News Beginier’s Guide NNPC declares Demand, Supply Building a N287bn as and Stock Price career profit in year 2020 movement with walls Pg. 5 Pg. 14 Pg. 13 August 30-September 5, 2021 Value Nigeria The Danger of Dividends pg 4 UPDC leads gainers as market returns Nigerian Youth: 0.01% WtD Gainful Pg3 engagement through social media pg 12 Implication of GDP Growth on the Nigerian Capital Market •Stocks to Watch Money Market News Zenith Bank Nigeria's launches 'ZIVA' to GDP grew by enhance customer 5.01% in Q2 service 2021 pg 7 pg 6 02 August 30-September 5, 2021 Implication of GDP Growth on the Nigerian Capital Market • Stocks to Watch ecent report published by that simply means is reducing The market will only get a shock the National Bureau of interest rates. By the time there is when GTCO now say they are paying RStatistics (NBS) revealed reduction the interest rate in the 25 kobo. If Guaranty is paying 30 that Nigeria's Gross Domestic bond market and money market, kobo, it's a known price; it is given. Product (GDP) grew by 5.01% in the there will be circular flow of income, That has already been factored into Second Quarter of 2021. This is a such that the next destination is the the price that Guaranty is trading massive jump from the GDP growth equity market”. now”. of 0.51% reported in the First “Last week, there was OMO “I believe that by and large, the Quarter of 2021. settlement. Even though there was market is billed to perform better By all standard, this is a sure Treasury bill auction, it was far with all these information at the indication that economic activities lower than money that came into the market place. We expect that the has returned after the lockdown, system, which means that the system next inflation will be lower than the occasioned by COVID 19 pandemic. is very liquid”. previous one and we are also The gradual return of commercial “With the information of the growth expecting that the GDP will grow activity as well as local and in GDP and reduction in inflation higher than what we saw”. international travel, accounted for suggests that all things is working together for the market. When you Stocks to Watch the significant increase in growth · Okomu: The Company put all these together, there is no way performance relative to the second released a fantastic in Q2 the market is not going to be affected quarter of 2020 when nationwide 2021 and it has good dividend restrictions took effect. positively”. “If you now say that will prices come pay-out history Commenting on the impact the GDP · Presco: Presco is in the same down? The real question to ask is growth would have on the capital i n d u s t r y w i t h O k o m u . that are these stocks trading at their market, the MD/CEO of Global Growth in the company's fair value? Most of these stocks are View Capital Limited, Aruna figures for Q2 2021 was trading below their intrinsic value. Kebira stated thus: impressive. “Figures don't have emotion. The Q1 So how should we be expecting prices · Courtville: Performance of 2021 figure for GDP growth was to go lower than what we have seen? Courtville for 2021 is Sterling. 0.51. Q2 growth is now 5.01%. This But with these good results in the air They are in AUTOREG is a very big leap. Whatever at the market place, I think the only business. Autoreg is not in all contributed to the growth is pointing thing the market needs to do is to go the 36 states, which means to a good direction for the economy up”. they are penetrating into “Yes we are waiting for about 4 or 5 and for the market. It is a confidence other states. As they penetrate banks that normally release their booster. It means that going forward, to other states to handle the results at this time to pay interim we have hope as far as the country is registration of their licences, dividend. Why the results will not concerned. Irrespective of the they will do better. insurgence, banditry and other actually impact those prices the way obvious challenges in the country if we feel is because this thing is given. · BOC Gases: The acquisition GDP can grow to that level, then We know Zenith will pay 5 kobo; we of BOC Gases by TY Danjuma there's hope”. know GTCO will pay 30 kobo. We is going to have a very good “In the money market, the 364 days know Access Bank will not be more impact on that stock going treasury bills has continued to come than 25 kobo. We know that UBA will forward. down. From 7%, it's now about 6%. It not be more than 20 kobo. The only · Oando: Based on the fact that means that the rates are coming thing that will bring shock to the their scheduled AGM may down. Even in the bond market, it's market is if there is a drop in give birth to the release of the like the Government is conscious of dividend pay-out. We have seen that 2019 and 2020 results which reducing their cost of funds. What of Zenith Bank, they paid 30 kobo. is believed that will be better. Insider Watch 03 August 30-September 5, 2021 UPDC leads gainers as market returns 0.01% WtD he Nigerian Stock market last NGX Banking, NGX Insurance and by 0.43%, 0.19% and 0.16% The Market Breadth positive as 35 week closed on a positive note NGX Oil & Gas indices which respectively. equities appreciated in their share Tas the All Share Index and appreciated by 0.30%, 1.06% and An aggregate of 1.026 billion units of prices against 29 equities that Market Capitalisation appreciated by 0.08% respectively, while the NGX shares were traded in 18.102 deals, declined in their share prices. 0.01% to close at 39,485.65 points Consumer Goods, NGX Industrial valued at N8.18 billion. and N20.573 trillion. and NGX Pension Indices depreciated Top 10 Gainers Top 10 Losers UPDC led other gainers with 37.59% respectively. ABC Transport led other price decliners their share prices by 9.43%, 7.41% and as it shed 15.38% of its share price, 5.15% respectively. growth week to date, closing at N1.83 Other top ten gainers include: closing at N0.33 from the previous close from the previous close of N1.33. Honeywell Flour (18.83%), Eterna Other top ten price decliners include: of N0.39. This is followed by Unilever Morison, Consolidated Hallmark (18.11%), Regency Assurance Academy Press (-4.88%), UACN (- and Ikeja Hotel as they both shed their 4.37%), PZ (-4.17%) and NASCON (- Insurance, FTN Cocoa and Transcorp (14.29%), Glaxo Smith (11.48%) and share prices by 10% respectively. Hotel grew their share prices by Capital Hotel (10%) respectively. 3.41%) respectively. 32.14%, 21.74%, 20% and 19.90% SCOA, Japaul Gold and Transcorp shed Gainers Losers 04 August 30-September 5, 2021 The Danger of Dividends i n c l u d e p h y s i c a l b u i l d i n g s , between the profit after tax and the which exceeds its generated free cash c o m p u t e r s , f a r m l a n d s , c a r s , amount of physical cash sat in the for the same period, it means it is intellectual property, to generate company's account. The profit after dipping its hands into its reserves or revenues. The process of revenue tax can therefore be manipulated by equity to pay that dividend. Let's take generation however comes at a cost. unscrupulous management teams to a practical example to illustrate all They need to pay staff and keep their be as large or as small as they want it to what we have talked about. be. All they have to do is increase property/ machinery in working order. For the financial year ended In addition to this, the company also inventory sales on credit or reduce the st depreciation/ amortization figures for December 31 2021, Nestle Nigeria needs to pay a tax to the government generated a profit after tax of about each year. a particular accounting period to have a larger PAT and vice versa to reduce N39.2 billion naira, EPS of N49.47, When the costs of production, cost of the PAT. Cash, on the other hand, is traded at N1,505 at year end and maintaining or replacing assets and more difficult to manipulate. declared a total dividend of N60.5 for the taxes are deducted from the the entire year. This is a dividend yield revenue, the left-over funds are How then can we, as personal of 4% and pay-out ratio of 122%. regarded as the profit after tax. It is investors, assess the cash position of Without digging any further, it is from this sum, that the company companies and their capacity to pay a obvious that Nestle, beyond profit management decides on a percentage dividend from it? For this, we need to generated in the financial year, had to to pay-out to shareholders as dive into one of the generally less dip into their cash reserves to pay-out dividends.