STOCK

RECOMMENDATIONS
Executive Summary
Global Economy May 9 - 13, 2011
Official data revealed that the United States (U.S) private
sector forged ahead in creating jobs in April, a sign the recov-
ery is gaining traction, despite a rise in the unemployment
rate to 9.0%. Private businesses added 268,000 jobs in April,
encouraging belief that the economy's recovery was on track
even as federal and local governments cut spending and
payrolls. The economy created a net 244,000 nonfarm jobs
last month, far more than expected, with the biggest growth
in the service sector. Furthermore, the Labor Department
revised upwards job creation figures for February and March
to 235,000 and 221,000, respectively. The new data from the
department also showed that the country's unemployment
rate rose to 9.0% in April from 8.8% in March, an unex-
pected increase that signaled the challenges facing the gov- Greenwich Research Team
ernment's efforts to kick-start growth in the ailing labor mar-
ket. Experts had estimated the jobless rate would remain at
March's 8.8% after falling for four consecutive months. Opeyemi Tella
opeyemi.tella@greenwichtrustgroup.com
According to an industry report released during the week, the
pace of growth in the U.S. services sector unexpectedly
eased to its lowest level since August 2010 in April 2011. The Oladipupo Adekanmbi
Institute for Supply Management said its services index fell to
52.8 last month from 57.3 in March. The figure was below oladipupo.adekanmbi@greenwichtrustgroup.com
economists' forecasts of 57.4 for the month of April. A read-
ing above 50 indicates expansion in the sector. According to
the reports, new orders index tumbled to its lowest level Olukayode Aladejebi
since December 2009, falling to 52.7 from 64.1,, while em- olukayode.aladejebi@greenwichtrustgroup.com
ployment gauge dipped to 51.9 in March from 53.7 in Febru-
ary.
Evelyn Taiwo
In Canada, Statistics Canada, the country’s statistics” agency
evelyn.taiwo@greenwichtrustgroup.com
revealed that the economy created 58,300 jobs in April,
bringing the unemployment rate down to 7.6%, matching the
lowest jobless level since the early months of the recession.
The agency stated that most of the gains were recorded in
the service sector. Although the job increase was dominated
by part-timers, there were 17,200 new full-time jobs created
in April. April's gains bring the year-over-year increase in
employment to 283,000, enabling the recovery of all the full-
time jobs that were lost in the 2008-2009 recession.

In the Eurozone, the region’s currency, the euro, retreated

from a 17-month peak against the dollar, and a 13-month
high against the pound sterling as the President of the Euro-
pean Central Bank (ECB), signaled that Eurozone’s interest
rates would remain on hold next month. The single currency
Greenwich Trust Limited
had received support in recent weeks as the ECB, in contrast
to the Federal Reserve and the Bank of England, was seen as
being ready to tighten monetary policy further in the coming Plot 1698A Oyin Jolayemi Street
months in a bid to stem inflationary pressures in the Euro-
zone. The ECB left rates unchanged at its recent policy meet-
P.M.B. 80074
ing, compared to a 25 basis point rise in April. Investors Victoria Island
focused on comments from ECB’s President for clues as to
future monetary tightening. Ahead of his remarks, forecasts Lagos.
were split as to whether the ECB Chief would signal a move in
June or July. Tel: 234-1-2715937

In the United Kingdom (U.K), the Bank of England’s Monetary Fax: 234-1-2700613
Policy Committee voted to maintain the official bank rate paid
on commercial bank reserves at 0.5%. The Committee also E-mail: research@greenwichtrustgroup.com
voted to maintain the stock of asset purchases financed by
the issuance of central bank reserves at £200 billion. With a Website: www.greenwichtrustgroup.com
slowdown in growth of manufacturing, construction and ser-
vices, it was widely expected that the rate would be kept at
the record low while recovery is still weak. The committee
was faced with a difficult choice, which was to either maintain
Greenwich Stock Recommendations May 9 - 13, 2011

Executive Summary (Cont’d) Inflation Rates Across Countries (March 2011)

the low interest rate to aid economic growth, or raise the rate to 14.00%
try and counter the high inflation figures. Inflation currently 12.00%
stands at 4%, which is double the bank's target rate. Raising 10.00%
rates takes demand out of the economy and slows down infla- 8.00%
tion. However, it also increases the cost of borrowing, with fears 6.00%
that this could put the country back into recession.
4.00%
2.00%
Data from the Customs office showed that France's trade gap
narrowed in March to €5.75 billion from €6.37 billion in Febru- 0.00%
ary. The deficit for March stayed well below the expected short-
fall of €6.5 billion. A year ago, the shortfall totaled €4.49 billion,
while exports increased to €35.16 billion in March from €34.69
billion in the previous month. Meanwhile, imports fell to €40.91 Inflation Rates
billion from €41.07 billion in February.

The Greek government unveiled a three-year national strategy Price Movement of Crude Oil (May 3- 6, 2011)
plan against tax evasion, aiming to raise at least €11.8 billion
150.00
by 2014. The Greek foreign minister noted that wide-spread tax
evasion in Greece is a crime against the country which still has
not been solved, although major steps have been taken over
100.00
the last year and a half. The fight against tax evasion is a sig-
nificant challenge in the overall national effort launched last
year to fix the debt-ridden country's finances.
50.00
Portugal reached a deal with the European Union (EU) and the
International Monetary Fund (IMF) on a €78 billion 3-year bail-
0.00
out. This is the third Eurozone member to do so after Greece
and Ireland. Under the conditions of the loan, the country will 3-May-11 4-May-11 5-May-11 6-May-11
be given longer period to reduce its budget deficit targets than
OPEC Basket
previous expectations. The deficit will need to be cut to 5.9 per
cent of GDP this year, followed by 4.5 per cent in 2010 and 3
per cent in 2013. This varies from previous targets for 4.6 per Major World Stock Market Indices (April 27 - 29, 2011)
cent, followed by 3 per cent and 2 per cent respectively. The
figure currently totals 9.1 per cent of the country’s GDP.
Current 1 Week
The Reserve Bank of Australia (RBA) announced that it would Index Value Change YTD Change
hold its benchmark rate steady at 4.75% despite the recent
surge in inflationary data releases. The result was a sudden Dow Jones (DJA) 4,397.05 3.85% 9.02%
downturn in Australian dollar (AUD) values across several of its
currency pairings. Prices were prevented from sky-rocketing out S&P 500 1,363.61 3.33% 8.43%
of control since interconnected costs and values would make
such a rise unpalatable to consumers.
Nikkei 225 9,849.74 2.69% -3.71%
Statistics South Africa (Stats SA) disclosed that South Africa’s
unemployment rate increased to 25% in the first quarter of FTSE 100 6,069.90 1.23% 2.88%
2011, from 24% in the final quarter of last year. The number of GSE Composite
unemployed grew by 227,000 quarter-on-quarter to 4.36- Index 1,100.38 3.62% 10.07%
million, while discouraged work-seekers increased by 73,000 in
three months of January to March. Employment fell by 14,000 LA T E S T G LO B A L E C O N O M IC IN D IC A T O R S
between the fourth quarter of 2010 and the first quarter of
2011, with an increase of 56,000 jobs in the formal non- Q ua t e rly
agriculture sector, a loss of 46,000 jobs in the informal non- G D P Gro wt h Int e re s t Inf la t io n C urre nt
R at e (Q4, R ate R ate J o ble s s
farming sector and a loss of 24, 000 farming jobs. Most of the
C o unt ry 2 0 10 ) ( M a r) ( F e b) R ate
jobs were lost in the transport sector, which accounted for
34,000 job losses, followed by 25,000 jobs in the construction C hina 9.80% 4.27% 4.90% 9.60%
industry. There has been an increase of 37,000 in the finance
sector, 20,000 jobs in manufacturing and 15,000 in the mining N ige ria 8.29% 10.00% 12.80% NA
industry.
India 8.20% 7.31% 9.30% 10.80%

Domestic Economy S inga po re 6.50% 0.44% 5.00% 2.20%

Unit e d
Stat es 3.20% 0.23% 2.10% 8.90%
On the local scene, it was revealed that Nigeria’s external re-
serves failed to sustain the appreciable increase recorded in G e rm a ny 1.50% 1.19% 2.10% 7.30%
March, as it advanced marginally by $300 million in April de-
spite the increase in the price of oil in the international market. E uro A re a 1.20% 1.19% 2.40% 9.90%
External reserves stood at $33.5 billion as at April, as against
B rit a in 1.70% 0.83% 4.40% 8.00%

2
Greenwich Stock Recommendations May 9 - 13, 2011

Executive Summary (Cont’d) Movement of All Share Index Against Volume

Traded (May 3 - 6, 2011)
350,000,000 25,350.00
the $33.2 billion it recorded at the end of March, after it rose to 25,300.00
$36.4 billion by mid March. The reserves had grown by $3.1 300,000,000
billion in March. 25,250.00
250,000,000
25,200.00
In a similar development, the CBN Governor, Mallam Sanusi
200,000,000 25,150.00
Lamido Sanusi, said that improved oil output and rising oil
prices in the international market would contribute to economic 25,100.00
150,000,000
growth and help rebuild external reserves, which are vital to 25,050.00
sustain consumer and investor confidence in the economy. He 100,000,000
further stated that the decline in the country’s reserves, was 25,000.00
partly due to spending to maintain a stable naira currency, huge 50,000,000 24,950.00
amounts spent on petroleum subsidies, expending of foreign 3-May-11 6-May-11
exchange on import of food items such as rice, spending on the
power sector, as well as, spending for a planned sovereign VOLUME INDEX

wealth fund.

In another development, the CBN governor also indicated he INTER-BANK CALL RATE (May 3 - 6, 2011)
may limit interest-rate increases to help spur lending in the 12.0000
country, as demand for foreign currency eases, reducing pres-
sure on the naira. He stated that CBN frontloaded a lot of the
10.0000
increase that people thought they will do gradually over the
years, when it raised its benchmark interest rate by 1 percent-
age point to 7.5% in March. While the central bank is aware of 8.0000
rising price pressures it also wants to avoid undermining stabil-
ity in financial markets after using $4 billion to bail out banks in 6.0000
2009.
4.0000
Liquidity pressure further eased in the financial system in the
week under review, as the Nigeria Interbank Offer Rates 2.0000
(NIBOR) decreased across all tenors. This was as a result of
liquidity inflow from the purchase of Non Performing Loans 5/3/2011 5/4/2011 5/5/2011 5/6/2011
(NPL) of banks by the Asset Management Company of Nigeria INTER- BANK CALL RATE
(AMCON).

At the fixed income market, bond yields reversed and dipped Nigerian FGN Bond Yield Curve
across most tenors in the week under review amid liquidity
pressure brought about by injection from AMCON’s purchase of 15.00%
NPLs from banks. This resulted in a consequent rise in prices of 13.00%
bonds.
11.00%
On a Week-on-Week basis, the Naira depreciated against the 9.00%
dollar by 0.71 per cent at the official window to close at
7.00%
N153.03/$ and by 0.24 per cent at the inter-bank forex market
to close at N155.30/$. However, it remained unchanged at the 5.00%
Bureau de Change and parallel window to close at N156.00/$, 3.00%
each, in the week under review.
3 5 7 10 20

The Nigerian Stock Exchange (NSE) closed on a positive note on

the last trading session of the week. The All-Share Index (ASI) Average Weighted (6/05/11) Average Weighted (29/04/11)

and the Market Capitalization rose by 32 basis points (0.32 per

cent) each to close at 25,300.46 and N8.08 trillion, respectively,
when compared to their previous figures. On a Week-on-Week
(WoW) basis, the ASI rose by 1.03 per cent, as against a mar-
ginal increase of 0.09 per cent recorded in the previous week. Ec o n o m i c I n d i c a t o r s Cur r e nt P r e v ious
Consequently, the YTD change in the ASI increased to 2.14 per
cent from the previous week’s figure of 1.09 per cent. YoY Inf lat ion ( Mar' 11) 12.80% 11.10%

OUTLOOK
MPR ( Mar . ' 11) 7.50% 6.50%
Investors' level of confidence in the capital market is gradually
being restored, on the back of growing optimism of a successful
inauguration ceremony of the newly elected political office hold-
ers. We expect increased level of activities in the coming week, Ext ernal Reser ves (May 5' 11) 32.63 32.66
although investors may still apply some level of caution. We
further expect long term investors to continue to take positions
GDP Gr owt h Rat e YoY ( Q4,
in fundamentally viable stocks.
2010) 8.29% 7.86%

3
Greenwich Stock Recommendations May 9 - 13, 2011

FORECAST PERFORMANCE FOR LAST WEEK

Forecast as a Per-
Security Base Price Forecast Week’s High centage of Actual
GUARANTY 16.21 16.32 16.59 101.65%
ACCESS 8.01 8.06 8.60 106.70%
UACN 38.5 38.75 39.00 100.65%
NAHCO 9.7 9.77 9.70 99.28%
MOBIL 148.2 149.1 148.20 99.40%
FIRSTBANK 13.43 13.52 13.86 102.51%
OANDO 53.6 53.96 53.60 99.33%
ZENITHBANK 15 15.1 15.50 102.65%
FIDELITYBK 2.71 2.73 2.70 98.90%
NB 86.48 87.05 87.00 99.94%
UBA 5.9 5.94 6.76 113.80%
ASHAKACEM 24.89 25.06 25.95 103.55%
NBC 37.05 37.29 37.05 99.36%
DANGSUGAR 13.1 13.19 13.30 100.83%
IBTC 9.56 9.63 10.05 104.36%
FCMB 7.39 7.44 7.60 102.15%
Percentage Forecast Achieved

FCMB
IBTC
DANGSUGAR
NBC
ASH AKACEM
UBA
NB
FIDELITYBK
ZENITH BANK
OAND O
FIRSTBANK
MOBIL
NAHCO
UACN
ACCESS
GUARANTY

86 .00 % 93 .00 % 10 0.0 0% 10 7.0 0%

Percen tage Forecast Ach i eved

SPECULATIVE BUY
Security Current Price Best Entry Price Exit Price % Expected Returns

FIRSTINLND 0.76 0.71 0.98 38.03%

INTERCONT 1.42 1.36 1.75 28.68%
PLATINUM 1.24 1.19 1.52 27.73%
WEMABANK 1.28 1.23 1.54 25.20%
OCEANIC 1.96 1.87 2.33 24.60%
AIICO 0.90 0.89 1.09 22.47%

4
Greenwich Stock Recommendations May 9 - 13, 2011

SUMMARY

Exit Price Expected Returns

Current (AMCON Hurdle 5-10 Trading (Using AMCON’s
Security Price (N) Rate) Days Forecast Exit Price) Rationale

Buy List
UBA 6.76 14.78 6.82 118.66% Fund-Tech

OANDO 53.60 101.14 53.96 88.70% Fund-Tech

ACCESS 8.30 13.76 8.36 65.84% Fund-Tech

NAHCO 9.20 15.16 9.27 64.83% Fund-Tech

UACN 39.00 63.01 39.27 61.57% Fund-Tech

PZ 32.45 52.25 32.68 61.02% Fund-Tech

GUARANTY 16.25 25.44 16.37 56.53% Fund-Tech

FIDELITYBK 2.66 3.89 2.68 46.40% Fund-Tech

NBC 36.99 53.93 37.24 45.80% Fund-Tech

FIRSTBANK 13.86 19.88 13.97 43.41% Fund-Tech

ZENITHBANK 15.31 21.63 15.43 41.29% Fund-Tech

Hold List
DANGSUGAR 13.30 26.28 13.40 97.59% Fund-Tech

ASHAKACEM 25.95 36.74 26.15 41.60% Fund-Tech

Watch List
FCMB 7.60 10.87 7.65 43.09% Fund-Tech

Sell List
OASISINS 0.50 0.44 Fund-Tech

CAPHOTEL 3.13 2.64 Fund-Tech

Note: The Exit price derived for Oasisins using the AMCON Methodology is below the nominal value of
the share.
Recommendation using ‘fundamental’ is based on analysis of the company’s financial statements.
Recommendation using ’technical’ is based on analyzing the stock price and volume trends.
CAPM– Capital Asset Pricing Model. See the Appendix for definitions of the technical tools used in this report.
YTD— Year-to-date

5
Greenwich Stock Recommendations May 9 - 13, 2011

UBA PLC
NSE All-Share Index Vs UBA- Jan '10 - Date
The Bank has 8 direct and 3 indirect subsidiaries, and it 200.00

was the first Nigerian bank to introduce the Nigerian 150.00

Government Bond Index. It also has established 131
100.00
international points of presence outside Nigeria.
50.00
R² = 0.5196
The Bank is well diversified in the financial services sec-
0.00
tor and is poised to take full advantage of the universal
4-Jan-10 4-Jul-10 4-Jan-11
banking environment. It has an experienced, dynamic NSE Reb ased UBA Rebased Po ly. (UBA Rebased)

and innovative management team. The Bank also main-

tains strong strategic alliances with international organi-
UNITED BANK FOR AFRICA PLC
zations for synergy benefits.
Current Price 6.76
Year High 11.70
In 2009, UBA’s gross earnings stood at N246.73 billion
Year Low 7.60
in its full year ended 2009, signifying a growth of
EPS 0.02
45.49% from N169.58 billion recorded in the previous
P/E Ratio 365.52
year. However, Profit After Tax (PAT) dipped signifi-
Outstanding Shares 32,334,693,694
cantly by 94.18% to N2.38 billion from N40.83 billion.
Dividend Yield 0.74%
This was as a result of huge write-offs as directed by
Profit After Tax '000 (Full Year) 598,000
the Central Bank of Nigeria (CBN). Total Assets also
Year End September
dropped by 7.45% from N1,672.99 billion in 2008 to
N1,548.28 billion in 2009.
UNITED BANK FOR AFRICA PLC
2010 ('000) 2009 ('000) CH.
However in 2010, the bank’s full year result was not as Turnover 185,186,0 00 246,725,0 00 -24.9 4%
impressive as the preceding year. Gross Earnings and Net Profit After Tax 598,0 00 2,375,0 00 -74.8 2%
PAT declined by 24.94 per cent and 74.82 per cent, Net Pofit Margin 0.3 2% 0.9 6% -66.4 5%
respectively. The Net Profit Margin and Shareholders’ Sharehold ers' Funds 179,4 26,0 00 186,8 29,0 00 -3.9 6%
funds also dipped by 66.45% and 3.96%, respectively.
Total Assets 1,6 17,6 96,0 00 1,548,2 81,0 00 4.4 8%
Dividend yield was also below a full integer as it stood
ROSH 0.3 3% 2.54%
at 0.85%.
ROA 0.0 4% 0.3 1%
Our technical analysis shows that the 100-day MA is UNITED BANK FOR AFRICA
slightly above the 200 day MA. This indicates that the
Valuation Weight Estimated Value
stock is attractive for long term investment. The one-
year Standard Deviation of the stock price stood at Earnings Basis 10 10.71
2.88%. The graph of the stock price against the NSE ASI Forward Earnings Basis 30 5.80
at the top right corner also show that stock is currently
Dividend Basis 30 12.40
below the signal line, and it seems that the price may
Price to Book Basis 30 3.99
witness an upward movement in the next couple of trad-
ing sessions. Estimated Fair Value 100 7.73
The fair price is skewed towards the Historical Divi-
The stock’s expected one-year return estimated with the dend Model. The fair value derived by the weighted
Capital Asset Pricing Model (CAPM) is 18.37% and the average of our valuation models is N7.73 per share.
stock is more volatile that the NSE with a beta of 1.43. UBA is trading at a discount of 14.35%, at the current
This shows that UBA is attractive for long term invest- market price of N6.76. Therefore, we are upgrading
ment. our recommendation on the stock to BUY. Also, we
expect the stock to trend towards AMCON’s transfer
price of N14.78. This represents 118.66% discount at
the current market price.

6
Greenwich Stock Recommendations May 9 - 13, 2011

OANDO PLC
NSE All-Share Index Vs OANDO- Jan '10 - Date
Oando Plc (formerly Unipetrol Nigeria Plc) is the second 200.00
largest oil marketing company by revenue in Nigeria.
The Company is an integrated energy solutions provider 150.00
as it operations scale across gas, international supply,
100.00
trading and energy services to its petroleum marketing
business. The Company is currently incubating explora- 50.00
tion, production and power initiatives. R² = 0.5268
0.00
The Group has strategic investments in a range of en- 4-Jan-10 4-Jul-10 4-Jan-11
ergy companies across West Africa, and it is envisioned NSE Rebased Oando Rebased
Poly. (Oando Rebased)
to become a leader in the African energy sector, deliver-
ing world-class services across the African continent. The
company has an upgraded terminal operations, massive OANDO PLC
modernization and large number of trucking fleet, signifi- Current Price 53.60
cant pump deployment and forecourt improvement, Year High 78.97
across the country.
Year Low 56.60
Oando is the first Nigerian company to accomplish a
EPS 6.35
cross-border listing on the Johannesburg Stock Exchange P/E Ratio 8.44
(JSE) in South Africa. Oando’s drive into the refinery Outstanding Shares 2,262,711,569
business provides an advantage for further improving Dividend Yield 5.60%
and sustaining earnings growth over the medium-term.
Profit After Tax '000 (Full Year) 14,374,000
The Company commenced the execution of its long-term Year End December
strategy with a Rights Issue of 301,694,876 Ordinary OANDO PLC
Shares of N0.50k each at N70 per share to rank pari 20 10 ('0 00 ) 2 00 9 ('0 00 ) CH.
passu with the existing share capital of the company. Turnover 378,930,0 00 336,859,000 12.49%
Net Profit After Tax 14,374,0 00 10,096,000 42.37%
The Company’s audited result for the financial year 2010 Net Profit Margin 3.79% 3.00% 26.57%
showed that the company increased its Profit After Tax Shareholders' Funds
(PAT) by 42.37 per cent to N14.37 billion, compared to Net Assets 95,004,000 53,319,000 78.18%
N10.10 billion recorded in the corresponding period in ROSH
2009. Turnover for the year also grew by 12.49 per cent RONA 19.3 8% 9.3 5%
from N336.86 billion in 2009 to N378.93 billion in 2010.
The Board of Directors of the company proposed a divi- OANDO PLC
dend of N3.00k and a bonus of one ordinary share for Valuation Weight Estimated Value
every four held as at 29th of April 2011. The dividend
Earnings Basis 30 43.05
yield stood at 5.60% at the current price of N53.60.
Forward Earnings Basis 10 62.48
The technical analysis of Oando indicates that the stock
Dividend Basis 30 76.90
has become more attractive for long term investors, as
the 100-day MA is trading above the 200-day MA. The Price to Book Basis 30 149.24
estimated one-year Standard Deviation of the stock price Estimated Fair Value 100 87.00
stood at 2.10%, from 2.18% recorded last week.
A final fair value of N87.00 using the company’s re-
cently released full year result and after adjustment
The stock has a relatively high long term return pros-
for bonus issue and dividend payment indicates that
pect, given the one year expected return of 15.15% esti-
Oando is trading at a discount of 62.31%. We there-
mated with the Capital Asset Pricing Model (CAPM).
fore maintain our recommendation on the stock as
BUY. However, the stock may likely rally to a price
of N101.14 in the medium term, depicting a discount
of 44.49% from its AMCON’s hurdle rate.

7
Greenwich Stock Recommendations May 9 - 13, 2011

ACCESS BANK PLC NSE All-Share Index Vs ACCESS- Jan '10 - Date
150.00
Access Bank operates through a network of 130 branches
located in all major commercial centers and cities across
100.00
Nigeria, and in eight other African countries, as it is
geared towards developing a world class retail banking R² = 0.0154
franchise in Nigeria. 50.00

The Bank has undergone a transformation process which 0.00

has positively impacted its every area of business and 4-Jan-10 4-Jul-10 4-Jan-11
propelled it into one of Nigeria's leading banks, with
Shareholders’ Funds in excess of N185billion, Assets and NSE Rebased Access Rebased Poly. (Access Rebased)

Contingents in excess of N850 billion, and a deposit base

A CC ESS BA NK PLC
in excess of N450 billion.
Current Price 8.30
The Bank is well positioned in a high growth market, with Year High 11.10
consistent growth in all key performance indicators over Year Low 8.14
the past 7 years. It acquired Capital Bank and Marina EPS 0.63
Bank during the 2005 Banking Reform and was one of
P/E Ratio 13.20
the first banks to completely integrate its operations with
the acquired banks. The Bank has an experienced and Outstanding Shares 17,888,251,479
aggressive management team, it operations are technol- Dividend Yield 3.61%
ogy driven and it has a high quality of branding and mar- Profit After Tax '000 (Full Year) 11,244,563
keting expertise.
Year End December
The Bank’s profitability index measured by Return on ACCESS BANK PLC
Asset (ROA) increased to 1.50% in 2010 from –0.82% in 2010 FY 2009 (9 M ONTHS) CH.
2009, and the Return on Equity (ROE) increased from – Turnover 91,142,0 64 84,980,554 7.25%
4.26% in 2009 to 6.54% in 2010. The Bank’s smoothed
annualized return using the 5-year compound annual Net Profit After Tax 11,244,563 (4,194,582) 368.07%
growth rate (CAGR) stood at 16.14% at the end of 2010. Net Pofit Margin 12.3 4% -4.94% 349.95%
Shareholders' Equity 175,370,457 168,346,048 4.17%
In the bank’s 2010 full year report, the bank’s gross Total Assets 804,823,772 693,783,938 16.00%
earnings increased by 7.25 per cent from N84.98 billion
in 2009 to N91.14 billion in 2010. The Profit After Tax ROSH 6.54% -4.26%
(PAT) also surged by 368 per cent from a loss of N4.19 ROA 1.50% -0.82%
billion recorded in 2009 due to provision for bad loans in
ACCESS BANK PLC
2009, to a profit of N11.24 billion in 2010. Total assets
increased by 16 per cent from N694 billion in 2009 to Valuation Weight Estimated Value
N805 billion in 2010. The bank declared a dividend per
Earnings Basis 10 13.61
share of N0.30k in the year ended December 2010, re-
cording a dividend yield of 3.75% at the current market Forward Earnings Basis 30 14.46
price of N8.01. The bank’s result for the first quarter of
Dividend Basis 30 14.30
2011 saw PAT stand at N4.17 billion, from N3.99 billion
recorded in the same period in 2010. Price to Book Basis 30 6.82
Estimated Fair Value 100 12.03
The return prospect of the stock estimated with the one-
year Capital Asset Pricing Model (CAPM) is 16.80%. This With the recently released full year report, the
shows that the stock has become more attractive for weighted average valuation of the stock is N12.03,
long term investment. Furthermore, the graph of the indicating that the stock is trading at a discount of
stock price against the NSE ASI at the top right corner 44.94% at the current market price of N8.30. We
shows that the stock price is currently trading below the therefore maintain our recommendation on Access
signal line. Thus a price rally may soon be witnessed.
Bank as LONG TERM BUY. Using AMCON’s valua-
tion methodology, the market price may likely oscil-
Technically, the stock seems to be attractive for short
term investors as the 5-day MA is approaching the 10- late around the proposed transfer price of N13.76,
day MA. The one year standard deviation of the stock indicating a 65.84% growth in the medium term.
declined to 2.64% from 2.67% recorded last week.

8
Greenwich Stock Recommendations May 9 - 13, 2011

NAHCO PLC NSE All-Share Index Vs NAHCO- Jan '10 - Date

NAHCO was incorporated on December 6, 1979 as a pri- 250.00

vate limited company and converted to a public limited 200.00

company on August 4, 2005. The company operates in 150.00
the Airline Services Sector, and is ranked as a top indus-
100.00
try player in the sector. R² = 0.1159
50.00

Despite the challenges faced in the business environ- 0.00

ment during the year under review, the company’s turn- 4-Jan-10 4-Jul-10 4-Jan-11

over increased from N3.66 billion the previous year to NSE Rebased NAHCO Rebased Po ly. ( NAHCO Rebased)

N4.43 billion in 2009. Profit After Tax increased signifi-

cantly by 36.10%, when compared to the same period in NAHCO PLC
2008, rising from N589 million to N802 million. Net Profit Current Price 9.20
Margin also rose from 16.11% to 18.12%. Year High 11.75
Year Low 8.84
However, the company’s profitability index measured by
Return on Average Equity (ROAE) decreased to 27.14%
EPS 1.01
in 2009 from 46.18% in 2008, and the Return on Aver- P/E Ratio 9.08
age Asset (ROAA) decreased from 16.96% in 2008 to Outstanding Shares 1,230,468,750
14.71% during the year under review. Meanwhile, the Dividend Yield 4.35%
company declared a dividend of N0.45k per share, an Profit After Tax '000 (Full Year) 1,247,334
increase of N0.15k, when compared to the previous Year End December
year’s dividend of N0.30k.
NAHCO PLC
In order to remain solidly afloat in the midst of the 2009 ('000) 2008 ('000) CH.
emerging competitions from new entrants into the avia- Turnover 4,430,0 35 3,661,2 75 21.00%
tion ground handling sector, the company has com-
Net Profit After Tax 802,9 10 589,9 50 36.10%
menced the process of diversifying its business, as a way
of creating alternative route of income generation and
Net Pofit Margin 18.12% 16.11% 12.48%
reducing dependence on ground handling income. Sharehold ers' Funds 4,2 16,984 1,6 99,636 148.11%
Total Assets 5,9 88,382 4,9 29,253 21.49%
Technically, the stock is attractive for long term invest- ROSH 27.14% 46.18%
ments, as the 100-day MA has crossed over and is now
trading above the 200-day MA.
ROA 14.71% 16.96%
NAHCO PLC
The Standard Deviation of the stock price reduced to
Valuation Weight Estimated Value
2.57%, from 2.64% recorded last week. This indicates
that the stock volatility decreased during the week. Earnings Basis 10 17.86
Forward Earnings Basis 20 24.02
Given that the one year return prospect of the stock, as
Dividend Basis 30 10.32
estimated with the Capital Asset Pricing Model (CAPM)
stood at 17.09%, the stock remains attractive for long Price to Book Basis 40 10.40
term investors. Estimated Fair Value 100 13.85

The graph of the stock price against the NSE ASI at the
top right corner shows that the price is slightly above the
signal line. This suggests that the stock may not be at-
tractive for speculative trading.
A weighted average of the valuation models gave a
final fair price of N13.85. This seems to indicate that
NAHCO Plc is undervalued by 50.54% at the current
market price of N9.20. We therefore maintain our
recommendation on the stock as LONG TERM BUY.
Also, we expect the stock to trend towards AMCON’s
transfer price of N15.16 in the medium term. This
represents 64.83% discount at the current market
price.

9
Greenwich Stock Recommendations May 9 - 13, 2011

UAC OF NIGERIA PLC NSE All-Share Index Vs UACN- Jan '10 - Date

UAC Nigeria Plc was incorporated on April 22, 1931, and 200.00

has since remained a foremost private enterprise in Ni-

150.00
geria.

100.00
The Company is built on integrity and high standards,
with diverse business portfolios in UACN Property Devel- R² = 0.444
50.00
opment Company Plc, Spring Waters Nigeria Plc, Grand
Cereals and Oil Mills Limited (GCOML) and Opticom 0.00
Leasing Company Limited. The Company also has inter- 4-Jan-10 4-Jul-10 4-Jan-11
ests in CAP Plc, UAC Registrars Limited and General Mo-
NSE Rebased UACN Rebased Poly. (UACN Rebased)
tors (GM) Nigeria Limited.
UAC OF NIGERIA PLC
In 2008, UAC was licensed by the National Pension Com-
Current Price 39.00
mission (PENCOM) to operate a Closed Pension Fund,
Year High 39.90
under the UNICO Closed Pension Fund Administrator
(CPFA) Limited. Year Low 31.35
EPS 2.51
The Company has a very strong financial base, and high P/E Ratio 15.53
capability to meet its obligations at all times. UAC oper- Outstanding Shares 1,600,720,323
ates with good cash flow, low leverage and adequate
Dividend Yield 2.82%
working capital, and is rated “Aa” by Augusto & Co., a
Profit After Tax '000 (Full Year) 4,019,127
Research and Business Information Company in Nigeria.
Year End December
Meanwhile, the Turnover in the audited result of the UAC OF NIGERIA PLC
Company for 2010 dropped by 7.40 per cent to N52.31 2010 ('000) 2009 ('000) CH.
billion. The profit after Tax and Net Profit Margin (NPM)
rose by 35.60 per cent and 46.44 per cent, respectively.
Turnover 52,313,0 00 56,495,000 -7.40%
The Total Assets and Shareholder’s fund also increased Net Profit After Tax 5,450,0 00 4,019,130 35.60%
by 8.80 per cent and 1.39 per cent, respectively. Net Pofit Margin 10.4 2% 7.11% 46.44%
Sharehold ers' Funds 45,587,000 44,9 63,740 1.39%
Despite the challenging business environment and de-
clining aggregate demand, which impacted negatively on
Total Assets 102,3 70,000 94,0 88,000 8.80%
the corporate earnings in 2010, the Directors of the ROSH 12.0 4% 17.8 8%
Company declared a dividend of N1.10k per share, and a ROA 5.55% 8.54%
bonus of one ordinary share for every four ordinary
shares held as at May 20, 2011. The dividend yield at UAC OF NIGERIA PLC
the current market price is2.82%. Valuation Weight Estimated Value

Our technical analysis shows that the 100-day MA is Earnings Basis 10 24.92
moving above the 200-day MA, indicating that the stock Forward Earnings Basis 30 27.66
may be suitable for long term investors.
Dividend Basis 30 42.46
The one year return prospect of the stock as estimated Price to Book Basis 30 78.60
with the Capital Asset Pricing Model (CAPM) is 15.77%.
The one-year Standard Deviation of the stock price re- Estimated Fair Value 100 47.11
duced to 2.41%, from 2.45% recorded last week, but A fair value derived by the weighted average of the
higher than the market’s 0.88%. valuation models was N47.11 per share, which indi-
cates that UACN is trading at a significant discount
of 20.79%. We therefore maintain our recommenda-
tion on the stock as LONG TERM BUY. Also, we
expect market vagaries to push the stock price to
N63.01, representing 61.57% discount from AM-
CON’s transfer price.

10
Greenwich Stock Recommendations May 9 - 13, 2011

PZ CUSSONS PLC NSE All-Share Index Vs PZ - Jan '10 - Date

180.00
PZ Industries is a well-diversified company With over
160.00
100 years' experience of trading in Africa and vast 140.00
knowledge of local markets including the consumer base 120.00
100.00
it developed over time, which has resulted in a strong
80.00 R² = 0.6598
portfolio of local brands. 60.00
40.00
20.00
The Company operates across a large scale of industries
0.00
including the manufacturing and sale of consumer prod-
4-Jan-10 4-Jul-10 4-Jan-11
ucts, electronic appliances and the wholesale distribution
NSE Reb ased PZ Reb ased P o ly. ( P Z Reb ased )
of general merchandise.
PZ CUSSONS NIGERIA PLC
Its consumer products line includes such items as soaps,
detergents, cosmetics, pharmaceuticals and confection- Current Price 32.45
ery items. The company's electronic products include Year High 33.60
refrigerators, freezers, air conditioners and plastic con- Year Low 30.00
tainers. EPS 1.68
P/E Ratio 19.34
PZ Cussons operates in selected markets that have the Outstanding Shares 3,176,381,636
potential for future growth, both in mature and emerging Dividend Yield 2.65%
markets all over Africa, Asia and Europe. Profit After Tax '000 (Full Year) 5,330,900
Year End May
To enable it deliver developed leading brands quickly
and efficiently for the markets, the company has created PZ CUSSONS NIGERIA PLC
a world class supply chain networks with a great team of 2010 ('000) 2009 ('000) CH.
people who are aligned with the company’s values and Turnover 185,751,0 90 166,960,0 20 11.2 5%
drive plans for growth.
Net Profit After Tax 15,3 34,8 20 10,592,500 44.77%
The Company’s audited result for the May 2010 shows Net Pofit Margin 8.2 6% 6.3 4% 30.13%
that the Turnover increased by 11.25% from N166.96 Sharehold ers' Funds 114,8 15,8 20 107,537,8 20 6.77%
billion in 2009 to N185.75 billion in 2010. Profit after Tax
Total Assets 190,6 85,3 10 180,217,9 00 5.8 1%
increased by 44.77% from N10.59 billion in 2009 to
N5.33 billion in 2010. The board of directors recom- ROSH 13.79% 19.70%
mended a dividend of 86k per Share. ROA 8.2 7% 11.76%
PZ CUSSONS NIGERIA PLC
In the company’s recently Q3 result, Turnover increased
by 1.79% from N44.15 billion in 2010 to N44.95 billion Valuation Weight Estimated Value
in 2011. Profit after Tax increased by 5.70% from N3.68 10 27.21
Earnings Basis
billion in 2010 to N3.89 billion in 2011.
Forward Earnings Basis 30 42.19
The one-year standard deviation of the stock price is Dividend Basis 30 40.82
2.38% YTD, which is significantly higher than the mar- 30 36.20
Price to Book Basis
ket’s 0.99%. The beta of the stock is 0.64, and the
CAPM one year expected return of the stock is 12.25%. Estimated Fair Value 100 38.48
This indicates that the stock is attractive for long term A final fair value derived by the weighted average of
investment. the valuation models was N38.48 per share, indicat-
ing a discount of 18.58% from the market price of
Our technical analysis shows that the 100-day MA N32.45. We therefore revise our recommendation on
moved above the 200 day MA, indicating a “buy” sig- the stock to BUY. We also expect the share price to
nal for long term investment. oscillate around N52.25 in the medium term, repre-
senting 61.02% from AMCON’s transfer price.

11
Greenwich Stock Recommendations May 9 - 13, 2011

GTBANK PLC NSE All-Share Index Vs GUARANTY- Jan '10 - Date

200.00
Guaranty Trust Bank Plc has built up an impressive cor-
porate image for itself as a strong growth, customer 150.00
friendly, dependable and high performance institution.
The Bank is associated with high levels of professional- 100.00
ism and has a reputation for high quality service deliv- R² = 0.0843
ery. Growing at a strong pace over the years, it has es- 50.00

tablished itself among the most efficient and profitable

0.00
banks in the industry.
4-Jan-10 4-Jul-10 4-Jan-11

NSE Rebased Guaranty Rebased Poly. (Guaranty Rebased)

In 2006/2007 financial year, the Bank received a credit
line of $40million from African Development Bank, taking Current Price 16.25
total investments by international finance institutions in Year High 20.50
the Bank to over $400million. Also in the same period,
Year Low 18.26
the Bank signed an asset management joint venture
agreement with Morgan Stanley Investment Management
EPS 1.30
to meet part of the requirements for managing portions P/E Ratio 12.49
of Nigeria’s external reserves. Outstanding Shares 29,146,482,209
Dividend Yield 6.15%
The Bank floated a $350million Eurobond issue which
Profit After Tax '000 (Full Year) 37,916,000
recorded a substantial oversubscription. The issue has
been listed on the London Stock Exchange. Similarly, the Year End December
Bank raised $750m to fund its growth programmes, GUARANTY TRUST BANK PLC
$500m from international investors by selling Global De-
Dec. 2010 ('000) Dec. 2009 ('000) CH.
positary Receipts (GDR) and the rest from Nigerians. The
GDR, which was fully subscribed has also been listed on Turnover 153,9 08,0 00 162,550,4 18 -5.32%
the London Stock Exchange. Net Profit After Tax 37,916,0 00 23,6 86,843 60.07%
Net Pofit Margin 24.6 4% 14.57% 69.06%
The Bank recently released full year result indicated that
its gross earnings declined by 5.32 per cent from Sharehold ers' Funds 210,8 26,000 192,2 45,928 9.66%
N162.55 billion in 2009 to N153.91 billion in 2010. How- Total Assets 1,152,0 02,000 1,0 06,503,718 14.46%
ever, Profit After Tax (PAT) increased by 60.07 per cent
from N23.69 billion in 2009 to N37.92 billion in 2010.
ROSH 18.8 1% 13.32%
The bank’s result for the first quarter of 2011 saw PAT ROA 3.51% 2.72%
stand at an impressive figure of N16.22 billion, from
GUARANTY TRUST BANK PLC
N10.71 billion recorded in the same period in 2010.
Valuation Weight Estimated Value
At the current market price of N16.25, our technical 10 26.67
Income C apitalization Model
analysis using Moving Averages (MAs) indicates that the
stock is becoming more attractive for short and long Earnings Model 20 32.16
term investors, as the 5-day and 100-day trend lines are Discounted Cashflow (DC F) 20 14.58
above the 10-day and 200-day line, respectively. The
one-year Standard Deviation of the stock price decreased Dividend Model 30 28.52
to 2.43% from 2.46% recorded in the previous week. Price to Book Basis 20 5.37

From the graph of the stock price against the NSE ASI at
the top right corner, the price line appears to be below
the trend line. This suggests that the stock price may
rally in the next couple of trading days.
The beta of the stock is 1.07, and the long term return
prospect of the stock estimated using the Capital Asset
Pricing Model (CAPM) is 17.18%, signifying long term
return prospects for this stock.
Estimated Fair Value 100 21.64
GTBank is currently trading at a discount of 33.17%,
at the current market price of N16.25. The price
trend which has been relatively stable may rise, as
the price has been adjusted for the recent corporate
actions. We therefore our BUY recommendation on
the stock. Meanwhile, we expect market vagaries to
push the stock price to N25.44, representing a dis-
count of 56.53% from AMCON’s transfer price.

12
Greenwich Stock Recommendations May 9 - 13, 2011

FIDELITY BANK PLC NSE All-Share Index Vs FIDELITYBK - Jan '10 -

150.00 Date
The current enlarged Fidelity Bank was a result of the
merger with the former FSB International Bank Plc and
Manny Bank Plc (under the Fidelity brand name) in 100.00
December 2005 during the consolidation era. The R² = 0.1264
Bank is ranked amongst the top 10 in the Nigerian 50.00
banking industry, with presence in the major cities
and commercial centers of the country. 0.00
4-Jan-10 4-Jul-10 4-Jan-11
Fidelity Bank has partnership with various off-shore NSE Rebased Fidelityb k Rebased
P oly. (Fid elit ybk Reb ased)
institutions, such as ANZ London, Afri-eximbank Cairo,
Egypt, ABSA South Africa, Commerce Bank, Frankfurt, FIDELITY BANK PLC
Citibank, N.A. London and New York, FBN Bank, UK Current Price 2.66
Ltd, SCB, London, HSBC, US Ex-im Bank, USAID, etc. Year High 3.20
The Bank has international access to correspondent Year Low 2.63
banking, confirmation lines, credit and other relation-
EPS 0.21
ships with these multinationals and international finan-
P/E Ratio 12.62
cial organizations.
Outstanding Shares 28,974,797,023
The Bank has an experienced and stable management Dividend Yield 5.26%
team, reputed for integrity and professionalism. The Profit After Tax '000 (Full Year) 6,105,000
Bank, having operated as an investment bank for 11 Year End December
years, has a leverage on its pedigree in its structures FIDELITY BANK PLC
and service offerings for a retail populace.
2010 ('000) 2009 ('000) CH.
The Bank’s Q3 result ended September 30, 2010 indi- Turnover 56,048,000 34,716,000 61.45%
cated a turnover decline of 31.51 per cent, but Profit Net Profit After Tax 6,105,000 1,557,000 292.10%
After Tax increased by 5.97 per cent. However, Net
Net Pofit Margin 10.89% 4.48% 142.87%
Profit Margin (NPM) declined from 18.83% to 6.93%.
Sharehold ers' Funds 136,052,000 130,691,000 4.10%
The audited result of the Bank for the year ended De- Total Assets 481,614,000 435,666,000 10.55%
cember 31, 2010 showed a turnover of N56.05 billion, ROSH 4.58% 1.94%
as against N34.72 billion in the previous year, indicat-
ing a growth of 61.45 per cent. Profit After Tax surged
ROA 1.33% 0.48%
by 292.10 per cent from N1.56 billion in 2009 to FIDELITY BANK PLC
N6.11 billion in 2010.
Valuation Weight Estimated Value
Our technical analysis seems to indicate that the stock Earnings Basis 10 3.71
price trend strengthened in the week under review, as
Forward Earnings Basis 30 2.89
the 100-day MA is now above the 200-day MA, which
suggests that the stock is attractive for long term in- Dividend Basis 30 3.90
vestment. The graph of the stock price against the Price to Book Basis 30 3.25
NSE ASI at the top right corner also show that stock is
currently below the signal line, and it seems that the Estimated Fair Value 100 3.38
price may witness an upward movement in the next All our fundamental valuation models, excluding
couple of trading sessions. the dividend discount model indicates that the
stock is underpriced. We therefore maintain a
The one year Standard Deviation of the stock price BUY recommendation on Fidelity Bank Plc. The
reduced to 2.62%, from 2.67% recorded last week. stock may likely rally to a price of N3.89 in the
The expected one year Return of the stock as esti- short to medium term, depicting a discount of
mated with the Capital Asset Pricing Model (CAPM) is 46.40% from AMCON’s hurdle rate.
16.50%.

13
Greenwich Stock Recommendations May 9 - 13, 2011

NIGERIAN BOTTLING COMPANY PLC

NSE All-Share Index Vs NBC - Jan '10 - Date
The Nigerian Bottling Company Plc (NBC) was incorpo- 200.00
rated in November 1951, as a subsidiary of A.G. Leventis
150.00
Group with the franchise to bottle and sell Coca-Cola
products in Nigeria. 100.00
R² = 0.5214
50.00
Since production began in 1953 at a bottling facility in
Ebute-Metta, Lagos, production capacity has grown over 0.00
the years and it presently has 13 bottling facilities and
4-Jan-10 4-Jul-10 4-Jan-11
over 80 distribution warehouses located across the coun- NSE Reb ased NBC Rebased
P oly. (NBC Reb ased )
try.
NIGERIA N BOTTLIN G C OM PA NY PLC
NBC Plc is currently the largest bottler of non-alcoholic Current Price 36.99
beverages in the country and the second largest market Year High 41.89
in Africa in terms of sales volume, with about 1.8 billion Year Low 35.03
bottles sold per year. EPS 2.42
P/E Ratio 15.26
The company is part of the Coca-Cola Hellenic Bottling Outstanding Shares 1,308,733,859
company (CCHBC), one of The Coca-Cola Company’s Dividend Yield 1.35%
largest anchor bottlers worldwide, which currently oper-
Profit After Tax '000 (Full Year) 3,172,264
ates in 28 countries, serving 540 million consumers and
Year End December
selling over 1.3 billion unit cases of beverage annually.
NIGERIAN BOTTLING COM PANY PLC
Despite the challenging business environment in 2009, 2009 ('000) 2008 ('000) CH.
NBC recorded a growth of 12.63 per cent in its turnover, Turnover 90,195,9 81 80,0 80,688 12.63%
when compared to the previous year and total assets
Net Profit After Tax 2,888,109 2,181,6 95 32.38%
increased by 27.61 per cent to 66.37 billion in 2009
while the Profit After Tax (PAT) increased by 32.38 per
Net Pofit Margin 3.2 0% 2.72% 17.53%
cent. Sharehold ers' Funds 29,781,064 21,8 59,966 36.24%
Total Assets 66,3 72,694 52,0 13,209 27.6 1%
The Nigerian Bottling Company has informed the Nige- ROSH 11.19% 19.96%
rian Stock Exchange (NSE) of a proposed scheme of ar- ROA 4.8 8% 8.39%
rangement between the company and its members to
cancel part of its share capital, such that the company NIGERIAN BOTTLING COMPANY PLC
would become a wholly owned subsidiary of Coca-Cola Valuation Weight Estimated Value
Hellenic Bottling Company SA. Consequently, the Com-
Earnings Basis 10 34.71
pany’s shares would be delisted from the NSE Daily Offi-
cial List, and a cash compensation of N43.00 (Forty-three Forward Earnings Basis 20 16.07
Naira Only) per share would be paid to shareholders for Dividend Basis 30 41.70
cancellation of the Shares of the company owned by the
Price to Book Basis 40 73.82
minority shareholders.
Estimated Fair Value 100 48.72
The beta of the stock price stood at 0.50. The year-to- The stock is 31.71% undervalued at the current
date Standard Deviation of the stock price is 2.27%, market price of N36.99, as the weighted average of
which is significantly higher than the market’s 0.88%. all the valuation metrics produced a final fair price of
Given that the one year return prospect of the stock, as N48.72. The fair value notwithstanding, we expect
estimated with the Capital Asset Pricing Model (CAPM) is the market price to oscillate around the proposed
15.24%, the stock is relatively attractive for long term transfer price of N43.00 per share as cash compen-
investment. sation to minority shareholders, which is 16.25%
return from the current market price. The final value
is tilted significantly towards the Price to Book
Model. We therefore recommend the stock as HOLD.

14
Greenwich Stock Recommendations May 9 - 13, 2011

FIRST BANK OF NIGERIA PLC NSE All-Share Index Vs FIRSTBANK- Jan '10 - Date

150.00
First Bank of Nigeria Plc (FBN) offers commercial banking
services and a variety of other financial services through
100.00
its subsidiaries, which include FBN Capital Limited, FBN
Mortgages Limited, First Funds Limited, First Trustees R² = 0.2866
50.00
Limited, First Pension Custodian Limited, First Registrars
Nigeria Limited, FBN Insurance Brokers Limited and FBN
0.00
Bank (UK) Limited.
4-Jan-10 4-Jul-10 4-Jan-11

It currently operates through 536 branches in Nigeria.

NSE Rebased Firstbank Rebased Poly. (Firstbank Rebased)
The branch network which cuts across all parts of Nige-
ria, gives the bank access to large market share, and FIRST BAN K OF NIGERIA PLC
cheap funds. Current Price 13.86
Year High 16.12
The Bank has been in existence for about 115 years and
over the years, it has maintained a strong brand name, Year Low 12.82
solid capital base and high market share. It’s experi- EPS 1.02
enced, dynamic and competent management team, as P/E Ratio 13.54
well as its consistent dividend and bonus policy has
Outstanding Shares 32,632,084,358
made it possible for the bank to distinguish itself as the
leading financial institution and a major contributor to Dividend Yield 4.33%
the economic advancement and development in Nigeria. Profit After Tax '000 (Full Year) 33,411,000
Year End December
First Bank has international presence through its subsidi-
FIRST BANK OF NIGERIA PLC
ary FBN Bank (UK) in London and Paris. It also has of-
fices in Johannesburg and Beijing. The Bank is quoted on 2010 ('000) 2009 ('000) CH.
the Nigerian Stock Exchange and currently has an Turnover 230,6 06,0 00 218,287,0 00 5.6 4%
unlisted Global Depository Receipt (GDR) Programme. Net Profit After Tax 33,4 11,0 00 12,569,0 00 165.8 2%
Net Pofit Margin 14.4 9% 5.76% 151.6 2%
The beta of the stock stood at 1.24 in the week under
review, as the stock experienced reduced volatility, given
Sharehold ers' Funds 340,6 26,0 00 337,4 05,0 00 0.9 5%
that the one-year Standard Deviation of the stock price Total Assets 2,3 05,2 58,0 00 2,009,9 14,0 00 14.6 9%
decreased to 2.22%, compared to 2.38% recorded last ROSH 9.8 6% 5.9 7%
week. ROA 1.55% 0.8 6%
FIRST BANK OF NIGERIA PLC
In the bank’s 2010 Full Year Report, gross earnings rose
by 5.64 per cent from N218.29 billion in 2009 to Valuation Weight Estimated Value
N230.61 billion in 2010. The Profit After Tax (PAT) stood Earnings Basis 10 15.36
at N33.41 billion at the end of 2010, as against N12.57
Forward Earnings Basis 30 38.18
billion recorded in 2009. The bank’s result for the first
Dividend Basis 30 18.09
quarter of 2011 saw PAT grow to N12.60 billion, from
N12.34 billion recorded in the same period in 2010. Price to Book Basis 30 7.16
Estimated Fair Value 100 20.56
Our technical analysis shows that the stock price is at-
We maintain our recommendation on First Bank as
tractive for long term investment, as the 100-day MA is
BUY, given an estimated weighted average final fair
slightly above the 200-day MA. The graph of the stock
price of N20.56 derived from all the valuation models.
price against the NSE ASI at the top right corner shows
The fair value has been upgraded based on the com-
the stock price is currently below the signal line and may
pany’s recently released first quarter 2011 result.
experience an upward rally in the next couple of days.
This indicates that First Bank of Nigeria Plc is under-
valued by 48.34%. We also expect the share price to
The stock is also attractive for long term investment,
gravitate towards AMCON’s proposed transfer price of
given an expected one year return of 17.75% as esti-
N19.88 in the medium term.
mated with the Capital Asset Pricing Model (CAPM).

15
Greenwich Stock Recommendations May 9 - 13, 2011

ZENITH BANK PLC

NSE All-Share Index Vs ZENITHBANK- Jan '10 -
The bank’s business location strategy and infrastructure 150.00 Date
deployment show its commitment to customer enthusi-
asm at all times, in all business offices across Nigeria. 100.00
R² = 0.2987

The uniqueness of the Bank’s brand of financial services 50.00

has actually made it one of the choices in banking, to
most multinational companies in Nigeria, and this ac-
0.00
counted for its wide customer base.
4-Jan-10NSE Rebased 4-Jul-10 4-Jan-11
Zenithbank Rebased
Poly. (Zenithbank Rebased)
As part of its vision to become a global leader in the in-
dustry, the Bank carries out its operations through a
ZENITH BANK PLC
number of subsidiaries, namely; Zenith General Insur- Current Price 15.31
ance Company Limited, Zenith Securities Limited, Zenith Year High 16.70
Registrars Limited, Zenith Bank Ghana Limited, Zenith Year Low 13.90
Pension Limited, Zenith Bank (UK) Limited, Zenith Trust EPS 1.19
Limited and Zenith Medicare Limited to offer a wide P/E Ratio 12.85
range of financial services.
Outstanding Shares 31,396,493,790
Zenith Bank’s growth and performance has continued to Dividend Yield 5.55%
earn excellent ratings from both local and international Profit After Tax '000 (Full Year) 37,414,000
rating agencies. The Bank was rated Aaa in Nigeria con- Year End December
secutively for six (6) years by Agusto & Co. Ltd. The ZENITH BANK PLC
bank has consistently recorded impressive performance
2010 ('000) 2009 ('000) CH.
on several parameters and this demonstrates the rising
customer patronage and an excellent approval and en- Turnover 192,488,0 00 277,3 00,000 -30.58%
dorsement all over the world. Net Profit After Tax 37,414,0 00 20,6 03,000 81.59%
Net Pofit Margin 19.4 4% 7.43% 161.6 1%
The bank’s Turnover declined by 30.58 per cent from Sharehold ers' Funds 363,561,000 337,793,000 7.63%
N277 billion recorded in 2009 to N192 billion in 2010.
Total Assets 1,8 95,027 1,659,703,000 -99.89%
However, Profit After Tax (PAT) increased by 81.59 per
cent from N20.60 billion in 2009 to N37.41 billion in ROSH 10.6 7% 12.20%
2010. The bank declared a dividend per share of N0.85k. ROA 4.50% 2.48%
The bank’s result for the first quarter of 2011 saw PAT ZENITH BANK PLC
stand at N15.07 billion, from N9.51 billion recorded in
Valuation Weight Estimated Value
the same period in 2010.
Earnings Basis 10 18.41
Our technical analysis seems to indicate that the stock is Forward Earnings Basis 30 34.84
attractive for long and short term investors as the 200- Dividend Basis 30 19.10
day MA is below the 100-day MA, just as the 5-day MA is
Price to Book Basis 30 7.93
above the 10-day MA, respectively. The graph of the
stock price against the NSE ASI at the top right corner Estimated Fair Value 100 20.40
also show that the stock is currently below the signal
A weighted average of all the valuation metrics pro-
line, and it seems that the price may witness an upward
duced a reviewed final fair price of N20.40, using the
movement in the next couple of trading sessions.
recently released full year results. This indicates that
the stock is 33.25% undervalued at the current mar-
The beta of the stock price is 1.05 and one-year Stan-
ket price of N15.31. We therefore maintain our rec-
dard Deviation is 2.45%, a decline from 2.49% recorded
ommendation on Zenith Bank as LONG TERM BUY.
the previous week. The expected one year return of the
In the medium term, the market price is likely to
stock as estimated with the Capital Asset Pricing Model
oscillate around the proposed transfer price of
(CAPM) is 17.09%.
N21.63 using AMCON’s methodology. This repre-
sents a discount of 41.29% from the current price.

16
Greenwich Stock Recommendations May 9 - 13, 2011

ASHAKA CEMENT PLC NSE All-Share Index Vs Flourmill- Jan '10 - Date
300.00
Ashaka Cement Plc (Ashakacem) became a subsidiary of
250.00
Lafarge Group, the world leader in building materials in
200.00
July 2001 after the acquisition of Blue Circle Industries
150.00
Plc. The company’s principal activities are the manufac-
100.00
turing and marketing of cement products. The company
R² = 0.655
has maintained a reputation of consistent dividend and 50.00

bonus history. Consequently, investors’ expectation of 0.00

4-Jan-10 4-Jul-10 4-Jan-11
bounty returns at the end of their financial year will trig-
ger the demand for the stock. NSE Rebased
Poly. (Flourmill Rebased)
Flourmill Rebased
Poly. (Flourmill Rebased)

ASHAKA CEM ENT PLC

The company believes that ongoing advances in building
materials must integrate respect for people, their differ-
Current Price 25.95
ent needs and their environment. This strong conviction Year High 30.00
is reflected in a strategy that combines industrial know- Year Low 24.00
how with performance, value creation, respect for em- EPS 1.34
ployees & local cultures, environmental protection and P/E Ratio 19.35
conservation of natural resources & energy. Outstanding Shares 2,239,453,125
Dividend Yield 1.16%
The company’s full year result ended December 31, Profit After Tax '000 (Full Year) 3,004,000
2010, shows that turnover increased by 11.40 per cent Year End December
from N17.19 billion in 2009 to N19.15 billion in 2010.
ASHAKA CEM ENT PLC
Profit After Tax (PAT) surged by 218.35 per cent from
N943.62 million to N3.00 billion when compared to the 2010 ('000) 2009 ('000) CH.
same period in the preceding year. Net Profit Margin Turnover 19,153,0 00 17,193,000 11.40%
(NPM) also increased from 5.49 per cent in the corre- Net Profit After Tax 3,004,0 00 943,6 18 218.35%
sponding period of 2009 to 15.68 per cent in the 2010, Net Pofit Margin 15.6 8% 5.49% 185.77%
indicating an increase of 185.61 per cent.
Sharehold ers' Funds 16,146,000 13,141,000 22.87%
The increase in earnings has been attributed to the rise
Total Assets 28,123,249 25,6 18,025 9.78%
in cement prices during the financial year as a result of ROSH 20.51% 14.36%
increased public projects in terms of infrastructural de- ROA 11.18% 7.3 7%
velopment. It was also noted that the impact of the
global financial crisis, which crippled the economy in
ASHAKA CEMENT PLC
2008 is beginning to ease. Valuation Weight Estimated Value
Earnings Basis 10 11.84
Meanwhile, the strength of the Company resides in its
ownership of a completed power project for production, Forward Earnings Basis 20 16.87
the advantage it derives from the technical alliance with Dividend Basis 30 43.55
other leading companies in the sector, its domineering
Price to Book Basis 40 23.79
status in some regions of the country, and its capability
to expand and take advantage of emerging opportuni- Estimated Fair Value 100 27.14
ties. A weighted average of all the valuation metrics pro-
duced a final fair price of N27.14. This indicates that
Our technical analysis shows that the 100-day MA is cur- the stock is currently trading at a discount of 4.59%
rently above the 200-day MA, just as the 5-day MA is at the current market price of N25.95. We therefore
above the 10-day MA, indicating a “buy” signal. The review our recommendation on the stock to HOLD.
stock is more volatile as the market, given a beta of
In the short to medium term, the market price is
1.03. The one-year Standard Deviation of 2.92%, which
likely to oscillate around the proposed transfer
is significantly higher than the market’s 0.88%. Long
price of N36.74, using AMCON’s valuation methodol-
term return prospect of the stock estimated with the
ogy, resulting to a growth of 41.60%.
Capital Asset Pricing Model (CAPM) is 17.04%.

17
Greenwich Stock Recommendations May 9 - 13, 2011

DANGOTE SUGAR REFINERY PLC NSE All-Share Index Vs DANGSUGAR - Jan '10 -
Dangote Sugar Refinery (DSR) operates in two key busi- 150.00 Date
ness areas which include: Refining Process and Market-
ing & Distribution. A total of 10 billion shares of N0.50 100.00
were listed on the 8th of March 2007. The company
R² = 0.6131
whose offer was 139.5% over subscribed, returned over 50.00
N20 billion, with 10% per annum interest to investors
whose application were invalid. 0.00
4-Jan-10 4-Jul-10 4-Jan-11
NSE Rebased Dan gsu gar Reb ased
The company intends to diversify into the upstream seg- P oly. (Dangsugar Rebased)

ment of the sugar business by acquiring and developing D AN GOT E SU GAR R EFIN ER Y PLC
Savannah Sugar Company Limited (SSCL), a subsidiary Current Price 13.30
of Dangote Industries Limited (DIL), to create synergies Year High 16.20
and increase overall capacity. SSCL currently produces Year Low 11.80
white sugar from own grown sugarcane. EPS 0.94
P/E Ratio 14.15
On successful combination, the potential synergies be- Outstanding Shares 12,000,000,000
tween DSR and its intended merger partner, SSCL, will
Dividend Yield 4.51%
see it become a formidable institution within the Sugar
Profit After Tax '000 (Full Year) 11,282,000
industry in Nigeria and beyond. The company expanded
Year End December
its production capacity by 75% in the first quarter of
2008, through the production of 2.55 million metric
DANGOTE SUGAR REFINERY PLC
tones per annum from 1.44 million metric tones. 2010 ('000) 2009 ('000) CH.
Turnover 89,9 80,0 00 82,3 95,000 9.2 1%
DSR has always relied mainly on retained earnings to Net Profit After Tax 11,2 82,0 00 13,185,000 -14.43%
support its growth in the past, and this strategy ac- Net Pofit Margin 12.54% 16.00% -21.65%
counted for the non-payment of dividend for some years.
Sharehold ers' Funds 40,8 95,000 41,6 12,000 -1.72%
This has helped the company to maintain consistent
Total Assets 62,2 91,340 77,562,125 -19.69%
growth.
ROSH 27.3 5% 39.03%
Meanwhile, the Board of Directors of the company that ROA 16.13% 20.6 5%
earlier promised quarterly dividend in 2009, resolved to DANGOTE SUGAR REFINERY PLC
change the quarterly dividend policy of the company as a
Valuation Weight Estimated Value
result of difficulty in the payment process, and failure of
the policy to impact noticeably on the market valuation Earnings Basis 10 17.35
of the shares of the company. Forward Earnings Basis 20 8.75
Dividend Basis 30 20.62
The graph of the stock price against the NSE ASI at the
Price to Book Basis 40 10.79
top right corner shows that the stock has crossed the
signal line from below, and it seems that the price may Estimated Fair Value 100 13.99
slightly reverse downwards. The one year return pros- The fundamental value of DSR is tilted towards the
pect of the stock as estimated with the Capital Asset Earnings Metric, as the weighted average of all the
Pricing Model (CAPM) is 17.12%. valuation metrics produced a final fair price of
N13.99. This indicates that the stock is trading at a
discount of 5.19%. Therefore, we recommend the
stock as HOLD. From the technical viewpoint, we
expect the share price to trend towards AMCON’s
hurdle price of N26.28 in the short to medium term,
representing a discount of 97.59%.

18
Greenwich Stock Recommendations May 9 - 13, 2011

APPENDIX

DEFINITION OF TECHNICAL ANALYTICS TERMS

Moving Average - MA
This is an indicator frequently used to measure momentum and to define areas of possible support
and resistance. It shows the average value of a security's price over a set period. Moving averages
are used to emphasize the direction of a trend and to smooth out price and volume fluctuations
that can confuse interpretation.

IMPORTANT DISCLOSURES

Information Source
The data used in this report were sourced from the audited accounts of the companies for their
various financial year ends. Other sources included the Central Bank of Nigeria (CBN) monthly re-
ports, the Nigerian Stock Exchange (NSE) Price List, Greenwich Research Database, and National
dailies.

Valuation Models and Methodology Applied in this Report

The equity analysis was conducted using a combination of valuation models, namely: Earnings
(Historical), Forecasted Earnings, Dividends Basis, and Price to Book Basis. A weighted average of
all these valuation methods was taken as the final estimated fair value of the stock. The weights
applied were based on our perceived applicability of the models to the different sectors of the Nige-
rian economy.

The forecasted earnings were derived using CAGR as a forecast factor over a period of time. The
most recent profit after tax, which was used as the base, was forecasted five years into the future
and the average of these five years was taken as the normalized earnings in the forecasted valua-
tion model after discounting for present value equivalent. A five year time horizon was used in
most cases in order to smoothen the returns as much as possible, so as to generate a realistic re-
turns. Despite the five year forecast horizon, adjustments were still made where estimates seemed
unrealistic. Good judgment and objectivity were displayed in deriving the estimates.

CAPM, which is the Capital Asset Pricing Model, was used in this report to derive the expected in-
vestment returns for one year investment timeframe. Note that this is an expectation and that re-
turns may be significantly higher or the expected returns may be achieved over a time period
much less than one year. The risk-free rate of return was the current yield on the 20-year FGN
Bond recently issued with a coupon rate of 10%, while market return is the weighted average of
the sector returns on the Nigerian Stock Exchange. The betas of the stocks were calculated using
market data covering 36 months.

The price forecasts in the Report are for time horizon between 5 to 10 trading sessions. However,
the forecasts may be achieved in a period less than 5 trading sessions. The forecast was based on
an average of the CAGR for a 10-day trading period and the daily average growth rate of the stock
price for the corresponding period. Good judgment was exercised in determining the current mar-
ket trend and adjustments were made when we felt that the observed trend might not be attain-
able for the forecast horizon.

19
Greenwich Stock Recommendations May 9 - 13, 2011

IMPORTANT DISCLOSURES CONT’D

Sector Basis of Projection

AGRICULTURE Earnings
AIRLINE SERVICES Earnings
AUTOMOBILE & TYRE Book Value
AVIATION Earnings
BANKING Historical Dividends / Book Value / Earnings
BREWERIES Historical Dividends
BUILDING MATERIALS Book Value
CHEMICAL & PAINTS Book Value
COMMERCIAL/SERVICES Book Value
COMPUTER & OFFICE EQUIPMENT Earnings
CONGLOMERATES Book Value
CONSTRUCTION Historical Dividends / Book Value
ENGINEERING TECHNOLOGY Book Value
FOOD/BEVERAGES & TOBACCO Earnings
FOOTWEAR Book Value
HEALTHCARE Earnings
HOTEL & TOURISM Book Value
INDUSTRIAL/DOMESTIC PRODUCTS Book Value
INFORMATION, COMMUNICATION & TELECOM-
MUNICATIONS Book Value
INSURANCE Earnings
LEASING Earnings
MACHINERY(MARKETING) Book Value
MARITIME Earnings
MEDIA Book Value
MORTGAGE COMPANIES Earnings
OTHER FINANCIAL INSTITUTIONS Historical Dividends / Book Value
PACKAGING Book Value / Earnings
PETROLEUM(MARKETING) Historical Dividends / Earnings
PRINTING & PUBLISHING Book Value
REAL ESTATE Earnings
REAL ESTATE INVESTMENT TRUST Book Value
ROAD TRANSPORTATION Book Value
SECOND-TIER SECURITIES Earnings
TEXTILES Book Value
THE FOREIGN LISTINGS Book Value / Earnings

20
Greenwich Stock Recommendations May 9 - 13, 2011

Investment Timeframes

We refer to long term investment timeframe to be a period greater than one year and short term
investment timeframe to be a period less than one year. We give a Buy recommendation when the
stock has good technicals and strong fundamentals, implying that the stock can be used for specu-
lating the market, and for fundamental investing where growth and income are the investment ob-
jectives.

Hedge Clause

The report was prepared by Greenwich Research, and it is for information purposes only. Green-
wich Trust Limited is under no obligation to accept any liabilities that may arise from the use of any
part of this report, as no representation is made on the accuracy of the sources used in preparing
the Report.

The price projections for the financial year in the report were generated based on the perceived
nature of business of the respective sectors. In some cases, where more than one estimates were
stated, the average of the estimates was taken as the price. Analyzed below is tabularized bases of
estimating the forecasts.

21