This week’s stocks to watch list consist of three firms with debt threatening their shareholders’ dividend, and another that’s entering a new market beyond its traditional service, while the last is about a takeover that puts a blurry picture on the entity’s future.
Ripples Nigeria stocks watchlist is a selection of stocks monitored for viable trading or investing opportunities. An investor may casually generate a list of equities for investment purposes. But we have taken the pain to do that based on certain parameters in order to save you that hassle.
Kindly note that Ripples Nigeria Stocks Watchlist is not a buy, sell or hold recommendation. It is advisable to consult your financial advisor before making any investment decision.
Union Bank of Nigeria (UBN) featured on this week’s stocks to watch list following the completion of its acquisition by Titan Trust Bank last week. While the deal is reportedly worth over N100 billion, it’s not certain how the capital market will welcome the change that comes with the takeover.
Titan Trust Bank has already began an overhaul of the board members, taking advantage of its 93.41% ownership stake in Union Bank. This shake up is expected to introduce new operational direction, which will have a positive or negative reaction on shareholders investment, thereby, creating uncertainty regarding the firm’s future.
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With the blurry future projection, it’s unknown how the capital market or minority shareholders of Union Bank will swing on the exchange floor this week or in future, considering reservations that a 2-year-old bank is acquiring a 105-year-old financial institution, so having UBN on your radar as the Nigerian bourse reopens is vital.
Guaranty Trust Holding Company (GTCO) has received regulatory approval for HabariPay, which is a new revenue generation source for the company, and this might improve the capital market’s investment value in the firm.
The growth of HabariPay will increase GTCO’s turnover, which may in turn cause management to raise its dividend payout to shareholders. This projects future growth prospects, that could influence investors to double down on their investment, leading to hike in share value.
UAC Nigeria has opted for fresh loan of N18.7 billion, which is expected to negatively impact the food and beverage company’s earnings, thereby, reducing the possibility of an increment in dividend payout for future quarters, to enable the firm payback its debt.
High net-worth individuals, asset managers, and more provided the loan through commercial paper issuance, comprised of two tenors; a 90-day Series 1 issuance, which is priced at 8.00% yield, and a 181-day Series 2 issuance, priced at 8.25% yield – this will further increase the total debt of UAC Nigeria.
Already, interest in UAC Nigeria among investors in the capital market is on a downward path, as sell off by shareholders has devalued the firm’s share by -23.61% in the last two weeks, so investors need to trade with caution going forward.
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