The returns of Nigerian stocks have somewhat tailed off since they returned 50 percent last year with a loss of 4.88 percent since the start of 2021, however, some stocks have still rewarded investors amid the downturn.
Increased investors’ appetite for returns available in the fixed-income market coupled with the limited rewards from the concluded 2020 reports forced investors to redistribute their asset to the less risky short-term government instrument, analysts said.
Yinka Ademuwagun, investment management analyst at ValuAlliance explained that the decline occurred because investors who initially trooped into the stock market as a result of the low yield environment experienced last year are moving out as the interest rate continues to rise this year.
Despite the weak year-to-date performance, BusinessDay analysis of 117 stocks listed on the Exchange shows that while the share price of some companies dipped to their record low levels others returned exceptional gains after their share price climbed higher.
Some of the top gainers whose share price saw the most surge and above the year-to-date benchmark index of -4.88 percent include LASACO Assurance Plc, Champion breweries, Royal Exchange Nigeria, Morison Industries Plc, and Linkage Assurance Plc.
“Most of the top gainers are insurance stocks who recorded solid FY-2020 numbers with stocks like LASACO paying a decent dividend yield,” Ayorinde Akinloye, investment research analyst at United Capital, said.
Explaining why insurance companies reported good performance last year, Akinloye said as part of efforts to look attractive to investors following NAICOM capitalisation requirements, many of the industry players had strong premium generation and investment income gains because of the decline in yields.
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Using the monthly data from January 1 to April 30 2021, the analysis of the best-performing stocks on NSE evaluates investors’ appetite for the different companies on the Exchange.
LASACO Assurance Plc
LASACO’s share price was the best performer on NSE in the first months of 2021 to April 30. Its stocks stormed 306 percent higher between January and April of this year. The Insurance and Financial service company opened the year with a share price of N0.35 and rose to N1.42 as of April 30 2021.
Champion Breweries
The Champion breweries share price was also on fire during the quarter with 155 percent gain. The beer maker’s share opened the year at N0.86 and jumped to N2.19 as of 30 April 2021.
The surge came on the back of Heineken’s indirect acquisition of additional shares in Champion Breweries through Raysun Nigeria Limited on the 8th of January 2021.
Heineken purchased about 1.9 billion shares at N2.6 per share, raising the ownership of Raysun to 84.7 percent. Since then, buying interests by investors continue to prop the shares of the company.
Akinloye believes the strong gains in Champion Breweries “was driven by news on the possible acquisition by Nigerian Breweries.”
Royal Exchange
The share price of Royal Exchange, one of Nigeria’s foremost financial services groups offering general and health insurance also gained by 104 percent in the first four months of this year. The insurer’s share price opened the year at N0.26 and then surged to N0.53 in the review period.
The key driver of this gain was the increase in investors buying interest in the shares of the insurance company.
Morison Industries
Morison’s share price wasn’t too far behind also with a gain of 92 percent during the review period.
Morison began the year with a share price of N0.49 per share and closed its last trading day in April at N0.94 per share, ranking it the fourth on the BusinessDay list of NSE top performers year-to-date.
Morison Industries Plc specializes in manufacturing and marketing pharmaceutical, hygiene and care products.
Linkage Assurance Plc
With a 65 percent share price gain, Linkage Assurance secured its seat on the top five lists of NSE best-performing stocks between the beginning of the year and April 30.
McNichols
McNichols, a fast-moving consumer brand of food and beverage saw its shares surge 57 percent to N0.8 per share from its opening price of N0.51 per share at the beginning of the year.
Regency Alliance
This insurer reported a 50 percent gain in its share price, from N0.22 per share at the beginning of the year to N0.33 at the ending of April.
Mutual Benefits Assurance
Mutual Benefits began the year with a share price of N0.27 and surged to N0.39 per share on the last trading day in April 2021.
The Company offers motor, marine, travel, fire, aviation, group life, and mutual term insurance, as well as investment-linked schemes, endowment plans, and protection policies.
Guinness Nigeria
Guinness Nigeria’s share price also gained 43 percent in the first four months of this year. The brewer’s share price opened the year at N19 per share and climbed to N27.1 as of April 30 2021.
BOC GAS
BOC GAS began the year with a share price of N9.57 but its price valuation closed the review period with gains of 42 percent to settle at N13.61 per share, ranking it 10th on the NSE year-to-date.
BOC is the market leader in West Africa for the production and distribution of industrial gas, including argon, nitrogen carbon dioxide, and oxygen, as well as welding products.
Others
Other stocks that, though did not make the top ten list but outperformed the NSE year-to-date return of -4.88 percent include UACN (42%), Seplat (42%), Livestock (38%), Academy Press (33%), Smart Product (30%), May & Baker (20%), Flour Mills (19%), United Capitals (18%) and among others.
