Nigeria's Capital Market Positive US Dollar Returns in September

14 November 2022

Only Nigeria had positive US dollar returns of 9.0 per cent Year to Date in Top 30 companies in West Africa

According to the Top 30 West African companies report, as of September 2022 only Nigeria had positive US dollar returns of 9.0 per cent YTD, while BRVM and Ghana had negative YTD US dollar returns of 8.9 per cent and 47.5 per cent, respectively.

This report, as of September 2022, covers the Top 30 companies in West Africa by market capitalisation.

The report was furnished by Hartland-Peel Africa Equity Research. According to African Financials, this is Sub-Saharan Africa ex SA: Equity, debt and FX research covering sixteen countries and advising institutional investors. Christopher Hartland-Peel has worked extensively in emerging markets - with the IFC in Washington D.C., the ADB and USAID, and Standard Bank and Exotix in London.

The total US dollar returns for the West African region was 1.7 per cent showing a decrease of 5.6 per cent in returns compared to the previous year in the same month.Nigeria, the regional heavyweight, has 21 stocks, BRVM has seven and Ghana has two. In the region Banks account for 14 stocks, manufacturing has nine, telecoms four and others have three.

Meanwhile, Dangote cement, MTN Nigeria, and BUA cement accounted for 53 per cent of the Top 30 in West Africa as of September 30, 2022.

Dangote Cement Plc which is listed on the Nigerian Stock Exchange manufactures, packages and distributes cement and related products for the limestone mining, coal production and property investment sectors in Nigeria and the rest of Africa. The company has operations in Nigeria, Benin and Ghana, Cameroon, Congo, Ethiopia, Senegal, Sierra Leone, South Africa, Tanzania and Zambia and exports internationally.

The other company, MTN Nigeria Communications Limited which is also listed on the Nigeria Stock Exchange, provides cellular telecommunications services in Nigeria. It offers cellular network access and information and communications technologies (ICT) solutions. The company also provides Internet services, such as video calling, data services and Internet browsing, mobile Internet, and mobile wi-fi services.

According to African Financials, BUA Cement Plc, listed on the Nigerian Stock Exchange, is a Nigerian cement producer.

It is quite clear that Nigerian companies are the ones who accounted for more than half of the Top 30 in West Africa as of September 30, 2022.

Further, according to the report, dual listed stocks trade at discounts to their home markets with discounts of 52 per cent for Seplat Petroleum and 67 per cent for Airtel Africa.

Big cap stocks are far more profitable with ROE's of 67 per cent compared to 21 per cent for mid cap stocks. Further, their stock market returns are superior to mid-cap stocks.Nestle Nigeria had the highest on Return on Equity of 215.4 per cent with a share price at 1,215.00 NGN. While, International Breweries had the lowest Return on Equity of a negative 2.5 per cent with a share price at 4.95 NGN as of September 30, 2022.

Nestle Nigeria Plc listed on the Nigerian Stock Exchange is a food manufacturing and marketing company in Nigeria and a subsidiary of the largest food and beverage company in the world. The company produces an extensive range of products for the retail and wholesale sectors.

International Breweries Plc is a brewery in Nigeria which brews, packages and markets a range of beer and non-alcoholic malt beverages.

  • Only Nigeria had positive US dollar returns of 9.0 per cent Year to Date in Top 30 companies in West Africa in September.
  • Dangote cement, MTN Nigeria, and BUA cement accounted for 53 per cent of the Top 30 in West Africa.
  • Dual listed stocks trade at discounts to their home markets with discounts of 52 per cent for Seplat Petroleum and 67 per cent for Airtel Africa.

Nestle Nigeria and International Breweries were also the companies with the highest and lowest Price Earnings Ratio. Nestle Nigeria had the highest Price Earnings Ratio of 20.9x with a share price at 1,215.00 NGN. While, International Breweries was loss-making.

Guaranty Trust Bank had the highest Dividend Yield of 16.9 per cent with a share price at 17.75 NGN as of September 30, 2022. Guaranty Trust Bank Plc (GTBank) is a leading financial services institution in Nigeria with business operations in Cote D'Ivoire, Gambia, Ghana, Liberia, Kenya, Rwanda, Uganda, Sierra Leone, Tanzania and the United Kingdom. The company provides banking products and services for the retail, commercial and corporate banking sectors. Coris Bank Burkina Faso, BUA Foods PLC , Oragroup Togo, and International Breweries are currently not paying dividends.

Coris Bank International is a Burkina Faso-based financial institution engaged in the banking sector. The Bank provides products and services to individual and business customers, as well as non-governmental organizations (NGOs).

While Oragroup is a banking group present in 12 countries in West and Central Africa (Benin, Burkina, Ivory Coast, Gabon, Guinea Conakry, Guinea Bissau, Mali, Mauritania, Niger, Senegal, Chad, and Togo) and in four monetary zones (UEMOA, CEMAC, Guinea Conakry, Mauritania). With 139 bank branches and 1,811 employees, Oragroup offers its customers a wide range of banking products and services.

Further, according to the report Nestle Nigeria had the highest Price Book Value Ratio of 45.05x with a share price at 1,215.00 NGN as of September 30, 2022. Access Bank had the lowest Price Book Value Ratio of 0.28x with a share price at 8.05 NGN as of September 30, 2022.

The report also presented commodities market in West Africa as of September 30, 2022, Nigeria, Côte d'Ivoire and Ghana are all petroleum exporters. Falling oil prices in 2020 reduced GDP, exports and government revenues has now reversed.

However, Ghana and, to a lesser extent, Côte d'Ivoire are important gold producers. The rising gold price from 2019 will have benefitted these two countries.

Another point to note is that Ghana, Côte d'Ivoire and, to a lesser extent, Nigeria are cocoa producers. Cocoa production benefits rural communities and has well developed infrastructure and crop harvesting.

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