Mid-Week: UBA records 65% YTD appreciation amid weak optimism on the bourse
Category: Daily & Weekly Market Updates
Sustained value investing was observed on the Nigeria bourse as investors continued to avert risk in the face of sustained speculative tendency while more value stocks consolidate on their new support levels amid growing volatility in the market.
Mid-week analysis revealed risk-aversion/cautious trend in the market as investors increased patronage towards medium and high priced stocks while bargain posture appeared weak amid flat market breadth- a true reflection of weakened optimism.
Notwithstanding, the market turnover sustained positive and impressive position while naira votes posture further indicates sustained commitment towards investments in equity. Though, more of distribution was observed as sell sides increased their activities in the week so far, buttressing the weak bargain and flat market breadth noted above.
We maintained our previous position as observed that investors’ crave for interim benefits from blue chip companies remained the driving force of sustained value investing observed.
The market momentum experienced slight weakness but remained healthy as revealed by market RSI, indicating increased sell activities against moderate bargain tendency in the market terrain.
At the end of the today’s session, technical analysis revealed weak market optimism as market witnessed weak bargain activities across attractive sectors while market turnover closed positive.
More so, slight profit taking tendency was towards penny stocks while value stocks mainly in medium capitalisation category experienced increased patronage.
Market closed with WTD performance of 0.65% gain- weak but sustained market optimism was observed when compared with previous mid-week performance of 1.53% gain while YTD performance stands at 7.35% as against 5.79% recorded in the previous week.
The improved patronage witnessed towards blue chip stocks in Consumer Goods, finance, Agriculture, Healthcare and Industrial Goodssectorscontributed to the market outlook so far in the week.
The Stocks on the Hunters’ Radar
Investors’ Trading pattern and psychology:
The trading pattern suggests low speculative tendency while the profile of top 10 stocks on the investors’ radar suggests sustained risk appetite as majority of the stocks are penny stocks while UBN, UAC-PROP, 7UP AND CONOIL are the only medium and high priced stocks that made top ten stocks on the investors’ radar.
Notwithstanding, we remained concerned as regards to the driver of these top penny stocks that dominated investors’ radar so far in the week.
Further analysis into their last financials revealed mixed outlook as subsequent outlines will shed more lights.
Snapshot comment on their recent results.
PAINTCOM records impressive top-line and bottom-line growth, indicating sustained market share and increase sales. However, the operating expenses of the company is the on high side while the significant plunge in the cash and bank balance gives us concern as this does not suggest sound financial status in the face of weak working capital.
LIVESTOCK recorded impressive posture with improved turnover and PAT posture while the posture of the working capital of the company appeared promising. Also, the slight decline in bank balance and increased in short term borrowings does not suggest anything depressing.
EVANS MEDICAL PLC records impressive top-line and bottom-line with sustained positive growth in the last financials. However, their financial status remained a big concern with a significant plunge in the working capital and similar dip in cash and bank balances.
7up Plcrecords impressive turnover posture, though there was a modest weakness in bottom-line. Nevertheless, the working capital of firm remained very strong with significant positive growth with corresponding positive growth in cash and bank balance posture.
Analysis of investors’ radar (gainers’ list) revealed improved bargain drive towards high and medium priced stocks while penny stocks experienced weak patroange.