Financial Planning with Raphael: Considering Foreign Currency As An Investment

The Coronavirus pandemic has had an adverse effect on major economies worldwide. As countries have closed their borders and restricted non-essential travel, this development has led to an impactful decrease in the global demand for crude oil and, subsequently, a correlating fall in crude oil prices. Furthermore, an ongoing oil price war led by Saudi Arabia and Russia has resulted in historic increases in unwelcome supply and a further catalyst of the decline in oil prices.

With the bulk of Nigeria’s foreign reserves stemming from the exportation of crude oil, the global decline in oil prices has strongly affected confidence in the country’s economy and currency. The flight-to-safety phenomenon has led foreign portfolio investors to exit their investments in the Nigerian – a move which has led to the depletion in Nigeria’s already precarious foreign reserves. In February 2020, Nigeria’s FX reserves declined to $36.36 billion, a 4.5% decline from the reserves’ January position at $38.1 billion.

Consequently, in the past few weeks, there has been substantial demand in the US Dollar as investors have sought to convert their Naira savings as a hedge for the growing expectation that there will be a deep devaluation of the Naira, even amidst the CBN’s denials that there are no plans for a devaluation.

However, on March 20th, 2020, as a result of steep declines in crude oil prices, the CBN issued a circular which effectively established a convergence of the multiple exchange rates for the naira. Nigeria will now observe a single exchange rate for all transactions. At both the Bureau De Change and Import & Export Window (I&E), the new end-user price has moved from N366.7 / $1 to N380.2 / $1. The CBN said that the decision to peg the exchange rate of the naira at N380 / $1 is not a devaluation of the currency but, rather, an adjustment of the rate. However, many still believe that a further devaluation is to be expected.

Amidst the turmoil and panic, the following questions must be considered:

  • What if there is no further devaluation of the Naira?
  • What happens if the pandemic is resolved sooner than later?
  • What will happen if the oil price war ceases and oil prices rise back up?

Unfortunately, these questions can only be answered with certainty in hindsight. However, the savvy investor must ensure that, regardless of the outcome, their savings remain protected and unsystematic risks remain low. Following the Financial Planning Principle for the effective management of your funds, investments in foreign currencies should be strongly considered for the following reasons:

  1. Diversification of the potential risks associated with solely holding the Naira currency
  2. Current and future Dollar-denominated obligations
  3. Hedge as a means of protection against the depreciation or devaluation of the Naira

Opportunities to look into

In achieving the objectives above while gaining competitive returns, kindly see below the following opportunities for investment:

  • ARM Eurobond Mutual Fund – A US dollar-denominated mutual fund that is authorized to invest in Eurobonds floated by the Federal Government of Nigeria and highly rated Nigerian corporates;
  • Eurobond investments– ARM Investment Managers offer investors access to invest directly in domestically issued Eurobonds; and
  • ARM Stocktrade– ARM’s proprietary mobile trading platform that provides access to trade domestic and international equities listed on the largest stock exchanges in the world.

6 books to read on money and investing during the quarantine

Life as you know it has been paused due to the current Corona Virus pandemic. You, like many others, have been confined to your home with limited movement for the next couple of weeks; but how do you spend this time wisely?

We recommend reading!

Here are some books on personal finance and investment you should read while at home to help you manage your finances better.

The Intelligent Investor by Benjamin Graham

Referred to as the godfather of investing, Benjamin Graham takes a different approach to investing in this book which we’re sure you’ll enjoy. Warren Buffet calls this “the best book on investing you’ll ever read”.

 

A Random Walk Down Wall Street by Burton Malkiel

This is a good one for beginners as Malkiel includes handy definitions of investment terms as it applies to various investment strategies directed toward different stages in life. In this book, he lays emphasis on long-term investments rather than get-rich-quick schemes including how to avoid common mistakes.

Thinking, Fast and Slow by Daniel Kahneman

This book isn’t just about investment. This Psychology professor delves into how one’s thought processes can affect investment success. Within the book, Kahneman explains how to identify your biases and lock them out so as to make rational, clear and analytical investment decisions.

Your Money or Your Life by Vicki Robin

This book is what you need to learn the art of living within your means by changing your habits and enjoying life. It helps you understand how to deal with this thing called ‘Budgeting’.

Rich Dad, Poor Dad by Robert Kiyosaki

‘Rich Dad Poor Dad: What the Rich teach their kids about money that the poor and middle class do not’ is touted as one of the bestselling personal finance books ever.

In this book, Kiyosaki uses his childhood recollections of his not-so-wealthy father and the father of his friend who was one of the richest residents in Hawaii to drive home points about money. The comparison shows how best to manage your money or lack of it, as well as helping your kids to do the same. Kiyosaki in this book posits that not all debt is bad, and you can build wealth even if you don’t currently have a staggering income.

The Broke Millennial by Erin Lowry

This book offers a fun, relatable take on managing money for beginners. Targeted towards 20-30-somethings who want to learn about finances, Lowry covers tricky, real-life situations involving money and how to deal with the challenges of having or not having enough brings.

Explore the pages of these select books to build your money-management and investing knowledge and then go on to explore www.arminvestmentcenter.com to put what you’ve learnt to practice with a plethora of investment vehicles to suit your every need.

ARM announces DAAYTA 2020 winner

[vc_row type=”in_container” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ width=”1/1″][vc_column_text]The finalists pitch event for the 2020 edition of the Deji Alli ARM Young Talent Award (DAAYTA) programme held on March 6th, 2020 at Four Points by Sheraton, Lagos with Eferobosa Oguegbu of The Paper Packaging Company emerging winner to claim the N12 million grant.

DAAYTA 2020 focused on identifying start-ups with a minimum viable product (MVP) and at least one customer. Having received about 425 applications from start-up entrepreneurs and following a rigorous review process, the top 6 contestants were chosen. These six presented their pitches at the event in a bid to win the grant of N12 million – an amount that is earmarked to assist the winner to grow his/her business idea and make a sustainable social impact in the community.

The Deji Alli Young Talent Award (DAAYTA) programme is a youth awards initiative founded in 2015 by ARM in honour of its founding CEO Deji Alli. The goal of the award is to provide support to young entrepreneurs with smart and innovative ideas that have a positive impact on people’s lives and the communities that surround them.[/vc_column_text][/vc_column][/vc_row][vc_row type=”in_container” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ width=”1/1″][image_with_animation image_url=”8746″ alignment=”center” animation=”Fade In”][vc_column_text]The top 6 finalists in their order of winning at the DAAYTA 2020 were:

1. Winner – Eferobosa Oguegbu with her idea of The Paper Packaging Company which provides a biodegradable paper-based alternative that is friendly to the environment.

2. 1stt runner up – Emmanuel Ezenwere whose business idea Arone focuses on revolutionizing courier in Africa by providing a faster, cheaper and more eco-friendly delivery solution using autonomous drones.

3. 2nd runner up – Chidi Nwaogu of Publiseer which at no charge lets independent African creatives distribute their creative works on over 400 digital stores worldwide, and they receive their royalties via African tailored payment methods, which are convenient.

4. 3rd runner up – Debo Odulana with Doctoora e-Health Limited – a platform that aggregates underutilized capacity in existing medical facilities so that healthcare professionals can rent to attend to patients.

5. 4th runner up – Bright Williams of Neohaul Technologies – a company that provides an AI-powered IoT device that can be attached to trucks to figure out realtime job status/irregularities using AI algorithms.

6. 5th runner up – Ahamefula Uzoma with Livekampus Technologies – a platform that provides students with details on accommodation vacancies off-campus. It allows schools to gather off-campus housing data in real-time and provides valuable insights for stakeholders looking to explore the student housing market for investments.[/vc_column_text][/vc_column][/vc_row][vc_row type=”in_container” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ width=”1/1″][image_with_animation alignment=”” animation=”Fade In”][vc_column_text]Speaking about the event, CEO of ARM Jumoke Ogundare said “I’m glad to say that the event went successfully as envisaged and I say big congratulations to the winner Eferobosa Oguegbu of The Paper Packaging Company and all runner ups. It is our belief that they all have what it takes to make a sustainable impact in their communities and we can’t wait to start recording success stories as we have with the past winners of DAAYTA since its pilot edition in 2015. I also appreciate the entire team; sponsor and partners who have supported this initiative to enable us to achieve the aim of enabling young entrepreneurs with innovative ideas change the narrative in their various communities.”

The team of judges who delivered the sound judgment were: Dr. Ndidi Nnoli-Edozien – an Angel investor who has dedicated a major part of her life to building bridges between large businesses and entrepreneurs, helping thousands of people at the bottom of the economic pyramid (BOP) in Nigeria live better lives; Eric Idiahi, a Co-founder and Partner of Verod Capital Management Limited, a private equity firm with over $300M under management focused on making investments in West Africa; Kola Aina, founding Partner at Ventures Platform, an avid angel investor and mentor to start-up founders; Mitchell Elegbe, founder of Interswitch; Sadiq Mohammed, Deputy Group CEO of ARM Group; Folashade Olusanya, a Partner at Jackson, Etta & Edu and Victor Asemota, the Africa Partner for Alta Global Ventures, a US-based venture capital company.

DAAYTA 2020 was proudly sponsored by Tangerine Life and coordinated by TechnoVision Communications LLC.[/vc_column_text][/vc_column][/vc_row][vc_row type=”in_container” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ width=”1/1″][vc_column_text]About ARM

Established in 1994 as an asset management firm, Asset & Resource Management Holding Company Limited (ARM) has evolved into one of Nigeria’s most innovative and respected non-bank financial institutions with a focus on Traditional Asset Management and Specialized Funds. ARM is a leading investment management firm that provides a diverse range of asset management services to a substantial and diversified client base that includes corporations, foundations and charities, high net-worth individuals, and small savers. See https://www.arm.com.ng/ for more details.

About Tangerine Life
Tangerine Life provides reliable financial services that create and protect wealth through digital financial solutions. By merging deep consumer insights and cutting edge technology, every product developed helps improve the quality of life for our clients.
See www.tangerinelife.com for details

About TechnoVision
TechnoVision is the brand name for TechnoVision Communications Limited a technology services company that advises clients on technology-led transformation and early-stage entrepreneurship in Africa. See http://tvcng.com/ for more details.[/vc_column_text][/vc_column][/vc_row]

ASK SHADE: My siblings are not happy I adopted a child

ASK SHADE: My siblings are not happy I adopted a child

Dear Shade,

I just turned 50 and decided to adopt a child since I never got married nor have a child. This 3-day-old baby is God’s gift to me and while I want to be around for a long time to see her go to the university and even get married, I know I cannot guarantee it. I’m not a prophet of doom but as a realist, I want to take measures to secure her future mainly because my other two siblings and their children have greatly benefitted from me financially and they didn’t seem happy when I adopted a child. 

Thank you.

Ayomide from Akure

 

Dear Ayomide,

Happy belated birthday and congratulations on your bundle of joy.

Your desire to secure your daughter’s future is applaudable and very responsible as people usually ignore the need to do so. They are either distracted by their day to day activities or are simply in self-denial of the fact that we are all mortals. Also, the fact that your siblings and their children sometimes financially depend on you is the more reason why you should take steps to secure your child’s future.

To efficiently and effectively secure your daughter’s future, you would require a structure that would ensure minimal exposure to any dispute arising from your extended family, considering their reception to your decision to adopt your daughter. Setting up a Trust could be a good beginning because it affords you the ability to make provisions for your daughter by transferring your assets to a neutral, unbiased third party known as a Trustee and name specific beneficiaries who would benefit from the Trust. This ensures the protection of your assets as they would only be made available to the named beneficiary or beneficiaries upon eventuality.

Other estate planning devices such as the Easy Will may also be drafted to complement the Trust. The Will may be necessary to transfer or dispose of your personal assets such as your bank accounts, pension, pieces of jewelry and personal belongings.

I felicitate with you once again Ayomide and wish you the very best in your endeavors.

Cheers,

‘Shade

The post ASK SHADE: My siblings are not happy I adopted a child appeared first on Realising Ambitions.

January Inflation: CPI maintained upward trajectory

As anticipated, inflation for the month of January ascended by 15bps to 12.13% YoY (vs December: 11.98% YoY) and 4bps shy of our estimate of 12.09% YoY. In our monthly economic update, we highlighted that the low base from food prices would send inflation on an upward trajectory. Unsurprisingly, food inflation rose 18bps to 14.85% YoY, accounting for bulk of the uptick in headline inflation, while core inflation moderately expanded by 3bps to 9.35% YoY. On the former, the pickup was anchored by 29bps and 6bps increase in farm produce and imported food to 15.35% YoY and 16.10% YoY respectively. Nonetheless, the buoyant supply from main harvest season has helped in moderating the pace of increase. Also, Core inflation ticked up by 3bps to 9.35% YoY, reflecting increases in HWEGF (+8bps to 7.78%), Transport (+10bps to 9.35% YoY), Health (+19bps to 9.78% YoY) amongst others.

Following similar trend, Month-on-month numbers rose slightly by 2bps to 0.87% MoM (3bps shy of our estimate: 0.84% MoM) due to minute expansion in both core and food inflation. Food inflation ticked up 1bp to 0.99% MoM mirroring 2bps expansion to 0.93% MoM in farm produce. Similarly, core inflation rose 1bp to 0.82% MoM following increases in HWEGF, Health, Transport, Clothing, Education.

We retain our view for an expanse in headline inflation owing to two key factors. First is the lingering impact of the low base on food inflation. Secondly, the increase in VAT from 5% to 7.5% which took effect from 1st of February 2020 with the aim of the generating more revenues for the government is expected filter into inflation numbers. Consequently, we expect the northward trend to persist, with headline inflation for the month of February printing at 12.3% YoY and 0.88% MoM. Against this backdrop, we expect average inflation for 2020 to print at 13.0% (FY 19: 11.4%).

Figure 1: One-year trend in Inflation rate

Source: NBS, ARM Research

Stock Recommendation for the Week, February 17

The Nigerian equities market maintained a downward trend with the ASI, dropping by 1.11% to 27,755.9 pts, with the market capitalization closing at N14.46 trillion as investors lost N162 billion during the prior week. All sectors closed negative WoW except Cement (+0.37%) and Construction (+0.13%). The deterioration was driven by the Food (-7.27%), Brewers (-2.02%), Oil & Gas (-1.34%), Insurance (-0.94%), Telecoms (-0.53%) and Banking (-0.21%) sectors. The key losers are NESTLE (-10.00%), DANGSUGA (-4.10%), GUINNESS (-16.56%) and MTNN (-0.85%), while GTB (+1.36%), BUA CEMENT (+1.13%) and WAPCO (+1.31%) yielded positive returns.

• Dangcem– STRONG BUY (FVE: N240.87): DANGCEM’s FY 19 earnings is expected to be pressured (EPS: N14, vs N22 in 2018) owing to lower volumes in Nigeria business (due to increased competition from BUA Cement) and some of its Pan Africa business, as well as high base of tax credits from 2018. However, DANGCEM currently trades at FY 19E P/E of 11x on our estimates, which is cheap compared to WAPCO and CCNN of 17.7x and 16.8x, respectively. We believe current valuation is unjustified given the superior ROE of 24%.

• Zenith Bank Plc – STRONG BUY (FVE: N31.50): Zenith bank 9M results saw a moderate expansion in PBT and PAT by 5.3% and 4.5% YoY respectively. We note however, that the banks valuation may remain depressed in the near-term given the regulatory overhang over the industry. Nonetheless, at current levels and based on our FY 19E dividend of N2.90, we view expected dividend yield of 15% as attractive and could be compelling to investors. We value Zenith at N31.50 which implies STRONG BUY by our recommendation.

• Guaranty Trust Bank Plc – STRONG BUY (FVE: N49.66): GTB’s 9M 19 earnings expanded modestly with PAT and EPS expanding only 3.4% YoY to N146.9 billion and N4.99/share respectively. Although we expect slower growth in EPS (+4% YoY to N6.53) over 2019, our case for GUARANTY remains the resilience in NIR, improved cost management, still strong loan book with moderate expansion in credit loss provision to 0.5%.

• Nestle Plc – OVERWEIGHT (FVE: N1447.39): Amongst the food producers, Nestle Nigeria Plc has managed to stay afloat, reporting modest growth in earnings amidst incessant competition. For 9M 19, EPS expanded by 11.2% YoY to N46.48 driven largely by the absence of impairment charges which created a high base for input costs over the same period last year. Asides from improved earnings, its strong cash balance, return on equity and 100% dividend payout further supports the case for an OVERWEIGHT rating.

• Seplat Plc – STRONG BUY (FVE: N828.90): Seplat’s total production declined in Q3 19, as the drop in gas production offset improvement in the oil segment. That said, we remain positive on growth in production (especially in oil) into 2020 as Seplat increases capex. Cashflows remain healthy. Upsides reside in the ANOH Gas project and acquisition of Eland Oil & Gas Limited, while decline in oil prices pose a threat to our estimates.

See attached for full report.

Kindly, visit ARM Research Portal for full stock reports.

LABS by ARM 2.0 Accelerator Programme Commences

The ARM Group is pleased to announce the commencement of the second cohort of the LABS by ARM Accelerator programme on the 10th of February, 2020. Similar to the maiden edition ARM is partnering with Ventures Platform to support and fund compelling fintech startups solving key problems in innovative ways around the financial industry, unlocking verticals and markets thereby changing how users access and consume financial services.

During the 12-week Accelerator programme, we will work intensively with each FinTech startup in a series of activities aimed at exponentially advancing the growth of their companies within the short time frame. We will also invest $20,000 (twenty thousand Dollars), offer office space, Amazon Web Services (AWS) credit of up to $10,000 (ten thousand Dollars), access to the ARM network capabilities and support the companies with carefully selected mentors comprising seasoned business leaders from the fintech industry who will provide hands-on support to the companies.

After the application deadline for LABS by ARM 2.0 , we had one hundred and ninety-one (191) submissions that were eventually reduced to thirty-three (33) and further reduced to eleven (11) companies after a tedious third round of evaluations. These eleven (11) companies were invited to the ARM headquarters in Ikoyi, Lagos for a chat with seasoned professionals, and technology entrepreneurs.. Finally, five (5) of the companies were selected and have now been invited into the Accelerator programme. They are:

TRUESAVER:

Truesaver provides access to zero-interest loans by leveraging rotational savings. The solution is a contact-based platform where contacts can save a set amount monthly over a period with lump-sum savings being given to each saver monthly in rotation.

OWOAFARA:

Owoafara is building tools and platforms to curate, verify and match small and medium-size businesses with financial institutions for loans as well as provide support for companies that do not qualify for financing to enable the businesses grow their business and better prepare to access financing.

RISE:

Rise helps Nigerians grow wealth by connecting customers with the best investment opportunities around the world, cheaply and seamlessly.

KWABA:

Kwaba is a property rental financing platform that is solving bulk rental payment problems for low to middle income earning Nigerians Kwaba makes the upfront rent payment for retail customers and these customers are able to pay their rent on a monthly basis.

QUANTIS FINANCE:

Quantis is leveraging technology to automate trading and investments in order to make financial markets and instruments more accessible to local investors.

Henrietta Bankole-Olusina (MD, ARM Financial Advisers)
Barbara Ezeife (Head, Marketing and Corporate Communications, ARM)

ARM

Established in 1994, ARM is a leading Nigerian diversified and integrated asset management group firm that offers wealth creation solutions and opportunities through a unique blend of traditional asset management and alternative investment services to retail, high net worth and institutional investors.

ARM currently manages total assets of approximately N 1.25 trillion (as at December 2019). www.arm.com.ng

Ventures Platform

Ventures Platform is creating inclusive and sustainable wealth in Africa, by building the capacity of African entrepreneurs and innovators leveraging technology to create sustainable solutions to the most urgent problems on the continent. They are one of the most active early-stage investors on the continent.

Ventures Platform also works with big corporations in driving innovation internally and in building lasting relationships with the startup ecosystem to help fuel business growth and achieve innovation goals.
www.venturesplatform.com

Stock Recommendation for the Week, February 10

Last week, the Nigerian bourse witnessed a steep decline as the ASI closed -2.69% WoW, while market capitalization lost N239 billion to close at N14.62 trillion. All sectors closed in red, save the insurance sector (+0.15%). The decline was anchored by the Breweries (-5.62%), Cement (-4.94%), Banking (-2.26%), Oil & Gas (-5.74%), and Telecom (-1.48%) sectors. On stock performance, FBNH (-8.40%), ZENITH (-5.04%), NB (-6.36%), INTBREW (-5.56%), DANGCEM (-5.50%), BUACEMENT (-4.32%) and MTNN (-2.17%) yielded negative returns amongst other stocks.

• Dangcem– STRONG BUY (FVE: N240.87): DANGCEM’s FY 19 earnings is expected to be pressured (EPS: N14, vs N22 in 2018) owing to lower volumes in Nigeria business (due to increased competition from BUA Cement) and some of its Pan Africa business, as well as high base of tax credits from 2018. However, DANGCEM currently trades at FY 19E P/E of 11x on our estimates, which is cheap compared to WAPCO and CCNN of 17.7x and 16.8x, respectively. We believe current valuation is unjustified given the superior ROE of 24%.

• Zenith Bank Plc – STRONG BUY (FVE: N31.50): We have made adjustment to our FY 2019 expectation for Zenith Bank following some surprises in the Q2 numbers. In specifics, we revised net interest income lower due to compressed yields on its loans and treasury asset (H1 18:10.6%, H1 19 9.1%) amidst contraction in funding cost. Elsewhere, we adjusted NIR higher due to upward review of electronic fee income and trading book. Thus, we now forecast PBT of N218 billion (-5.5% YoY), while we cut our FVE to N31.57/share (previously: N33.71/share).

• Guaranty Trust Bank Plc – STRONG BUY (FVE: N49.66): GTB’s 9M 19 earnings expanded modestly with PAT and EPS expanding only 3.4% YoY to N146.9 billion and N4.99/share respectively. Although, we expect a slower growth in EPS (+4% YoY to N6.53) over 2019, our case for GUARANTY remains the resilience in NIR, improved cost management, still strong loan book with a moderate expansion in credit loss provision to 0.5%.

• Nigerian Breweries Plc – STRONG BUY (FVE: N75.82): With intense competition from International Breweries (IB) and graduated excise duty (+17% YoY) that kicked-off in Jan-19, revenue growth is expected to be slow even as we expect higher finance cost (+38% YoY) to be another pressure point to earnings this year. However, given our case for a slight improvement in volumes and decline in cost of sales (-1.1% YoY) which translates to gross (+120bps YoY) and EBIT (+101bps YoY) margin expansion, the misery seems moderated. Overall, the net impact of all our adjustments translates to PBT of N29.9 billion and EPS of N2.58 (+6.3% YoY) over 2019.

• Seplat Plc – STRONG BUY (FVE: N828.90): Seplat’s total production declined in Q3 19, as the drop in gas production offset improvement in the oil segment. That said, we remain positive on growth in production going into the final quarter of the year (especially in oil) and into 2020 as Seplat increases capex. Cashflows remain healthy. Upsides reside in the ANOH Gas project and acquisition of Eland Oil & Gas Limited.

Kindly, visit ARM Research Portal for full stock reports.

Stock Recommendation for the Week, February 03

For the first time this year, the equity market closed the prior week on a negative note with the NSE ASI declining by 2.65% to 28,843.53 index points. Loses were observed in the Banking (-6.13%), Cement (-0.90%), Telecom (-2.96%), Personal Care (-13.72%), Food (-0.50%), Oil & Gas (-2.58), and Real Estate (-0.14%) sectors. On the other hand, gains were seen across only the Brewers (4.89%), Construction (2.64%) and Insurance (0.54%) sectors. Major drivers for the week decline were stocks such as; FBNH (-10.27% WoW), STANBIC (-10% WoW), BUACEMENT (-2.12% WoW) and MTNN (-4.32% WoW).

• Dangcem– STRONG BUY (FVE: N240.87): DANGCEM’s FY 19 earnings is expected to be pressured (EPS: N14, vs N22 in 2018) owing to lower volumes in Nigeria business (due to increased competition from BUA Cement) and some of its Pan Africa business, as well as high base of tax credits from 2018. However, DANGCEM currently trades at FY 19E P/E of 11x on our estimates, which is cheap compared to WAPCO and CCNN of 17.7x and 16.8x, respectively. We believe current valuation is unjustified given the superior ROE of 24%.

• Zenith Bank Plc – STRONG BUY (FVE: N31.50): We have made adjustment to our FY 2019 expectation for Zenith Bank following some surprises in the Q2 numbers. In specifics, we revised net interest income lower due to compressed yields on its loans and treasury asset (H1 18:10.6%, H1 19 9.1%) amidst contraction in funding cost. Elsewhere, we adjusted NIR higher due to upward review of electronic fee income and trading book. Thus, we now forecast PBT of N218 billion (-5.5% YoY), while we cut our FVE to N31.57/share (previously: N33.71/share).

• Guaranty Trust Bank Plc – STRONG BUY (FVE: N49.66): GTB’s 9M 19 earnings expanded modestly with PAT and EPS expanding only 3.4% YoY to N146.9 billion and N4.99/share respectively. Although, we expect a slower growth in EPS (+4% YoY to N6.53) over 2019, our case for GUARANTY remains the resilience in NIR, improved cost management, still strong loan book with a moderate expansion in credit loss provision to 0.5%.

• Nigerian Breweries Plc – STRONG BUY (FVE: N75.82): Intense competition from International Breweries (IB) and graduated excise duty (+17% YoY) that kicked-off in Jan-19, revenue growth is expected to be slow even as we expect higher finance cost (+38% YoY) to be another pressure point to earnings this year. However, given our case for a slight improvement in volumes and decline in cost of sales (-1.1% YoY) which translates to gross (+120bps YoY) and EBIT (+101bps YoY) margin expansion, the misery seems moderated. Overall, the net impact of all our adjustments translates to PBT of N29.9 billion and EPS of N2.58 (+6.3% YoY) over 2019.

• Seplat Plc – STRONG BUY (FVE: N828.90): Seplat’s total production declined in Q3 19, as the drop in gas production offset improvement in the oil segment. That said, we remain positive on growth in production going into the final quarter of the year (especially in oil) and into 2020 as Seplat increases capex. Cashflows remain healthy. Upsides reside in the ANOH Gas project and acquisition of Eland Oil & Gas Limited.

Kindly, visit ARM Research Portal for full stock reports.

ASK SHADE: Help! My husband buys assets in his name alone

ASK SHADE: Help! My husband buys assets in his name alone

Dear Shade,

My husband wants me to include his name on the documents of the properties I bought before we got married. I refused to. Now, he buys assets in his name only saying I started it first. What do I do? Should I ignore him? Or would you advise me to start buying my own assets in my name only or heed to his request for peace to reign? I’m confused.

Joy from Jos.

 

Dear Joy,

I appreciate you reaching out to me on this rather personal and sensitive subject.

Couples are at liberty to purchase property either individually or jointly, but it may be advisable to evaluate one’s matrimonial situation critically before making decisions on whether to purchase assets in one’s personal name or as joint owners with one’s spouse.

It is not an abominable act for spouses to purchase assets in their personal names. In Nigeria, the purchase of assets jointly by spouses could be interpreted to symbolize unity and synergy within a marriage and could increase the bond between spouses, thereby making them feel relevant to the other spouse.

Joint ownership of assets may also be considered as an estate planning option for many spouses, given that the surviving owner eventually ends up owning the asset, which may be utilized to catering for expenses as the need may arise, rather than having the assets frozen and unreachable. However, it is important to bear in mind that in the event of a simultaneous demise of both spouses, distribution of the jointly owned properties would be subjected to intestacy laws and may not reflect the true intentions of the owners.

I would therefore advise that you discuss your options with your husband and enlighten him on the estate planning benefit of joint ownership and the dangers of having sole ownership as the only plan. Other Estate planning tools such as Wills and Trust may be used to further secure a solid estate plan.

I do hope that I have been able to be of help to ease your concerns and I wish you all the very best in your marriage.

 

Cheers!

‘Shade

The post ASK SHADE: Help! My husband buys assets in his name alone appeared first on Realising Ambitions.