Queen Elizabeth II (1926-2022)
Apathy towards insurance and insurance stocks has depressed the prices of most insurance stocks trading on the Nigerian Stock Exchange. But there are some of them trading below their fair values, thereby providing a buying opportunity for investors.
- Nem Insurance Plc has total assets exceeding NGN30 billion and returns are high.
- Lasaco Assurance Plc is not overburdened by debt. Its life insurance business segment is growing in prominence.
REITs to the rescue
REITs afford investors the opportunity to profit from real estate even if they do not have huge capital to buy properties directly. In addition, it helps them mitigate risk by diversifying their investment portfolio.
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GSPECPLC provides offshore support services with its fleet of vessels that includes marine security escort vessels, security patrol vessels and platform support vessels. The company is liquid and the shareholders' fund is expanding.
NESTLE has been successful in doing business in Nigeria for about sixty years, and it has achieved strong growth across all brands. The company continues to maintain its reputation as a high-dividend paying company in Nigeria.
UNILEVER is one of the few companies that are still around after over ninety years of existence. Revenue has grown at a Compound Annual Growth Rate (CAGR) of 4.3% over the past twelve years.The company is being refocused and we expect management’s efforts to bear fruit.
Zenith Bank presently operates in four African countries. It is adequately capitalised and asset quality is not impaired. Total assets and total equity are in excess of NGN8 trillion and NGN1 trillion respectively. In addition, shareholders have enjoyed dividends regularly from the company.
Corporate governance abuses prompted the Central Bank of Nigeria to sack the board. Does the new board have the readiness to face the problems head-on? First Bank of Nigeria, its flagship operation, is a market leader with over 30 million customer accounts.
FLOURMILL is a foremost food and agro-allied company in Nigeria. It has reduced its indebtedness and improve working capital. Shareholders receive dividends regularly and fundamentals have been improving.
The unitholders, in addition to capital appreciation, enjoy generous distribution from the net income made each year. Though it made a loss in 2019,UPDCREIT had been making profits since its inception. Besides, the fund generates free cash flow for the unitholders.
MEYER has reduced its indebtedness. Besides, management embarked on product and market development in order to improve brand awareness and brand preference. Investment in capital is expected to boost capacity. Though the shares of MEYER are trading below our fair value estimate, we would recommend a hold.
PREMPAINTS' performance has been subpar and it is lagging behind the competition. The company’s woes have been exacerbated by the current economic impasse. Costly operations, to a large extent, have made PREMPAINTS unprofitable. Its fundamentals are weak and it trades well above its intrinsic value.
CAP Plc enjoys the technical leverage of AkzoNobel to produce and market Dulux paints in Nigeria. It is the largest paint manufacturer quoted on the Nigerian Stock Exchange. Though high costs are bedevilling manufacturers in the country, CAP has grown earnings and produce attractive profit margins.
Okomu Oil is a subsidiary of SOCFINAF, a company famed for operating rubber and oil plantations in Africa. Despite the volatility of commodity prices, Okomu Oil has consistently made profits and paid dividends to its shareholders. The closure of land borders to crude palm oil and allied products is a boon to the company.
Profitability was restored in 2015; operating profit was NGN154.5 million in 2015 compared to operating losses of the earlier years. Profit Before Tax (PBT) and Profit After Tax (PAT) were NGN248.4 million and NGN77.1 million respectively in 2015. At present, CHAMPION provides brewing services to Nigerian Breweries Plc, a member of the Heineken group and the largest brewing company in Nigeria.
OMOLUABI enjoys financial support of the Federal Mortgage Bank of Nigeria (FMBN) by procuring loans which it lends to qualified National Housing Fund (NHF) beneficiaries. We expect this to boost its capacity to grant more loans as the government embarks on creation of more housing units in the country by injecting more funds into FMBN.
UBA has a strong distribution network in Nigeria from where it derives roughly 76% of its revenue and 78% of its Profit After Tax (PAT). We believe that UBA has a fair share of the market and should be able to maintain it in the longer term.
The company spent NGN150.7 million on capital in the period under review (2018: NGN218.4 million). In addition, its collaboration with local researchers should encourage the use of local materials and drive down its costs; also, it would help it find its niche in the pharmaceutical sector in Nigeria.
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