With a total market capitalisation of N5.65 trillion, Dangote Cement, Nigerian Breweries, Guaranty Trust Bank, Nestle and Zenith Bank made up 64.02 per cent of equities quoted on the Nigerian Stock Exchange (NSE) . . .
As at March 22, 2017, statistics made available by the NSE shows that the five companies, with 50 kobo per share nominal value each, have per share current values of N165 for Dangote Cement, N130.01 for Nigerian Breweries, N740 for Nestle, N26.50 for GTBank and N13.80 for Zenith Bank.
Analysis of market capitalisation showed that Dangote Cement, Nigerian Breweries, GTBank, Nestle Nigeria and Zenith Bank reported market value of N2.81 trillion, N1.03 trillion, N788.46 billion, N594.49 billion and N428.56 billion respectively, out of the NSE’s total of N8.827 trillion in the period under review. There are 176 companies quoted on the NSE.
Looking at the stocks showed that, while they dictate market direction because of their heavy capitalisation, they have been able to perform impressively, which has led to increase in their shares price and capitalisation over the years.
For instance, Dangote Cement is the most capitalised stock on the Exchange and the highest-priced in its sector, with expanded production capacity above 20 million metric tons per annum to boost sustainable development with alternative energy from coal.
It has continued to export cement, while meeting the demand of government and private sector consumers, even as it has continued to prove a worthy ally in the commitment to infrastructure development and efforts to bridge the existing gap on the road to economic diversification.
The company is trading at a reasonable valuation, with improving profit margin. The construction industry and building materials’ companies are expected to benefit from the government infrastructure development drive to support economic diversification at this time of the nation history and development.
While Zenith Bank and Guaranty Trust Bank have increased their earnings power and performance in the sub-sector, they have remained on top with strong profitability ratios.
The high dividend payouts of the banks in the last four years have been supported by equally strong earnings, despite the seeming over regulation of the sector by the Central Bank of Nigeria (CBN).
Chief operating officer of InvestData Limited, Mr Ambrose Omordion, said the five companies have been doing well, with good returns to investors.
He also noted that a gloomy economy will have a weak and unpredictable stock market which is the leading indicator that reveals a country’s economic deterioration or prosperity.
Omordion said, “It is true that investing successfully in any market in the world requires that you understand the big picture of the economy and stock market dynamics to grow wealth.
“For us to be successful equity investors and traders at all times, we must successfully identify the stage our economy is at any particular time and which sector, industry and company can do well in all these stages by remaining in business and posting good earnings that can support its share price and dividend payout in future”.
Also speaking, Managing director, Highcap Securities Limited, Mr David Adonri, added that the companies are very active on the NSE and liquid, saying they are stocks you can buy into or sell out of within a day and without causing a tsunami.
He also added that they are companies with profit driver, consistent earnings growth, a profit margin that is above 15 per cent, low debt, improved cash flow and a good dividend payout ratio.
According to a broker with Calyex Securities Limited, Mr Tunde Oyediran, the high priced stock dominant market activities and any swing in their prices determines the direction of the market in a particular trading.
“With particular reference to Dangote Cement, any changes in price of the stocks affect the direction of the market. That is why sometimes you have many price gainers but if Dangote Cement or many of the other companies are among the losers, the market will close negatively”, Oyediran said.
While presenting the 2016 audited results, the chief executive officer of Dangote Cement Plc, Onne van der Weijde, assured the investors of better returns on their investment in the Dangote Cement.
He said, “The new year has started well and we expect much higher profitability in Nigeria in 2017, even though we may not see the volume growth we achieved in 2016. I am confident that we will deliver an even stronger performance in 2017 as we increase market share and extend our reach across Africa”.
The economic challenges notwithstanding, Weijde revealed that Dangote Cement achieved sales and revenue growth of 25 per cent and consolidated its position as Africa’s leading producer of cement.
While sales from Nigerian operations increased by 13.8 per cent to nearly 15.1 million metric tons at a growth rate far higher than the country’s GDP, which fell in 2016, its total revenue leaped by 25.1 per cent to 615.1 billion
To the delight of the investors, Dangote Cement earnings per share increased by 4.5 per cent to 11.34 and the dividend payout to the shareholders also increased significantly by 6.3 per cent to N8.5 kobo per share.