• Thursday, February 29, 2024
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Elumelu-linked companies trounce other large caps in returns

Stock market rally continues

Out of the thirty (30) most capitalised companies listed on the Nigerian Exchange Limited (NGX), returns made this year by investors in three (3) companies linked to billionaire businessman Tony Elumelu surpassed that of others, BusinessDay can disclose.

Elumelu, a Nigerian economist, and philanthropist chairs Heirs Holdings, Transnational Corporation Plc, United Bank for Africa (UBA) and is the founder of The Tony Elumelu Foundation.

Trading performance of the NGX 30 tracks – the top 30 companies in terms of market capitalisation and liquidity – shows year-to-date (YtD) returns from Elumelu-linked listed companies.

These companies and their returns this year are: Transcorp Hotels Plc (+720.8percent), Transnational Corporation Plc (+515.9percent), and United Bank for Africa Plc (+219.1percent). Transcorp Hotels Plc is the hospitality subsidiary of Transnational Corporation of Nigeria Plc.

The increased buy-side activity seen at the Nigerian Bourse lately is driven by investors who are positioning in value stocks ahead of their full year financials and possible corporate rewards such as dividends.

“We anticipate investors sentiments in the local equities market to remain strong. We have observed significant interests in the Banking sector, given the impressive performance across all banks and in anticipation of full year 2023 earnings season.

“However, the downside risk to our prognosis is the likelihood of profit-taking activities following the new highs reached in the market,” Lagos-based United Capital research analysts said in their December 18 note to investors.

Transcorp Hotels Plc in its financial performance for the third quarter (Q3) ended September 30, 2023 reported strong year-on-year (YoY) growth on all indices.

Transcorp Hotels which is the hospitality subsidiary of Transcorp Group sustained growth momentum with 62percent profit growth.

Its revenue for the Q3 period ended September 30 was N29.9billion, signifying a 31.76percent increase from N22.7billion in same period of 2022. Profit grew by 62percent to N5.5billion, from N3.4billion by the end of September 2022.

Elumelu is also linked to Transnational Corporation Plc (Transcorp Group), Nigeria’s leading conglomerate with investments in the Power, Hospitality, and Energy sectors. Transcorp Group in its financial results for the third quarter (Q3) of the year ended September 30, 2023 recorded commendable growth across all its major indices.

In its unaudited results filed with the Nigerian Exchange (NGX), Transcorp Group reported an impressive revenue of N128 billion in Q3’2023, compared to N96.2 billion in Q3’2022, marking a substantial 33percent growth year-on-year (YoY) while operating income also grew by 36percent to close at N42.7 billion as of September 2023, compared to N31.5 billion in September 2022.

United Bank for Africa (UBA) Plc, another of Elumelu-linked company reported a splendid performance in its unaudited financial results for the third quarter (Q3) ended September 30, 2023, recording impressive growth across all key performance metrics.

Replicating the remarkable performance achieved in the first two quarters of the current fiscal year, the bank’s gross earnings grew by 115.2 percent to N1.309 trillion up from N608billion recorded last year, while operating income rose by 146 percent from N414 billion in September 2022; to N1.018 trillion in the year under consideration.

The Africa’s Global Bank financial report filed with the Nigerian Exchange Limited indicated a whopping 262percent rise in Profit before Tax (PBT) to close at N502.01 billion in Q3’23 compared to N138.49 billion recorded at the end of the third quarter of 2022.

Profit after tax also rose impressively by 287.2percent from N116 billion recorded a year earlier to N449.29 billion massively surpassing its annualised return on average equity for Q3’2023 at 131 percent to 44.37percent.

Other NGX-30 member companies and their returns YtD are: Access Corporation (+158.8percent), Dangote Cement (+22.6percent) Dangote Sugar (+257.6percent), ETI (+114.2percent), FCMB (+83.1percent), Fidelity (+123percent), Geregu (+167.8percent), Sterling Financial Holding Company (+198.6percent), MTNN (+14percent), Seplat Energy (+110percent), Lafarge Africa (+24.6percent), and United Capital (+35.7percent).

Driven majorly by investors who have been buying Oil & Gas, Banking, Consumer Goods, and Insurance stocks, the market recorded +41.27 percent return year-to-date (YtD), according to December 18 trading data.

“We anticipate continued positive trading, as sentiments from the last week still prevails. We advise investors to invest in high-quality stocks with strong fundamentals backing them,” Lagos-based Futureview analysts said in a recent note to investors.

Zenith Bank, another large cap stock has risen this year by 54.6percent, Airtel Africa (+10.1percent), BUA Cement (-0.8percent), BUA Foods (+206percent), Nestle (+4.5percent), Okomu Oil (+45.5percent), Presco (+38.1percent), Stanbic IBTC Holdings (+94.3percent), Total Energies (+99.5percent), Flour Mills (+11.1percent), GTCO (+72.2percent), FBNH (+111.9percent), and Guinness (-2percent).

Most of these largely capitalised stocks rally and that of other conglomerates, plus record new listings this year on the Nigerian Exchange Limited (NGX) have pushed the market higher by over N11.69trillion in 2023.

In their December 18 note, CardinalStone Research analysts who said they will continue to actively monitor their positions and take advantage of opportunities as they arise, acknowledged the continued rally in banking names, “driven largely by local participation and some foreign interest”.

“In addition, we saw some institutional demand for tier-one banks over the past week as portfolio managers actively rebalanced their positions ahead of the new year,” CardinalStone Research said.

Further look at the performance of largely capitalised stocks this year shows International Breweries is down by -8.5percent this year, while Nigerian Breweries is also in negative of 7.6percent YtD.