By Omoh Gabriel, Business Editor
Indications are that the banking sector of the Nigerian economy will continue in 2008 to dominate activities in the capital market. Research findings, stock brokers expectations and institutional investors’ calculation have all pointed to this direction.
The market will be driven by expected future stream of earnings in capital gains, price appreciation, dividend payout, and possible bonus issue that shareholders expect from the sector. The predicted boom is not based by any known economic fundamentals as is the case in other clime.
Findings show that the banking sector, Breweries, Building materials, Conglomerates, Food and Beverages, Healthcare, Petroleum, Real Estate, agriculture, Chemicals and Paints and Insurance will experience the expected boom in 2008.
In the banking sector
Access Bank stock will be one of the stocks to watch in 2008. The bank’s share price which stood at N7 in 2007 rose to N25.20 as at last week. Market operators have projected its Profit before tax in 2008 to hit N14billion while its Price earning ratio will rise to 22.54. According to market projection, its Earning Per share will in most part of the year be 111.8 with a growth of 138 per cent and a projected dividend payout of N7.25billion. A 2.22 per cent yield is expected from the bank. As a result investors who are in long term trading in stocks will find the shares of the bank very inviting as short term investors may be tempted to hold their shares in the bank.
Another stock that investors may find exciting in 2008 is
Afribank. According to market projections the bank share price which was trading for N11.51 January 2007rose to N30 as at January 2008. Institutional investors, stock brokering firms and operators estimate that the bank’s profit before tax in 2008 will be N8billion, giving the bank a price earning ratio of 38.61, earning per share of 78.79, a growth of 60 per cent and a dividend payout of N4billion. This projection market operators say will in 2008 make short term investors to sell while long term investors will hold onto the shares of the bank.
In the case of
Diamond Bank,its price, which was N7.84 in early 2007 rose to N34 and declined to N21, will rise above the N34 mark it attained in 2007. The bank’s profit after tax is projected to grow to N11.3billion with a price earning ratio of 24.46, earning per share of 85.7 giving the bank a projected growth of 60 per cent and a dividend pay out estimate of N7.33billion . This will amount to a projected dividend per share of 56 kobo, a 2.66 per cent yield. This will encourage short term investors to hold their stock and buy for long term.
Ecobank shares are also projected to do well in 2008. The bank’s share which traded at N4.98 in Early January 2007 moved up to N7.95 Its profit before tax has been projected at N6.8billion, Price Earning ratio of 25.3, earning per share 31.50, growth of 92.11 per cent and a dividend pay out of N3.4billion. This will give investors in the bank a dividend yield of 1.98 per cent. Going by investors’ attitude many are likely to hold onto their shares in the bank to maximise their expected gains while others may seek to buy the shares.
Another bank shares market operators say will be sort after in 2008 is
Zenith Bank. The bank’s share which traded at N24 in January 2007, rose to N46 in 2008. The bank’s profit before tax is projected at N29.8 billion. The bank’s half year result just released indicate that the bank may surpass this estimate as it has always be the case with the bank. The Price earning ratio is estimated at 23.3, earning per share ratio 19, a growth of 60 per cent and dividend payout of N19.billion thus giving the bank a projected dividend per share of N1.27, a dividend yield of 2.76 per cent. The high yield expectation will make short term investors hold their current Zenith shares while long term investors will attempt to buy to take advantage of the expected future streams of dividend, price appreciation and bonus issue.
Market projection show that
FCMB which share price was N4.15 in January 2007 grew its price to N19 as at its last trading in January 2008. Projections are that in 2008, its profit after tax will be N10.1billion, Price earning ratio of 30, EPS of 76.64, growth 27 per cent, N5.6billion dividend and dividend per share of 34 kobo amounting to a 1.65 per cent dividend yield. This, research finding show, will encourage both short term and long term investors to hold their stake in the bank which may result in the scarcity of the bank shares in the secondary market that could push up the share price in 2008.
Estimate also show that
Fidelity Bank stock will do well in 2008. According to stock brokering firms market survey, in 2008, the bank’s share will receive a boost as its profit before tax is expected to grow to N6.11billion, giving it a price earning ratio of 31.8, EPS of 37, and a growth of 90 per cent N3.0billion dividend thus netting a projected dividend per share of 19 kobo. This will give the average investor in the bank stock a 1.57 dividend yield which will influence trading in the bank stock at the exchange as short term investors will sell off and long term investors may hold their shares.
First Bank is yet another bank that markets fundamentals show that its shares may be highly traded at the Stock Exchange in 2008. The bank’s share price moved from N32 in January 2007 to N45 last week. Market projection indicate that the bank is expected by operators to generate a profit after tax of N28billion giving it a price earning ratio of 31.82, EPS of 141.75, growth in its financials of 53.01 per cent, dividend out lay of N16billion thus resulting in dividend per share of 85 kobo resulting in 1.89 per cent projected dividend yield. Following this trend most investors will hold onto the bank shares both in the short and long term which is likely to result in scarcity of the bank shares in the secondary market that will push up the prices of the shares in 2008 due to expectation of price, dividend and bonus gains
Gtbank is yet another of the bank which the market place expects much from in terms of price gain and dividend pay out in 2008. The bank which price was N18.80 in January 2007 enjoyed a price appreciation peaking at N37.79 in early January 2008. The bank has a projected after tax profit of 21.104billion, price earning ratio of 24.8,earning per share of 152.3, growth of 60 per cent, dividend payout of N12.622 billion and a dividend per share of 91 kobo thus giving a dividend yield of 2.42 per cent. This, it is projected will make short term investor in the bank to want to sell while those looking on the long term will hold on to their investment in the bank. If there are significant short term investors they may likely in the short run stem price rise in the bank stock.
Intercontinental Bank is also tipped to have a good year at the capital market. Its shares which at the beginning of last year traded at a price of N13.8 moved up to N39.0 at early January trading.
The bank projections indicate that profit after tax will round up at N24billion, price earning ratio 31.42, earning per share 124.27, growth of 60 per cent, dividend N17.418billion, resulting in dividend per share of 89 kobo thus giving investors a dividend yield of 2.29 per cent. Because of the dividend yield potential many investor both the short and long term will hold their shares market experts predicts.
Oceanic Bank Plc is expected to perform well in 2008. Its shares which stood at N14.76 per share, recorded an over 100 per cent appreciation, to stand at N39.05 per share in early January. The bank is projecting a profit after tax of N24.2 billion, price earnings ratio of 32.13, earning per share of 118.38, growth of 50 per cent, dividend of N15.78 billion, resulting in dividend per share of 71 kobo thereby giving investors a dividend yield of 1.87 per cent. Because of its performance last financial year, where it paid shareholders a dividend of N1.02 per share, many investors, both in the long and short term would want to hold their shares. This will create a scarcity of the stock, pushing up its share price to unprecedented level.
Platinum Habib Bank is one of the stocks that is expected spring up surprises this year. Its shares which was traded at N3.03 per share at the beginning of last year, astonished market players as it rose to N25.51 per share in the first day of trading in 2008. Despite its modesty with its financials, it is expected to surpass investors’ expectations, going by the rate of its growth. Its projections for 2008 indicate a profit after tax of N14.63 billion, price earnings ratio of 22.74, earnings per share of 112.16, growth rate of 90 per cent, dividend of N9.22 billion, resulting in a dividend per share of 71 kobo, which represent a dividend yield of 2.77 per cent. Its projected dividend yield and growth rate which is on the high side is expected to attract the interest of investors, making them to hold their shares both in the long and short term.
Despite the uncertainty which beclouded its future,
Skye Bank still managed to keep its head out of troubled waters in 2007. Its shares which was traded at N4.12 early January appreciated by up to 400 per cent to commence the year 2008 at N17.19 per share. It is projecting a profit after tax of N8.28 billion, price earnings ratio of 15.59, earnings per share 110.30, growth of 50 per cent, dividend of N4.14 billion, translating into a dividend per share of 55 kobo, giving investors a dividend yield of 3.21 per cent. Because of its potential for growth, it is predicted that investors would want to hold the shares in the long and short term.
Sterling Bank is a stock with a question mark on its future. This is as a result of the on-going merger talks between it and Ecobank Nigeria Plc. It is expected that at the conclusion of the talks, Sterling Bank would cease to exist. Its shares which was traded for N4.00 in early 2007 rose to N7.28 per share in early 2008. Its projections for 2008 financial year indicate a profit after tax of N3.20 billion, price earnings ratio of 24.01, earnings per share 30.32, a growth of 220 per cent, dividends N1.60 billion, representing 15 kobo per share, giving investors a dividend yield of 2.08 per share. Its low dividend yield and uncertain future will lead to investors selling off their shares in the short term while investors in the long term are expected to buy more of the shares as the future of the bank would have been known.
United Bank for Africa is a stock that is expected to perform well this year. Its shares rose from N26.56 per share in January 2007 to N49.10 per share in January 2008.
The bank has a projected profit after tax of N32.16 billion, price earnings ratio of 17.17, earnings per share of 284.86, a growth of 50 per cent, dividend of 19.3 billion, representing a dividend per share of N1.71.
This translates into a dividend yield of 3.50 per cent. Its high dividend yield will make investors to hold on to their shares in the short term while in the long term they would be motivated to buy more so as to increase their chances of benefitting from the stock.
Union Bank is yet another of the bank which the market place expects much from in terms of price gain and dividend pay out this year. Its price which was N23.30 per share in January 2007 enjoyed a price appreciation peaking at N43.05 per share in early January 2008. The bank has a projected after tax profit of N22.08 billion, price earning ratio of 23.02,earning per share of 190.68, growth of 60 per cent, dividend payout of N13.25 billion and a dividend per share of N1.14 thus giving a dividend yield of 2.61 per cent. It is predicted that short term investors would hold on to their investment in the Bank, while investors in the long term are expected to buy more in anticipation of improved earnings and dividends payout.
Unity Bank, one of the silent achievers is expected to spring surprises this year. Its shares which were traded in early January 2007 for N2.50 appreciated to N9.01 per share in January 2008. Its projection for 2008, a factor that will determine the performance of its shares in the capital market in the year, indicates a profit after tax of N2.6 billion, price earning ratio of 61.69, earnings per share of 15.14, growth of 90.00 per cent. Investors are expected to hold on to the shares both in the long and short term, in a bid to take advantage of the growth rate.
Wema Bank is expected to perform creditably this year, following its return to profitability in its last financial year. Its share which stood at N3.25 as at January 2007 appreciated by over 400 per cent to N15.00 per share last week. Market projections indicate that the bank would record a profit after tax of N10 billion, price earnings ratio of 30.28, earnings per share of 49.54, growth rate of 97.57, dividend of N5 billion, representing a dividend per share of 25 kobo, giving investors a dividend yield of 21 per cent. It is predicted that investors in the short term would sell off the shares while long term investors would want to hold their shares in anticipation of a future improvement in its financials.
In the Breweries sub-sector experts predict that Guinness is one of the companies expected to perform well this year. Its stocks which traded for N104.00 per share in early January 2007 rose to N130.00 per share in the first day of trading of 2008.
Its projections for 2008 indicate a profit after tax of N12.2 billion, price earnings ratio of 15.73, earnings per share 826.48, a growth rate of 15 per cent, dividend of N7.31 billion, representing a dividend per share of N4.96, translating into a dividend yield of 3.81 for its shareholders.
The high yield expectation would make short term investors hold their current shares while long term investors would acquire more of the shares so as to take advantage of expected future surge of dividend, price appreciation and bonus issue.
Nigerian Breweries is also expected to perform beyond the expectations of investors. Its share were traded for N49.00 per share last week from N36.00 per share in January 2007. Its projections for 2008 shows a profit after tax of N16.8 billion, price earnings ratio of 21.83, earnings per share of 222.15, a growth rate of 54.13, dividend of 11.76 billion, representing a dividend per share of N1.56, resulting in a dividend yield of 3.21 per cent. Its high dividend yield would stimulate investors to hold the shares in the short term, creating scarcity in the market, which would further be compounded by long term investors’ decision to acquire more of the shares. It is expected that this will push up the price of the stock.
In the Building materials sub-sector,
Ashaka Cement Plc going by its performance in the previous years is expected to do well this year. Despite the fact that its share price dropped from N56.98 per share in early January 2007 to N54.24 per share last week, it still has the potential to give investors huge returns on their investment. It projections for 2008 indicate a profit after tax of N3.5 billion, price earnings ratio of 27.29, earnings per share of 205.13, a negative growth rate of 13.63, N1.64 dividend per share, representing a dividend yield of 2.93 per cent. The high dividend yield would spur investors to hold on the stock both in the short and long term.
West African Portland Cement is predicted to perform well in the year 2008. This is evident in the rise of its share price from N54.00 per share in January 2007 to N82.98 per share last week.
It is projecting a profit after tax of 12.5 billion, price earnings ratio of 20.52, earnings per share of 416.44, a growth rate of 15.10 per cent, dividend of N7.5 billion, representing a dividend per share of N2.50, and a dividend yield of 2.92 per cent.
Its high dividend yield and impressive dividend forecast would stimulate investors to acquire more of the share both in the long and short term.
