July 29, 2019

Positive H1’19 earnings may spur bargain hunting this week


By Peter Egwuatu

FOLLOWING the   persistent  bearish run in the equities market in recent times, investors may begin bargain hunting of equities, especially with some of those companies expected to release positive first half, HI’19, earnings.



There’s been improvement in foreign investors participation – APT Securities(Opens in a new browser tab)

Some of the companies that have filed their H1’19 results last week to the Nigerian Stock Exchange, NSE with positive results at the weekend include Ecobank Transnational Incorporated, ETI Plc, recording N73.4 billion Profit Before Tax, PBT, as against N65.1 billion in the corresponding period of last year, H1’18 and N405.2 billion gross earnings against N384.6 billion in    H1’18. Julius Berger posted N4.6 billion PBT and N131.8 billion turnover as against N3.9 billion PBT and N73.1 billion turnover in H1’18 respectively. Nestle Nigeria Plc grew its PBT and gross earnings by five percent and 27 percent to N141.9 billion and N40.3 billion from N135.3 billion and N31.9 billion in H1’18 respectively.

Analysts have opined that in the absence of any policy catalyst to drive positive market returns, the market may remain bearish in the short term. In their projection for the market, analysts at Cordros Capital Limited stated: “Our outlook for equities in the short to medium term remains conservative, amidst the absence of any catalyst to drive positive market returns as the bearish trend persisted for the last three trading sessions.”

Reacting on the bearish sentiment, analysts at Afrinvest Research said: “We believe that the bearish run would persist as investors maintain a risk-off approach towards investing in the domestic equities market. However, we expect that investors would resume bargain hunting due to sharp losses in some stocks recently, especially those with positive H1:2019 earnings.”

Meanwhile, analysis of trading on the Exchange last week showed that downtrend in the local bourse continued as the NSE All Share Index (ASI) suffered losses on four of five trading sessions.

However, the benchmark Index closed flat Week on Week, W-o-W to settle at 27,918.59 points while Year to Date, YtD loss stood at -11.2 percent. Investors lost N444.6million in value as market capitalisation decreased to N13.6trillion. However, activity level was weak as average volume and value traded fell 1.5 percent and 14.9 percent to 130.9million units and to N2.6billion respectively.