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2020
(Member of The Nigerian Stock Exchange) 114135
Content
1 3 6
Global Economy: The impact Nigeria Mid-year Economic Gross Domestic
of COVID-19 review 2020 Product (GDP)
7 8 9
Monetary Policy (MPR) Inflation Rate Capital Market Update
15 17 19
Banking Sector Insurance Sector Consumer Goods
Sector
21 23 29
Oil & Gas Sector Industrial Sector H2 Outlook 2020
Chukwuemeka Nwagwu Faith Igbokwe
Capital Market / Research Analyst Capital Market / Research Analyst
T: +234-806-020-0321 T: +234-810-512-5545
E: cnwagwu@capitalbancorpgroup.com E: figbokwe@capitalbancorpgroup.com
Capital Bancorp Plc
30 June 2020
Global Economy.
The impact of COVID-19 on global Trade
The COVID-19 pandemic is causing the worst contraction in global trade in the post-war era
and it has had negative impact on activities in the Half year 2020 than anticipated, the pandemic
is likely to leave lasting scars on the global economy by threatening investor confidence and
human capital. The sharp fall in activity in the first half of this year is expected to contribute to
a contraction in global trade of about 13.4 percent in 2020. As the pandemic has spread,
stringent border controls and production delays have weighed on trade. Measures to slow the
outbreak have limited or delayed the supply of critical inputs.
Brent crude Oil slumped in the face of swelling crude supplies and weak fuel demand due to the
coronavirus pandemic, while investors also grew cautious over expectations that the world’s
biggest producers would quickly agree on output cuts.
A gradual recovery is assumed to start during the second half of the year as controls are lifted,
travel returns to more typical levels, and manufacturers rebuild inventories. This recovery is
expected to be historically feeble, however, reflecting the exceptional character of the present
crisis, as well as the length of time that it will take to restore confidence, to replace bankrupted
firms, and to establish virus-safe working and entertainment environments
1
Capital Bancorp Plc
Market note
(Member of The Nigerian Stock Exchange) 114135
Global markets
Global stocks rebounded on Tuesday as investors appeared willing to put their faith in vast
stimulus moves from central banks and governments to shore up economies against the fast-
spreading coronavirus pandemic. However, the gains were not enough to offset the previous
days’ rout as stocks were still headed for a weekly loss as at the time of writing. Consequently,
US (DOW JONES: -0.3%; S&P: 0.5%) and European (STOXX Europe: 2.01%; FTSE 100:
1.07%) shares were on track to close the Half year in the green. Asian shares (Nikkei 225:
0.11%; Shanghai SE: 1.38%) made a partial comeback from the global rout but still nursed
massive losses for the month.
World Map
Source: Business Insider
World markets also posted solid gains on economic recovery hopes, with the MSCI-EAFE
Index rising 5.15%. European markets moved higher, with gains in France, Germany, and
the Netherlands. The U.K. slipped 1.07%.
Pacific Rim stocks were mixed, with advances in Australia (+1.52%) and Japan (+0.11%).
Hong Kong gained (+0.52%) due to China-related tensions. The volatile Merval Index,
which tracks the largest companies based in Argentina, dropped (-2.33%).
2
Capital Bancorp Plc
(Member of The Nigerian Stock Exchange) 114135 2020
Market note (Member of The Nigerian Stock Exchange) 114135
30 June 2020
Nigeria Economic
• Projection of Nigeria’s GDP
• Naira remains under strain after devaluation
• Inflation rate jumps to 12.40%, highest in over
2 years
• Government measures in response to COVID-
19
Earlier this year, the outlook for Nigeria’s GDP was
optimistic, the World Bank and IMF forecasted 2.10%
and 2.30% growth respectively. However, recent
events – the decline in oil prices and the COVID-19
pandemic - has led to a review of the economic
outlook and a likelihood of a recession which means
that the pandemic has led to a reduction in GDP
growth by more than five percentage points.
Due to the collapse in oil prices coupled with the
COVID-19 pandemic and its negative impact on
global economic activities, the Nigerian government
slashed its 2020 budget by NGN1.5 trillion to
NGN9.09 trillion (excluding GOEs: NGN8.21
trillion).
In March, the crash in Oil prices led CBN to devalue the naira 4% against the US dollar
which is a major concern for Nigerian banks’ credit book and capital metrics “as the banks
have high proportion of foreign-currency denominated loans.
CBN weakened the Naira market rate to 380 naira per dollar from 365 naira while the
official exchange rate was allowed to depreciate by 15% to 360 naira per dollar from 307
naira.
Source: Bloomberg 4
Capital Bancorp Plc
Market note
(Member of The Nigerian Stock Exchange) 114135
The Coronavirus Disease (COVID-19) continues to significantly impact people’s health,
businesses and the global economy. From country shutdowns, disruption of supply chains,
crash in stocks, drop in commodity prices, loss of daily income, the negative economic effects
are numerous. Now a global pandemic, corporates, regulators and governments across the
world are responding to the scourge.
Policymakers’ immediate priorities are to address the health crisis and moderate the short-term
economic losses, the likely long-term consequences of the pandemic highlight the need to
forcefully undertake comprehensive reform programs to improve the fundamental drivers of
economic growth, once the crisis abates.
The Nigerian Private Sector Coalition Against COVID-19 was announced as the umbrella body
under which industrialists and corporate organizations would donate funds to support efforts in
combating the contagious virus.
Some of the top Nigerian billionaires who rose to the occasion and contributed to the good
cause and the donations have grossed to N15.325 billion.
5
Capital Bancorp Plc
Market note
(Member of The Nigerian Stock Exchange) 114135
30 June 2020
Gross Domestic Product (GDP).
According to data published by the National Bureau of Statistics, Nigeria’s Gross Domestic
Product (GDP) advanced by 1.87% year-on-year in the first quarter of 2020. The growth rate
represents a decline of 0.23% compared to the 2.10% growth rate recorded in Q1 2019, and a
drop of 0.68% compared to Q4 2019 figure of 2.55%.
Source: National Bureau of Statistics
The Oil sector grew by 5.06% in real terms in Q1 2020, compared to a shrinkage of -1.46%
recorded in Q1 2019, but lower than 6.36% growth rate achieved in the previous quarter.
Average daily crude production rose to 2.07mbpd in Q1 2020 from 2.00mbpd in the preceding
quarter. However, a supply glut caused by the Russia-Saudi price war, coupled with a drastic
reduction in global demand for crude due to lockdowns, led to a precipitous decline in oil
prices.
The effect of the COVID-19 pandemic was felt more sharply in the Non-oil sector. The sector
grew by 1.55% year-on-year in Q1 2020, compared to higher expansions of 2.48% recorded
last year, and 2.27% in the fourth quarter of 2019.
Going forward into Second Half year (H2’ 2020), we expect two sectors to either
continue with negative growth. First, we expect Trade to continue with negative
growth, given the fact that US dollars are in short supply and that logistical issues
appear not to be fully resolved and Secondly, despite rising oil production, we expect
the Oil & Gas sector go into recession. It is difficult to know exactly when the effects
of low prices will translate into negative growth, as oil can be sold three or six months’
forward (or more).
6
Capital Bancorp Plc
Market note
(Member of The Nigerian Stock Exchange) 114135
30 June 2020
Monetary Policy.
The Monetary Policy Committee (MPC), in its first-rate decision of the year, took a striking
decision by electing to adjust the Cash Reserve Ratio (CRR) upward by 500bps to 27.5%, while
holding all other parameters constant. While the committee highlighted increasing concerns
around sustained inflationary pressure, which has persistently run ahead of the CBN target of
6.0% - 8.0%, its disposition reflects signs of the ineffectiveness of monetary policy tools in
curbing consumer price pressures.
Cash Reserve Ratio in Nigeria remained unchanged at 27.50 percent in June from 27.50 percent
in May of 2020.
Source: Central Bank of Nigeria (CBN)
Inflation accelerated for the fourth consecutive month in December to reach a 20-month high
of 12.0% (November: 11.9%), amid rising money supply and the closing of land borders since
August which has stoked food inflation. Despite the pick-up in inflation, the MPC deemed
that keeping the policy rate stable “is essential for sustainable support to growth before any
possible adjustments”. Instead, the CNB opted to tighten liquidity conditions, and thus restrain
inflationary pressures, by increasing the amount of cash that banks are required to keep at the
CNB. Previous measures that encouraged lenders to extend more credit to stimulate growth
have led to an excess of liquidity in the system, which could stoke price increases further down
the line.
7
Capital Bancorp Plc
Market note
(Member of The Nigerian Stock Exchange) 114135
30 June 2020
Inflation Rate.
The Nigerian Bureau of Statistics (NBS) released the Consumer Price Index (CPI) which
serves as the measure of inflation in the country. The report shows that Headline Inflation
rose moderately by 6bps to 12.40% for the month of May 2020, compared to 12.34% recorded
in the month of April 2020.
Core Inflation surged once again, rising by 14bps to
10.12% from 9.98% in April, 2020, while Food
Inflation inched up by 1bp to 15.04% from 15.03% in
the previous month. On a monthly basis, Headline
Inflation rose by 1.17% in May, 2020 compared to
1.02% in the previous month. Food Inflation soared
by 24bps during the month to 1.42%, from 1.18% in
April, 2020. However, Core Inflation grew at a
reduced rate of 0.88% this month, compared to
0.93% in the previous month.
In line with the recent events, the inflation rate in
the economy will continue its upward movement,
though at a declining rate. The increase was
driven mainly by core inflation as prices of goods
and services in this basket continue to rise due to
the current economic condition. 8
Capital Bancorp Plc30 June 2020
Capital Market update.
• It was a positive market start 2020 for Nigeria’s equity bourse, as the benchmark index
rose by 0.10% to 26,867.79 points, following investors’ interest in MTNN stock and
Dangote Cement (Dangcem) buy-back share.
Market momentum was mostly bearish in 2019 as the benchmark index fell to 26,842.07
points, sinking deeper with a 14.6% loss after losing 17.8% in 2018. Taking a clue from the
poor performance in 2019, the market started 2020 with a marginal appreciation of 0.10% in
January, which started the Bullish run for the year.
9
Capital Bancorp PlcMarket note
(Member of The Nigerian Stock Exchange) 114135
The All Share Index and market capitalization
ascended by 0.10% to 26,867.79 and N12,970.80Bn
2-Jan-20 %Change YTD
respectively. Market activity was low as volume and
NSE ASI 26,867.79 0.10% 0.10% value traded declined. Volume traded declined by -
MCAP N'Bn 12,970.80 0.10% 0.10% 74.93% to 264.10Mn shares, while value traded fell
VOLUME Mn 264.10 -74.93% - by -4.82% to N5.23Bn. The Nigerian equities market
VALUE N'Bn 5.23 -4.82% - posted a whopping 9.1% w/w gain, the largest
NSE 30 1,180.79 0.25% 0.25% weekly return for 2-years (12 January 2018: +10.0%),
Consumer Goods 592.24 -0.10% -0.10% to become the world’s best-performing stock market
Oil & Gas 249.38 -5.01% -5.01% for the week.
Banking 355.46 -0.39% -0.39% The Equities market ended the month of January
Industrial 1,051.34 -2.26% -2.26% 2020 on a bullish note, gaining 7.46% compared to
Insurance 127.04 0.97% 0.97% the loss of 0.59% recorded in the month of
Source: NSE, CBP Research
December 2019.
Equities hit new low as Coronavirus rattles
markets
Going into February, the market was unsettled by
25,694 investors’ reactions to the outbreak of Coronavirus
in China and the aggressive pace of infections. On
25 February 2020, the index case of the novel
Coronavirus, Covid-19, was announced in Nigeria.
9,746 Since then, the number of cases has risen to 11,166
confirmed cases with 3,329 discharged and 315
deaths as at 20 April 2020.
590 The stock market ASI YTD crash began on
Thursday, February 27. The NSE ASI fell by -0.13%
YTD that day to 26,808.24 index points after a
global market recognition as “THE WORLD’S
BEST PERFORMER” with a positive price return
of 4.22%. Some labeled the crash as “BLOODY
VAL” that started the ASI YTD drop to date.
The local bourse ended the month of February 2020
on a bearish note, reversing the gain of 7.46%
recorded in January 2020 to a loss of 9.11% in the
month of February 2020. This translated to a Year-
to Date loss of 2.33% as at February 28, 2020. The
market cap deteriorated to N13.36trillion in
February 2020 from N14.86trillion in January 2020.
10
Capital Bancorp PlcMarket note
(Member of The Nigerian Stock Exchange) 114135
We opine that this may have been as a result of weak investor sentiment, towards to nation’s
equities markets on the back of the epidemic arising from the Corona Virus which caused a
slowed down in economic activities in the global space. Similarly, the uncertainty around
regulation of banks could have caused sell-offs in some of the majors banking names.
Dec-19 Jan-20 Feb-20 %Change YTD
NSE ASI 26,842.07 28,843.53 26,216.46 -9.11% -2.33%
MCAP N'Tn 12.96 14.86 13.66 -8.08% 5.40%
VOLUME Bn 1.05 0.35 0.42 20.00% -60.00%
VALUE N'Bn 5.50 4.21 6.19 47.03% 12.55%
Deals/Trades 2,445 4,207 5,220 24.08% 113.50%
NSE 30 1,177.83 1,180.79 1,148.03 -2.77% -2.53%
Consumer Goods 592.85 592.24 458.03 -22.66% -22.74%
Oil & Gas 262.54 249.38 234.01 -6.16% -10.87%
Banking 356.84 355.46 315.50 -11.24% -11.59%
Industrial 1,075.60 1,051.34 1,214.60 15.53% 12.92%
Insurance 125.82 127.04 116.30 -8.45% -7.57%
Source: NSE, CBP Research
COVID-19 Dampens Investors’ Sentiment
The weak performance of the nation’s bourse may be attributed to the fear of devaluation
following the sustained weakness in oil price as well as the continued spread of COVID-19,
which continues to dampen the nation’s growth expectation. Additionally, weaknesses in the
country’s ability to defend its currency with FX reserves at US$34.97 following 9 months of
decline, and risk off sentiments towards Emerging and Frontier markets has led to reversal of
FPI inflows from the local bourse.
The NSE All-Share Index (ASI) declined by -0.14% to its worst First – quarter performance
(Q1’ 2020) at -20.65% in NSE history to close at 21,300.47 points.
Dec-19 Jan-20 Feb-20 Mar-20 %Change YTD
NSE ASI 26,842.07 28,843.53 26,216.46 21,300.47 -18.75% -20.65%
MCAP N'Tn 12.96 14.86 13.66 11.10 -18.74% -14.35%
VOLUME Bn 1.05 0.35 0.42 0.42 0.00% -60.00%
VALUE N'Bn 5.50 4.21 6.19 1.72 -72.21% -68.73%
Deals/Trades 2,445 4,207 5,220 3,448 -33.95% 41.02%
NSE 30 1,177.83 1,180.79 1,148.03 902.37 -21.40% -23.39%
Consumer Goods 592.85 592.24 458.03 325.50 -28.93% -45.10%
Oil & Gas 262.54 249.38 234.01 215.25 -8.02% -18.01%
Banking 356.84 355.46 315.50 235.86 -25.24% -33.90%
Industrial 1,075.60 1,051.34 1,214.60 1,041.18 -14.28% -3.20%
Insurance 125.82 127.04 116.30 119.40 2.67% -5.10%
Capital Bancorp Plc
11Market note
(Member of The Nigerian Stock Exchange) 114135
Nigerian equities suffered high price volatility in the first quarter of 2020 as a result of the
impact of the Coronavirus (COVID-19) pandemic, as well as the crash in global oil prices.
In the month of April, the market experienced significant gain which was as a result of
investors reacting to the inflow of corporate earnings and actions released by listed companies.
Similarly, there was bargain hunting by local investors who took advantage of cheap prices of
fundamental stocks to average down despite the declines in reserves and oil price as well as
weak macro economic condition.
Source: NSE, investing.com
The raging bull ended the month of April 2020 in the positive territory as NSEASI gained
8.08%, retracing some of the losses in March 2020 (-18.75%). This translated to a Year-to-Date
loss of 14.24% as of April 30, 2020. The market cap improved to N11.99trillion in April 2020
from N11.10trillion in March 2020.
Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 %Change YTD
NSE ASI 26,842.07 28,843.53 26,216.46 21,300.47 23,021.01 8.08% -14.24%
MCAP N'Tn 12.96 14.86 13.66 11.10 12.00 8.08% -7.43%
VOLUME Bn 1.05 0.35 0.42 0.42 0.36 -14.29% -65.71%
VALUE N'Bn 5.50 4.21 6.19 1.72 3.26 89.53% -40.73%
Deals/Trades 2,445 4,207 5,220 3,448 4,946 43.45% 102.29%
NSE 30 1,177.83 1,180.79 1,148.03 902.37 987.17 9.40% -16.19%
Consumer Goods 592.85 592.24 458.03 325.50 371.99 14.28% -37.25%
Oil & Gas 262.54 249.38 234.01 215.25 209.13 -2.84% -20.34%
Banking 356.84 355.46 315.50 235.86 271.57 15.14% -23.90%
Industrial 1,075.60 1,051.34 1,214.60 1,041.18 1,012.59 -2.75% -5.86%
Insurance 125.82 127.04 116.30 119.40 121.88 2.08% -3.13%
Source: NSE, CBP Research
12
Capital Bancorp PlcMarket note
(Member of The Nigerian Stock Exchange) 114135
Bloomberg has ranked the Nigerian Stock Exchange as the second best performing
primary equity in the last one month. The ranking which covers April 4 to May 5 shows
that the local bourse rallied by 16.395 percent in the 31 days period.
The ease of the lockdown has significantly added to improved trading on the local bourse
as the total market capitalisation stands at N12.53. Several factors have been identified as
the reason for this rally including oil price recovery, the gradual easing of the lockdown in
several economies, and the expectation of dividend payments attracting investors to blue
chip stocks.
Source: NSE, investing.com
From the above chart, May continued the upward movement as the Bull stood strong to
maintain growth. Investors are positioning for the high dividend yields of blue cheap
companies ahead of their qualification and closure dates.
The local bourse ended the month of May 2020 in the positive territory as NSE ASI gained
9.76%. This translated to -5.86% Year-to-Date
Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 %Change YTD
NSE ASI 26,842.07 28,843.53 26,216.46 21,300.47 23,021.01 25,267.82 9.76% -5.86%
MCAP N'Tn 12.96 14.86 13.66 11.10 12.00 13.17 9.78% 1.62%
VOLUME Bn 1.05 0.35 0.42 0.42 0.36 0.33 -8.33% -68.57%
VALUE N'Bn 5.50 4.21 6.19 1.72 3.26 4.48 37.42% -18.55%
Deals/Trades 2,445 4,207 5,220 3,448 4,946 5,647 14.17% 130.96%
NSE 30 1,177.83 1,180.79 1,148.03 902.37 987.17 1,096.28 11.05% -6.92%
Consumer Goods 592.85 592.24 458.03 325.50 371.99 424.96 14.24% -28.32%
Oil & Gas 262.54 249.38 234.01 215.25 209.13 228.30 9.17% -13.04%
Banking 356.84 355.46 315.50 235.86 271.57 304.11 11.98% -14.78%
Industrial 1,075.60 1,051.34 1,214.60 1,041.18 1,012.59 1,204.70 18.97% 12.00%
Insurance 125.82 127.04 116.30 119.40 121.88 131.81 8.15% 4.76%
13
Capital Bancorp PlcMarket note
(Member of The Nigerian Stock Exchange) 114135
In the month of March 2020, we see the panic of investors towards the stock market as a result
of crash in Oil price (Saudi & Russia oil war), Coronavirus (COVID-19) pandemic and Naira
devaluation. The same investors are now taking advantage of capital gain and dividends
proposed by most companies.
As at the end of the Half year June 30, 2020 the NSE ASI ytd is -8.80% compare to
March ending which closed at -20.65%, the Bull has been up and running.
Source: NSE, investing.com
Outlook for the Third quarter
The performance of the capital market will be shaped by how Government policies could
quickly address the coronavirus pandemic. A rise in the fortune of crude oil will bolster
investor’s confidence in the nation’s capital market. Also, we foresee a pick in the activities of
private equity firms due to the fact that equity valuations of most stocks are far below their real
worth. In addition, the current valuations offer opportunities to those who want to position for
long term.
Since the first day in the third quarter started on a good note, we foresee investors positioning
for interim dividends but will the Banking sectors pay their final dividends? This will determine
investors fate.
14
Capital Bancorp PlcMarket note
(Member of The Nigerian Stock Exchange) 114135
30 June 2020
Nigerian Banking Sector
ACCESS N6.55 BUY
In January 2020, the Monetary Policy Committee 2018 2019 Q1' 2020
(MPC) of the Central Bank of Nigeria (CBN) raised EPS 3.31 2.9 2.8
the Cash Reserve Ratio by 5% to 27.5%. The move P.E (x) 2.3x 2.9x 2.3x
shocked bankers who had expected the CBN to taper Net Asset per share 17.17 13.8 17.88
down on its tight monetary policies considering the Dividend Yield 8.70% 9.20%
economic headwinds. The CBN also imposed a loan
to deposit ratio of 65% which means banks will also
have to lend out 65% of their deposits. FBNH N5.25 BUY
2018 2019 Q1' 2020
EPS 1.61 1.95 2.18
P.E (x) 4.9x 2.1x 2.4x
Net Asset per share 14.74 18.42 18.95
Dividend Yield 4.60% 0.00%
GUARANTY N22.05 BUY
2018 2019 Q1' 2020
EPS 6.54 6.96 6.98
P.E (x) 5.3x 3.4x 3.2x
Net Asset per share 19.58 23.35 22.46
Dividend Yield 9.40% 10.40%
Source: NSE, investing.com
The outbreak of COVID-19 and the sharp downturn
UBA N6.25 BUY
in crude oil prices have continued to stoke fears of a
further devaluation in the Naira. 2018 2019 Q1' 2020
The Nigerian Stock Exchange’s banking index EPS 2.2 2.52 2.53
declined by -1.32% to close at -20.68%. The positive P.E (x) 3.5x 2.7x 2.5x
performance in FY’2019 & Q1’2020 financial results, Net Asset per share 14.7 17.49 17.91
investors’ reaction to the result is positive as the bank’s Dividend Yield 11.00% 15.00%
shares kept pushing up.
The International Monetary Fund (IMF) has advised ZENITH N16.10 BUY
top commercial banks in the world to suspend 2018 2019 Q1' 2020
dividend payment to their shareholders so as to retain EPS 6.15 6.65 6.66
earnings during the COVID-19 pandemic. retaining P.E (x) 3.9x 2.9x 2.4x
earnings through suspension of dividend payments Net Asset per share 25.98 30
would provide banks with enough capital to serve as a
Dividend Yield 13.60% 16.60%
buffer against the adverse effects of the pandemic.
Market Price @ 30th June, 2020
16
Capital Bancorp PlcMarket note
(Member of The Nigerian Stock Exchange) 114135
30 June 2020
Nigerian Insurance Sector
• NAICOM gives insurance companies additional
one year to recapitalise AIICO N0.92 UR
The National Insurance Commission (NAICOM), the 2018 2019 Q1' 2020
insurance regulator in Nigeria, has recently introduced EPS (N) 0.44 0.83 0.27
higher minimum capital requirements for insurers with a P.E (x) N/A N/A 3.4x
Net Asset per share N/A N/A
31 December 2020 deadline. Under the revised
Dividend Yield N/A N/A
capitalization requirements, life insurance firms are
UR: Under Review – We are current updating
required to have a minimum paid-up capital of N8.0 the Valuation model
billion from N2.0 billion previously while general
insurance companies are required to raise their minimum
CUSTODIAN N5.50 UR
paid-up capital to N10.0 billion from N3.0 billion
2018 2019 Q1' 2020
previously. EPS (N) 1.16 0.97 0.31
The regulatory capital for composite insurance was raised P.E (x) N/A N/A 17.7x
to N18.0 billion from N5.0 billion previously while Net Asset per share N/A N/A 7.92
reinsurance businesses are now required to have a Dividend Yield N/A N/A
minimum capital of N20.0 billion from N10.0 billion UR: Under Review – We are current updating
the Valuation model
previously
NEM N2.06 UR
2018 2019 Q1' 2020
EPS (N) 0.39 0.45
P.E (x) N/A N/A
Net Asset per share N/A N/A
Dividend Yield N/A N/A
UR: Under Review – We are current updating
the Valuation model
WAPIC N0.35 UR
2018 2019 Q1' 2020
Source: NSE, investing.com EPS (N) 0.03 0.02 0.02
P.E (x) 11.0x 15.5x 17.5x
NAICOM has extended the deadline for insurance and
Net Asset per share 0.71 0.77
reinsurance companies to meet its new capital Dividend Yield N/A N/A
requirements to September 30, 2021 from December 31, UR: Under Review – We are current updating
2020. It disclosed this in a circular, titled, ‘Segmentation the Valuation model
of minimum paid-up share capital requirements for
Market Price @ 30th June, 2020
insurance companies in Nigeria but the regulated entities
must meet about half of the capital requirements by the
end of December 2020.
18
Capital Bancorp PlcConsumer Goods Sector
Market note
(Member of The Nigerian Stock Exchange) 114135
30 June 2020
Nigerian Consumer Goods Sector
The federal government of Nigeria closed the land
borders to the country on the 20th of August 2019 with DANGSUGAR N12.00 BUY
a view to curtailing the smuggling of goods into the
country from neighbouring countries as well as ensuring
2018 2019 Q1' 2020
compliance with existing trade rules as to how trade EPS (N) 1.85 1.87 0.53
should be conducted. P.E (x) 8.2x 6.9x 22.6x
In essence, there are both advantages and disadvantages Net Asset per share 8.25 9.01 9.54
to this land border closure. It is difficult to ascertain Dividend Yield
which outweighs the other but one thing is for sure, the
government cannot continue to make the citizens pay for
their inefficiencies. FLOURMILL N19.00 HOLD
441.71 +0.18
2017 2018 9M' 2019
EPS (N) 4.83 1.3 1.84
P.E (x) 15.2x 10.3x
Net Asset per share 37.61
Dividend Yield
NB N36.10 BUY
2018 2019 Q1' 2020
EPS (N) 2.43 2.01 1.7
P.E (x) 21.6x 25.6x 21.2X
Net Asset per share 20.86 20.98 21.67
Dividend Yield
Source: NSE, investing.com
The covid-19 pandemic took the world by storm. While
people are caught up in the fear of contracting the virus NESTLE N1,256.80 BUY
and the nationwide lockdown announced by Federal 2018 2019 Q1' 2020
Government, led to severe disruptions and widespread EPS (N) 54.26 57.63 55.5
confusion among people. The lockdown resulted in P.E (x) 27.4x 19.6x 22.6X
panic buying and people hoarding essential items like Net Asset per share 63.36 57.47
beverages, homecare products while the demand for Dividend Yield
breweries products like beer declined.
Market Price @ 30th June, 2020
20
Capital Bancorp PlcOil & Gas Sector
Market note
(Member of The Nigerian Stock Exchange) 114135
30 June 2020
Nigerian Oil & Gas Sector
Outbreak of Coronavirus Drives Oil Prices Lower
• Reduction of the Budget benchmark price of
crude oil CONOIL N21.00 UR
• Global and local crude oil production cuts 2018 2019 Q1' 2020
EPS (N) 2.59 2.86
• Reduced crude oil demand and unsold
P.E (x) 8.9x 6.9x
cargoes Net Asset per share 26.37 27.23
On January 6th crude oil prices briefly rose above Dividend Yield N/A N/A
US$70/barrel as US-Iran tensions escalated in the days UR: Under Review – We are current updating
following a US air strike that killed one of Iran's most the Valuation model
senior military figures, General Qassem Suleimani.
OANDO N2.30 UR
Brent oil price came under significant pressure from
2018 2019 Q1' 2020
supply and demand sides of the market. While the EPS (N) N/A N/A 2.3
supply side was driven by the price war between Russia P.E (x) N/A N/A 1.0x
and Saudi Arabia, the demand side was driven by weak Net Asset per share N/A N/A
oil demand on the back of series of shutdowns in Dividend Yield N/A N/A
different parts of the world due to the spread of UR: Under Review – We are current updating
COVID-19. As such, Brent oil price lost 38% to the Valuation model
US$41.15 per barrel TOTAL N97.50 UR
2018 2019 Q1' 2020
EPS (N) N/A N/A 7.6
P.E (x) N/A N/A 12.8x
Net Asset per share N/A N/A
Dividend Yield N/A N/A
UR: Under Review – We are current updating
the Valuation model
SEPLAT N386 HOLD
2018 2019 Q1' 2020
EPS (N) 78.9 149.4 -60.19
P.E (x) 7.8x 3.6x (6.4x)
Net Asset per share 835.21 941.14 1,042.97
Source: NSE, investing.com Dividend Yield N/A N/A
The year has seen a renewed oil price war and the Market Price @ 30th June, 2020
spread of a global pandemic which has in turn seen oil
price fall sharply which will further erode investment
and production in Nigeria. The refining sector is due to
be transformed with the start-up of the Dangote
facility, for which we now expect to see first
production in 2021, reaching full capacity in 2022.
22
Capital Bancorp PlcIndustrial Sector
Market note
(Member of The Nigerian Stock Exchange) 114135
30 June 2020
Nigerian Industrial Sector
• BUA Cement Plc is a product of a merger between BUACEMENT N38.7 BUY
the Cement Company of Northern Nigeria 2018 2019 Q1' 2020
(CCNN) and OBU Cement EPS (N) 1.89 1.79 0.58
• Dangote Cement: Creating Value For Shareholders P.E (x) 16.83 16.83 66.7
Through Share Buyback Net Asset per share 9.11 10.74
Dividend Yield N/A N/A
On Thursday 9th January, Abdul Samad Rabiu, chairman,
Cement Company of Northern Nigeria, CCNN and
Founder/CEO of BUA Cement rang the traditional closing
gong on the floor of the Nigerian Stock Exchange to mark DANGCEM N127 BUY
the end of trading for that day and also signals the 2018 2019 Q1' 2020
successful completion of the scheme of merger EPS (N) 22.83 11.79 11.8
CCNN/Kalambaina Cement and listing of the shares of P.E (x) 9.2 14.42 10.8x
the expanded entity. Net Asset per share 57.9 52.69
Dangote Cement is the first Nigerian corporate body to Dividend Yield N/A N/A
undertake a share buyback as a corporate action, to buy Market Price @ 30th June, 2020
back 10% of its entire issued shares from shareholders was
unanimously granted on January 22, 2020 as the company’s
shareholders’ voted in support of the share buyback plans.
Source: NSE, investing.com
24
Capital Bancorp PlcMarket note
(Member of The Nigerian Stock Exchange) 114135
26
Capital Bancorp PlcMarket note
(Member of The Nigerian Stock Exchange) 114135
27
Capital Bancorp PlcINVESTMENT QUOTE
Warren Edward Buffett is an American investor, business tycoon, and philanthropist,
who is the chairman and CEO of Berkshire Hathaway. He is considered one of the
most successful investors in the world and has a net worth of US$88.9 billion as of
December 2019, making him the fourth-wealthiest person in the world.
………Wikipedia
28
Capital Bancorp Plc30 June 2020
Global Market H2 Outlook 2020.
The Covid-19 crisis drove the global economy into an unprecedented deep freeze in the first
half of 2020. The combination of monetary and fiscal stimulus will help the global
economy de-freeze in H2. As was the case with the virus cycle, the recovery will be
sequential and involve different regions at different times - on a ‘first in, first out’ basis - and
will depend on the size of the policy response. As the global economy gradually de-freezes,
investors will turn their focus back to geopolitics. The climax will be the US presidential
election – the outcome of which appears increasingly open. It will influence the US vs.
China dispute, which will shift from trade to technology and healthcare supremacy.
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Capital Bancorp PlcABOUT CAPITAL BANCORP PLC
Incorporated in 1988, we have been around for over three decades delivering superior
value to our clients in the capital market.
We consistently help our clients weather storms produced by harsh economic cycles,
imbalanced and unfavourable economic environments. We leverage technology and our
unique specialities to preserve legacy companies and accelerate the growth of start-ups
across industries.
We have 3 subsidiaries strategically incorporated to address the unique financial and
capital demands of our clients – Bancorp Finance Limited, Bancorp Bureau De Change
and Bancorp Asset Management Limited.
Corporate Directory
Branch Offices:
Registered Address (Head Office): Ground Floor, OKLEN Suites
3rd Floor, UNTL House 1, Davies Street, 1, Evo Road, Off Olu Obasanjo
Off Marina, Lagos, Nigeria Road,
GRA Phase 2, Port Harcourt,
Rivers State
+234 - 01 – 462-2367, 462-2371 - 5
RC Number: 114135 No. 8, Lagos by pass GNI Building
Trading Code on The Stock Exchange: BNCO Oke – Ado, Ibadan, Oyo State.
Capital Bancorp plc @CapitalBancorp
@CapitalBancorpPlc info@capitalbancorpng.com
@capital_bancorp www.capitalbancorpng.com(Member of The Nigerian Stock Exchange) 114135
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