BusinessDay

Here are Nigeria’s underperforming stocks in 2021

Some Nigerian stocks are seen not keeping pace with the broader market despite that the market continues to see impressive bargains lately.

In a now rising equities market like Nigeria, for example, a stock is said to be underperforming if it is not experiencing gains equal to the advance in the NGX All Share Index (+7.39percent as of November 8).

Notable names among them are Nigerian Breweries Plc (-6.3percent), Stanbic IBTC Plc (-11.5percent), Sterling Bank Plc (-26.5percent), Nestle Nigeria Plc (-7percent), FCMB Group Plc (-8.4percent), C& I Leasing (-8.7percent), GlaxoSmithKline Consumer Nigeria Plc (-7.2percent), Union Bank of Nigeria Plc (-6.5percent) and International Breweries Plc (-6.7percent).

These stocks and some others below declined at the affixed rates as of November 8 when compared to their prices at the beginning of this year 2021.

Other stocks that are not keeping pace with other securities are: Unity Bank (-14.1percent), Union Dicon Salt Plc (-9.6percent), Sunu Assurance Nigeria Plc (-50percent), SCOA Nigeria Plc (-64.5percent), Neimeth International Pharmaceuticals Plc (-19.3percent), Japaul Gold and Ventures Plc (-33.9percent), Ikeja Hotel Plc (-4.2percent), FTN Cocoa Processors Plc (-39.4percent), Nigerian Enamelware Company Plc (-26.7percent), Dangote Sugar Refinery Plc (-5.1percent), CWG Plc (-59.8percent).

Read also: Nigeria’s stocks gain N643bn as investors buy Airtel, MTNN

While most of these stocks are capable of recovering from these negatives returns seen year-to-date (Ytd), others may not easily recoup the loses particularly now that the impact of nine months (9M) 2021 earnings season is gradually waning, even as there are no other strong key positive triggers capable of aiding their rebound.

“This week, we expect sell pressure to dominate the market barring any positive catalyst,” Afrinvest Research analysts said in their November 8 note.

Other laggards this year are Caverton Offshore Support Group Plc (-8.8percent), Chams Plc (-4.3percent), Beta Glass Plc (-4.4percent), BUA Cement Plc (-3.7percent), Africa Prudential Plc (-3.2percent), CAP Plc (-2.5percent), Abbey Mortgage Bank Plc (-9.5percent) and ABC Transport (-21.1percent).

Some of these now underperforming stocks are getting “HOLD” ratings from equity research analysts, which implies that the stocks Target Prices (TPs) ranges between -10 percent and 10 percent from the current market price.

Lagos-based Meristem Research analysts who in their recent note see possibility of sustaining bearish trend this week “given that there is still room for profit taking on tickers that gained significantly over the past few weeks”, asked investors to HOLD stocks like FCMB Plc, International Breweries, Nestle, GlaxoSmithKline Consumer Nigeria, and BUA Cement –all yielding negative returns YtD.

At the beginning of this week, two listed Telcos –MTNN and Airtel Africa –lifted the market into the green (with over N643billion gain), as investors cheered last week’s announcement of CBN’s approval-in-principle for the Telco’s mobile money businesses. Also in the banking space, activities in favour of tier-1 lenders have remained elevated and are expected to persist amid strong valuations and good entry points.

“We expect mixed sentiment this week, as bargain hunters take position on the low stock prices, and profit-takers taking advantage of the appreciated stock price. Furthermore, investors will also track yield movement in the fixed income market”, said Lagos-based GTI Research analysts in their outlook for the week ending November 12.

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