WAPIC Insurance Plc (“WAPIC”) proposes to raise NGN5.93bn capital through a Rights Issue of 15.61bn ordinary shares on the basis of 7 new shares for every 6 existing ordinary shares held as at the close of trades on Thursday, September 19th, 2019. The offer is at a price of NGN0.38 per share which has an upside potential of 18.42% to our 2019 target price (NGN0.45). The proceeds from the Rights Issue is aimed at buffering the capital base of WAPIC Life - the life business segment of the firm and the WAPIC Ghana subsidiary. We consider the Rights Issue price reasonable and as such, we advise investors to take up their rights. Kindly find attached the full report.
Fidelity Bank Plc. continued its decent run in 2019, recording double-digit growth in gross earnings (+15.87%), driven by growths across its income streams; Interest income (+12.22%) and non-interest income (+13.06%). Although the average yield on earning assets remained flat at 13.80%, an increase in the value of earning assets pushed interest income to NGN135.12bn, while non-interest income benefitted from NGN2.42bn gains on disposal of fixed assets as well as an increase in fees and commission income (+27.83%). The bank also recorded an uptick in its cost of funds (6.70%, Vs. 6.20% in 9M:2018) owing to increased competition for cheap deposits; which led to a decline in its CASA mix to 78.76% (vs. 81.61% in 9M:2018). Consequently, the Net Interest Margin trended down by 70bps to 6.00%, the lower band of its 2019FY target. The growth in operating income (+14.53%) barely outpaced the growth in operating cost (+14.48%) as the cost to income ratio settled at 71.70%. Nonetheless, the bank recorded a PAT growth of 20.19% to NGN21.46bn. Given its aggressive asset expansion, we revised our growth forecast for 2019FY and our forecast lies thus; gross earnings (+14.16%), interest income (+17.14%), non-interest income (+11.30%), and interest expenses (+16.10%). Kindly find attached the full report.
On the 1st of November 2019, Flutterwave (a payment solutions company), joined the list of companies to be granted a Super-agent license, having secured an approval in principle from the CBN. Also, recall that MTN through its subsidiary, Yello Digital Financial Service (YDFS), was granted a full Super-agent license by the CBN in July, while other Telcos including Airtel, have signaled their intention to obtain this license. The gradual influx of players into this relatively untapped segment of Nigeria’s financial ecosystem indicates that competition is heating up, as these players seek to establish their presence and reap the benefits from providing financial services to Nigeria’s unbanked and underbanked populace. Kindly find attached the full report.
T-bills Auction | Scheduled 14th November 2019
The Central Bank of Nigeria (CBN) is scheduled to hold a Treasury Bills (T-Bills) Primary Market Auction (PMA) on the 14th of November 2019. T-Bills worth NGN125.24bn will mature, and an equal amount will be issued in the 91-day, 182-day, and 364-day instruments. The CBN is expected to auction NGN4.38bn, NGN12.93bn and NGN107.94bn in the 91-day, 182-day, and 364-day instruments respectively. Kindly find attached the full report.
Chemical and Allied Products
Reaping the Benefits of Diversification Forte
Reaping the Benefits of Diversification Forte Oil PLC (“FO”) released its 9M2017 financial scorecard which showed that the company recorded a year-on-year decline of 19.98% in revenue. Gross profit and Profit-After-Tax, however, advanced by 9.11% and 81.42% respectively.
The company’s efforts towards concerted cost management