metrics.

In light of the Q1'24 earnings release, we raise our 12-month target price (TP) for DANGCEM to N552.42 (vs N375.58 previously); however adjusting our recommendation to a HOLD (BUY previously). Our revision hinges on better FY'24E volume sales expectations, driven primarily by a recovery in Nigerian operations and steady growth in Pan-African markets. We also expect still-high prices in Nigeria and the sustained positive FX translation from Pan-African operations to be supportive of the top line. However, we anticipate compression in margins from elevated operating and finance costs in in line with the broader inflationary environment and FX volatility. In addition, following the expiration of the pioneer tax incentive on Obajana Line V in December 2023, we expect a higher tax charge in the period to pressure the bottom line.

Following the release of ACCESSCORP’s FY’23 and Q1’24 numbers, we now expect earnings to increase by c.2.0% from the FY’23 print. Our confident expectation (given the FY’23 high base) hinges on the view that core banking income (interest funding income) will drive the momentum in earnings. While we expect non-interest revenue to decline in the current financial year, the impact of elevated interest income should mask its pass-through to FY’24E earnings.

Following OKOMUOIL’s stellar Q1’24 performance, we revise our 12-month target price (TP) to N308.71 (previously N253.07), with a BUY rating on the ticker. Our view stems from the higher domestic CPO prices and a modest increase in CPO production. We project FY’24 PAT to scale by 38.6% YoY to N28.61 billion.