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The stock market
opened for three days as Thursday and Friday were declared public
holidays in celebration of id-el- fitri. Meanwhile, the bear took the
lead as the stock exchange and the All Share Index failed to sustain
the last support point it found during the previous week; thus, it
dropped from the opening point of 24,241.84 and rested at 23,802.79
points having shed 1.81 per cent an equivalent of 439.05 points.
Investors should note that the straight drops have dragged good numbers
of equities below their respective intrinsic values leaving traders
with short term trading opportunities. The market capitalisation of the
listed equities equally closed at N5.832 trillion.

The NSE-30 Index
closed in the red below 1,000 points at 994.19 points from the opening
figure of 1,010.57. This is an indication that good numbers of the most
capitalised equities were hit by the bear’s knife. All the four most
active sectoral indexes closed below their respective opening figures.
NSE- Food/Beverages index closed down at 770.54 from the opening
figures of 775.06 having shed 4.52 points or 0.58 per cent. NSE-Banking
index lost 9.55 points same as 2.70 per cent moving from 354.05 to
344.50. NSE-Insurance index closed low at 171.74 from 173.86 losing
2.12 points an equivalent of 0.12 per cent and NSE-Oil/Gas index closed
in the red at 362.52 points from the opening of 367.22 shedding 4.7
points or 1.28 per cent.

Technical view

The NSE broke above
the upside resistance level of 22,160.69, 161 days ago. This was a
bullish sign. This previous resistance level of 22,160.69 may now
provide downside support. Volume on the day of the breakout was neither
extremely heavy nor extremely light – providing no convincing evidence
either way as to the validity of the breakout. A long lower shadow
however occurred, typically a bullish signal, so traders should
therefore watch for possible short bull takeover.

Within the three
trading days the stock market recorded a turnover of 591.85 million
shares valued at N5 billion in 17,660 transactions. Of these volumes,
the banking subsector contributed 304 million shares that were
exchanged in 9,650 deals. Volumes in the sector were chiefly driven by
transactions on the shares of Zenith Bank Plc, FinBank Plc, Guaranty
Trust Bank Plc, and First Bank of Nigeria Plc in that order. Volume in
the banking sector accounted for 51.44 per cent of the entire market
performance. On the other hand, volume on the shares of AIICO Insurance
Plc, and NEM Insurance boosted performance in the Insurance sector as
the sector followed on performance chart with 79.63 million shares
moved by 884 transactions.

First Aluminum tops
the price percentage gainers’ with 13.40 per cent appreciation from
N0.97 to N1.10. Honeywell followed with 10.36 per cent price
appreciation while 7-Up’s price was impacted by the corporate action on
dividend and bonus as it gained 10.23 per cent. Due to price adjustment
for dividend of N0.40 and bonus of 1:5, University press top the
losers’ table by 24.00 per cent. While profit taking activities dropped
the price of National Salt by 13.91 per cent, Poly product shed 13.74
per cent and Bank PHB closed down by 13.18 per cent.

Bond market

A total volume of
141.71 million bonds worth N129.01 billion exchanged in 1,257 deals was
transacted last week. This is in sharp contrast with the 264.92 million
units valued at N262.72 billion transacted in 3,111 deals for the week
ended Thursday, September 2, 2010. Measured by turnover/volume, the
most active bond was the 10 per cent FGN July 30, 2010 series which
recorded a traded volume of 77.05 million valued at N68.96 billion
cross 694 deals. It was immediately followed by 4 per cent FGN April
2015 series, with a traded volume of 31 million worth N25.25 billion
and exchanged in 227 deals. Ten out of the available 37 FGN Bonds were
traded in the week under review in contrast to 14 recorded in the
Penultimate week.

During the week, 15
equities were placed on full suspension for non-compliance with the
listing rules on financial reporting for 2008 as at 6th September,
2010. The equities delisting process shall formally commence if they
fail to release their respective result by Monday 11th October, 2010. A
total of 28 equities shall be placed on technical suspension on Monday
4th October 2010 if they failed to release their 2009 financial reports.

Five equities were
directed to regularize their status in the areas of audited accounts,
evidence of recapitalization and payment of outstanding listing fees;
failure to do this, the exchange shall commence delisting process
against them.

Meanwhile, seven
equities have appeared on the NSE watch list for complete
recapitalization activities, submission of outstanding financial
accounts, AGM meetings, and clearance of all regulatory issues with the
Securities and Exchange Commission among other issues.

Corporate actions

Seven-Up Bottling
Company Plc: the Q4 FY results of the heavy weight bottling company,
7-Up Plc for the period ended March 31, 2010 was made available in the
market last week. A cursory view on the performance indexes as shown in
the table below revealed improved growth against a comparable period in
2009. Lead indicators recorded double digit growth. Sales revenue
attained new high of N41.07 billion. Cost of sales (COS) remained high
at 85.4 per cent (same figure attained in FY 2009). Despite high COS
earnings was boosted by advanced growth in the bottom line.

Q4 EPS recorded a
growth of 23.8 per cent from 298 kobo in FY 2009 to 369 kobo
stimulating need for improved incentives. Other performance yardsticks
are ROE, PE ratio and Net profit margin of 21 per cent, 12.9x and 4.6
per cent respectively. At current earning yield of 7.7 per cent, 7-Up
returns to average shareholder is above benchmark 5 per cent. The
company’s directors have recommended a twin incentive; dividend of 175
kobo and scrip of 1 for every existing 4.

Observation: These
incentives are attractive considering the fact that 11.33 per cent of
the current market price will be paid to shareholders.

John Holt Plc: Conglomerates quoted company, John Holt Plc made available in the
market last week its belated Q4 FY results for the period ended
September 30, 2009. Performance indices showed subdued performance. As
depicted in the table below, TO and PAT dipped significantly by 11.6
per cent and 649.7 per cent.

With the
significant decline in the major profitability indices, ratio
indicators equally slide low, as such EPS loss ground by 655 per cent
at current LPS of 550k against 100k in FY 2009. Other major indicators
turned negative.

Observation: This stock is not attractive for short-medium investment.

Aiico Insurance
Plc: Policing covering firm, AIICO Insurance Plc last week reported its
overdue Q4 FY December 31, 2009 results to the market. Indicators
revealed stimulated performance in the midst of endemic concerns by
household units over the insurance industry, especially in the period
covered. Growth in the bottom line was notable. Though sales premium
managed 0.2 per cent growth, bottom line boosted by tax rebate grew by
67.5 per cent.

Performance ratios
witnessed improved growths. EPS went up by 75 per cent at 14k against
8k in FY 2008. At PE ratio of 7x, net profit margin of 26.8 per cent
and earnings yield of 14.3 per cent, AIICO appears attractive for
medium term investment.

Observation:AIICO is attractive for medium term investment.