News flash – First Ideas Limited

News flash

Investors Gain N5.38bn as NGXASI Inches Up by 0.02%, YTD Return Hits 4.34%

Equities market closed on a positive note, as NGXASI appreciated by 0.02% to close at 42,018.92 basis points as against  -0.38% depreciation recorded previously. Its Year-to-Date (YTD) returns currently stands at +4.34%.

Market breadth closed negative as ABBEYBDS led 19 Gainers as against 18 Losers topped by GLAXOSMITH at the end of today’s session – an improved performance when compared with previous outlook.      

Market turnover closes positive as volume moved up  by +51.46% as against +133.31% uptick recorded in the previous session. FBNH, STERLNBANK, and ETI were the most active to boost market turnover.  FBNH and GUARANTY topped market value list.

BERGER leads the list of active stocks that recorded impressive volume spike at the end of today’s session.

Haulage cost in yuletide stable first time in 8 years

Two weeks to this year’s Christmas and New Year celebrations, the cost of moving containers from Apapa and Tin-Can Island Ports in Lagos has remained stable, a rare case seen first in over eight years due to a decline in the volume of business at the ports, BusinessDay investigation has shown.

9M’21: Nigerian Breweries raises hope for big recovery despite rising cost

There are indications Nigerian Breweries (NB) Plc, Nigeria’s biggest brewer, may have recovered from a deep plunge the company in 2020 although challenges of rising input cost continue to rear its ugly head, an analysis from BusinessDay has revealed.

Ikeja Electric Advocates Sanctions against Activities under Power Lines

Ikeja Electric Plc (IE), Nigeria’s largest electricity Distribution Company has cautioned members of the public to desist from erecting structures under power lines or carrying out activities and trading near electrical installation

Lossless zoom, quality image sensors, others to define 2022 phone cameras

Despite the huge leap in the evolution of smartphone cameras that has been achieved so far, experts say manufacturers are likely to continue with many of the innovations already in the market in 2022.

Equinix to buy MainOne in push for Africa’s data centre market

Equinix, a US-based global infrastructure company, is perfecting plans to acquire MainOne, one of the largest data centres in West Africa, for $320 million as it moves to become a dominant player in Africa.The acquisition is expected to be completed in the first three months of 2022

FX speculators selling off hoarded cash says senior Nigerian bankers

Senior Nigerian bankers say currency speculators are now beginning to bring out the foreign exchange they are hoarding to the market and selling, according to the Economist Intelligence Unit, EIU. It is seen as reversing the speculative pressure on the Naira since the Central Bank stopped the sale of foreign exchange in the parallel market.

GTBank, Zenith banking apps top list – survey

Nigeria’s two systemic important banks, Guarantee Trust Bank (GTB), and Zenith Bank Plc are leading the top four best banking applications, a customer survey conducted by BusinessDay, indicated. The survey, which required customers to mention the three best banking apps they use currently

 

Lekoil Nigeria offers shareholders buyback deal

Ahead of Lekoil Nigeria Limited annual general meeting taking place this December, the company has written to the shareholders of Lekoil Limited (Lekoil Cayman) with an “indicative offer to acquire Lekoil Limited shares and potential share exchange

SEC Issues Exposure Draft of Its Proposed New Rule on Special Purpose Acquisition Companies

The Securities and Exchange Commission (SEC) has issued an exposure of its new rule on Special Purpose Acquisition Companies (SPACs) and proposed an amendment to its rule to rule 3(6)(b) which focuses on time for processing.

Details of the exposure are provided below

Exposure Of New Rule on Special Purpose Acquisition Companies And Sundry Amendments To SEC NG Rules

Summary of Changes

New Rule

1. Proposed New Rule On Special Purpose Acquisition Companies (SPACs)

Sundry Amendment

2. Proposed Amendment to Rule 3(6)(b)- Time for Processing

All comments and input should be forwarded by e-mail to the Secretariat, Rules Committee of the Commission, at rulescommittee@sec.gov.ng or by letter addressed to the Director-General, SEC, not later than two (2) weeks from date of publication.

Decent 9M 2021 VAT and CIT numbers

The National Bureau of Statistics (NBS) published data on the revenue generated from both Value Added Tax (VAT) and Company Income Tax (CIT) collections in Q3 2021. The total VAT collected in Q3 2021 was N500.5bn, a slight decline of 2.3% q/q from N512.3bn in Q2 2021. Y/y, Q3 VAT numbers rose by 17.8% y/y relative to N424.7bn in Q3 2020. On the other hand, CIT collections increased to N472.5bn in Q3 2021, showing a flattish growth of 0.1% from Q2 2021 and beating the N416.0bn generated in Q3 2020 by 13.6% y/y. The growth in CIT collections may be due to improved corporate performances, leveraging the continued macroeconomic recovery.

Further analysis of the contribution to VAT revenue collected solely in Q3 2021 revealed that VAT on locally produced goods (i.e., non-import VAT) alongside Nigerian Customs Service (NCS)-Import VAT were the silver lining as non-import (foreign) VAT declined by 60.9% q/q and 29.6% y/y. We believe the growth in VAT on locally produced goods (+57.6% q/q and +37.6% y/y) reflects the gradual recovery in consumption. For CIT collections, foreign CIT payment largely drove the q/q increase (up 249.8% q/q to N180.5bn) as local CIT declined by 30.1% q/q to N292.0bn in Q3 2021. We believe the growth in foreign CIT payment may be partly due to the impact of currency adjustments. No revenue was generated from Other Payments in Q3 2021.

 Overall, the total VAT and CIT collections have grown by 40.2% y/y and 20.1% y/y to N1.5tn and N1.3tn, respectively, for the nine months, signaling improved economic activities. The combined amount of N2.8tn is already above the prorated 9M 2021 budgeted N2.5tn for VAT and CIT in 2021 by 13.8%, so we expect 2021 performance for VAT and CIT to significantly outpace 2020 numbers of N2.8tn. We note the VAT increase to 7.5% became effective in February 2020, leaving only 1 month of lower VAT. Excluding any growth attributable to currency adjustments, we can safely conclude that some of the growth seen is largely due to improving macro-economic conditions.

A Modest MoM Rise in Net Capital Inflow in July 2021

According to the CBN’s most recent monthly economic report, net capital inflow (after adjusting for capital exports) into the Nigerian economy improved to USD0.06bn in July ’21, compared with a net capital outflow of c.-USD0.2bn in June ’21. On a y/y basis, however, the capital influx was more than 90% lower than what was recorded in July ’20. It is important to keep in mind that the data is preliminary, and that there are often variances between the CBN’s data series and the series published by the NBS.

With respect to inflows, the total (gross) capital imported into the country increased 29% m/m to USD0.62bn in July ’21, but was down by c.-34% y/y. Foreign portfolio investments (FPI) with inflows of USD0.48bn accounted for the largest share at over 76% of total.

 The report does not provide sufficient data to make meaningful m/m and y/y comparables. However, we see that capital inflows for bond purchases and money market instruments accounted for c.60% and 33% of total FPI inflows respectively, or c.USD0.29bn and USD0.16bn.

We assume that the balance of FPI inflow of just over 6% was for investment in listed equities. The data confirms the waning interest of the offshore investment community in shares of quoted companies due to the fx liquidity crunch which worsened in Q2 ’21.

Capital outflow declined by 17% m/m to USD0.56bn. However, on a y/y basis, the outflows were c.81% higher. Again, this is understandable given the significant backlog of FPIs waiting to repatriate funds.

 We presume that such FPI outflows made up most of the segment classified as “outflow in the form of capital” which accounted for c.51% of total capital outflows.

 Dividend repatriations accounted for nearly a third of capital outflows, with the telecoms sector accounting for 31.2% of all dividend payments.

 A case in point is MTN Nigeria, which has managed to upstream about ZAR6.3bn (c.USD380m) in the first nine months of this year to MTN Group, its parent company in South-Africa.

 According to CBN data, total capital inflow and outflow for the year to July were c.USD3.4bn and USD3.3bn respectively, implying a net capital inflow of barely USD0.1bn over the period.

 

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First Ideas Limited is an investment and financial advisory company established in 1994 to provide advisory services to high net worth individuals, trust funds, financial institutions and medium sized companies in growth sectors.

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