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Fidelity Bank non-Executive Director purchases 3.1 million shares

A Non-Executive Director of Fidelity Bank has acquired 3,138,000 additional units of the bank’s shares.

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Fidelity Bank Plc has notified the Nigerian Stock Exchange that Chief Charles Umolu, a Non-Executive Director in the bank, has acquired 3,138,000 additional units of Fidelity Bank shares, worth ₦8.8 million.

In line with the Nigerian Stock Exchange policy on insider dealing, the formal disclosure was made by the Bank’s Secretary, Ezinwa Unuigboje.

According to the disclosure, Chief Umolu acquired the additional 3,138,000 units of Fidelity Bank shares in three transactions, at an average share price of ₦2.8 per share.

This put the total consideration for the shares purchased by the non-executive director by at ₦8,876,740.00.

Fidelity Bank Plc’s shares closed the week at ₦2.89 per share on Friday the 13th of November, 2020. This price, however, is 92.7% higher than its 52-week low of ₦1.50.

Why this matters

Dealings by insiders of listed companies are corporate actions to be disclosed, as required by the Nigerian Stock Exchange. Reporting the trade is part of the transparency required by the Exchange and compliance of the bank.

Trade by insiders, particularly purchases, often demonstrates confidence in the financial performance of the companies that they run.

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STOCK MARKET

Nestle S.A acquires additional shares of Nestle Nigeria worth ₦300 million

Nestlé Nigeria Plc has notified the NSE that Nestle S.A. has acquired 214,924 additional units of its ordinary shares, worth N300.89 million.

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The largest consumer goods company on the Nigerian Stock Exchange (NSE), Nestlé Nigeria Plc, has notified the Exchange that Nestle S.A.- its parent company, has acquired 214,924 additional units of its ordinary shares, worth N300.89 million.

In line with the Nigerian Stock Exchange policy on insider dealing, the formal disclosure was made by the Company’s Secretary, Bode Ayeku.

Mr. Ayeku disclosed that Nestlé S.A acquired the additional 214,924 units of Nestle Nigeria Plc shares in a single transaction, at an average share price of ₦1.400 per share.

This put the total consideration for the shares purchased by the parent company at N300,893,600.00.

What this means

The purchase of the shares of Nestlé Nigeria further cements Nestlé S.A’s position as the majority shareholder of the company.

In line with the information contained in the financial statements of the company as of 30th September 2020, the company had exactly 792,656,252 shares outstanding, with Nestlé S.A being the majority shareholder with 525,537,201 units – 66.30% of the total shares of the company outstanding.

Hence, with the purchase of 214,924 additional units, Nestlé S.A’s ownership percentage of Nestlé Nigeria is now put at 66.33%.

Why this matters

Dealings by insiders of listed companies are corporate actions to be disclosed, as required by the Nigerian Stock Exchange to aid transparency.

What you should know

Nestlé Nigeria’s shares opened the trading session on the Nigerian Stock Exchange today, November 16, 2020, at ₦1450.00 per share. This price, however, is 89.67% higher than its 52-week low of ₦764.90.

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STOCK MARKET

Seplat announces exchange rate of N385.78/$1 in payment of its interim dividend

Seplat has announced that an exchange rate of N385.78/$1, will be used to determine its interim dividend.

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Seplat Plc has announced that an exchange rate of N385.78/$1, will be used to determine its interim dividend payment of US$0.05 (United States Five Cents) per share to shareholders whose names appear on its Register of Members as at 13th November 2020.

This disclosure was made in a corporate announcement issued by the company’s Chief Financial Officer, Emeka Onwuka, which was made available on the website of the Nigerian Stock Exchange (NSE).

The management of the company advised in the document that shareholders that hold their shares on the NSE may elect to receive their entire dividend payment in Dollars, while shareholders on the London Stock Exchange (LSE) may elect to receive their entire interim dividend payment in GBP or USD Dollar.

In line with this, the company submitted that the following currency exchange rates would be applicable in the determination of the interim dividend payment to shareholders that qualify for and have elected to receive the Q3 2020 interim dividend payment in Naira or GBP.

Exchange Rate

1 USD = 385.78 Naira
1 USD = 0.7534 GBP

What you should know

However, the exchange rate for the Naira or Pounds Sterling amounts payable was determined by reference to the exchange rates applicable to the US dollar available on 12th November 2020.

The CBN official exchange rate currently stands at N379.5. Further checks revealed that the Naira rate used is the FMDQ benchmark rate for foreign exchange spot operations in the Investors and Exporters FX Window (NAFEX).

What this means

It may be argued that the N385.78/US$ proposed by the company is a fair decision on the NSE shareholders, as the proposed exchange rate by the company, holds a fairly robust premium of N6.78/US$ for the shareholders when compared with the CBN rate of N379/US$ the day the decision was made.

However, when compared with the rate at the parallel market, which had opened and closed at N460/US$ on the day the decision was made – Friday 13th November, one may argue that shareholders would have wanted more in terms of currency conversion.

Viewed from the parallel market exchange rate angle, NSE shareholders may conclude that they lost N74.22 per US$ on the conversion.

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STOCK MARKET

Investors embrace Nigerian stocks, with portfolio investment rising by N40.5 billion

Domestic transactions accounted for 70.33% while foreign transactions accounted for 29.67% of the total transactions.

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The Nigerian Stock Exchange appears to be gaining significant traction as total portfolio investments rose by N40.5 billion in September 2020.

This was contained in the domestic and foreign investments report released by the Nigerian Stock Exchange (NSE).

According to the report, the total portfolio investments rose by 42.9% compared to 94.45 billion recorded in August 2020. The breakdown of the report shows that domestic transactions accounted for 70.33% of the total transactions, while foreign transactions accounted for 29.67% of the total transactions in September.

Key highlights

  • Total domestic transactions completed year to date (YTD) is about N825.94 billion, while foreign transactions completed YTD is about N510.25 billion.
  • Foreign inflows decreased by 71.67% since the last rise in September 2019, while Foreign Outflows decreased by 70.31% since the last rise in March 2020.
  • The total value of transactions completed by Domestic Investors in September 2020 surpassed that of the total value of transactions completed by Foreign Investors by N54.87 billion.
  • Portfolio investments increased sharply by 42.9% from N94.45 billion (about $244.27 million) in August 2020 to N134.97 billion (about $349.85million) in September 2020.
  • Compared with September 2019 (N141.45 billion), the performance of the current month indicates that total transactions decreased by 4.58%.

As illustrated in the chart, total transactions completed between August and September 2020 indicated that total domestic transactions surged by 71.12% from N55.47 billion in August to N94.92 billion in September.

Also, total foreign transactions increased by 2.74% in September 2020 from N38.98 billion (about $100.81 million) in August 2020 to N40.05 billion (about $103.81million) in September 2020.

Meanwhile, for domestic transactions, analysis revealed that Institutional Investors outperformed Retail Investors by N23.54 billion.

A comparison of domestic transactions in the current and prior month (August 2020), revealed that both retail and institutional transactions increased by 34.12% from N26.61 billion in August 2020 to N35.69 billion in September 2020, and 105.23% from N28.86 billion in August 2020 to N59.23 billion in September 2020 respectively.

For foreign transactions, analysis revealed that Foreign Outflow outperformed Foreign Inflow by N12.05 billion. A comparison of foreign transactions in the current and prior month (August 2020) revealed that Foreign Inflow declined by 20.72% from N17.66 to N14 billion, while Foreign Outflow increased by 22.19% from N21.32 to N26.05 billion.

What you should know

  • Over a 6-year period, based on the data available on the NSE, analysis indicated that total domestic transactions decreased by 67.94% from N296.06 billion in September 2014 to 94.92 billion in September 2020; while total foreign transactions decreased by 82.33% from N226.68 billion in September 2014 to N40.05 billion in September 2020.
  • Total domestic transactions accounted for 70.33% of the total transactions carried out in September 2020, while foreign transactions accounted for 29.67% of the total transactions in the same period.

What this means

Considering the importance of foreign investment, the decline is particularly alarming and could indicate that foreign investors are shying away from Nigerian stocks. Meanwhile, more Nigerian investors are venturing into the market compared to previous months.

However, the encouraging factor is that total foreign and domestic portfolio figure recorded in September is the highest since the dip in March. This may well mean that stocks are beginning to pick up, which is good news for stock investors.

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