ASK SHADE: My siblings are not happy I adopted a child

ASK SHADE: My siblings are not happy I adopted a child

Dear Shade,

I just turned 50 and decided to adopt a child since I never got married nor have a child. This 3-day-old baby is God’s gift to me and while I want to be around for a long time to see her go to the university and even get married, I know I cannot guarantee it. I’m not a prophet of doom but as a realist, I want to take measures to secure her future mainly because my other two siblings and their children have greatly benefitted from me financially and they didn’t seem happy when I adopted a child. 

Thank you.

Ayomide from Akure

 

Dear Ayomide,

Happy belated birthday and congratulations on your bundle of joy.

Your desire to secure your daughter’s future is applaudable and very responsible as people usually ignore the need to do so. They are either distracted by their day to day activities or are simply in self-denial of the fact that we are all mortals. Also, the fact that your siblings and their children sometimes financially depend on you is the more reason why you should take steps to secure your child’s future.

To efficiently and effectively secure your daughter’s future, you would require a structure that would ensure minimal exposure to any dispute arising from your extended family, considering their reception to your decision to adopt your daughter. Setting up a Trust could be a good beginning because it affords you the ability to make provisions for your daughter by transferring your assets to a neutral, unbiased third party known as a Trustee and name specific beneficiaries who would benefit from the Trust. This ensures the protection of your assets as they would only be made available to the named beneficiary or beneficiaries upon eventuality.

Other estate planning devices such as the Easy Will may also be drafted to complement the Trust. The Will may be necessary to transfer or dispose of your personal assets such as your bank accounts, pension, pieces of jewelry and personal belongings.

I felicitate with you once again Ayomide and wish you the very best in your endeavors.

Cheers,

‘Shade

The post ASK SHADE: My siblings are not happy I adopted a child appeared first on Realising Ambitions.

January Inflation: CPI maintained upward trajectory

As anticipated, inflation for the month of January ascended by 15bps to 12.13% YoY (vs December: 11.98% YoY) and 4bps shy of our estimate of 12.09% YoY. In our monthly economic update, we highlighted that the low base from food prices would send inflation on an upward trajectory. Unsurprisingly, food inflation rose 18bps to 14.85% YoY, accounting for bulk of the uptick in headline inflation, while core inflation moderately expanded by 3bps to 9.35% YoY. On the former, the pickup was anchored by 29bps and 6bps increase in farm produce and imported food to 15.35% YoY and 16.10% YoY respectively. Nonetheless, the buoyant supply from main harvest season has helped in moderating the pace of increase. Also, Core inflation ticked up by 3bps to 9.35% YoY, reflecting increases in HWEGF (+8bps to 7.78%), Transport (+10bps to 9.35% YoY), Health (+19bps to 9.78% YoY) amongst others.

Following similar trend, Month-on-month numbers rose slightly by 2bps to 0.87% MoM (3bps shy of our estimate: 0.84% MoM) due to minute expansion in both core and food inflation. Food inflation ticked up 1bp to 0.99% MoM mirroring 2bps expansion to 0.93% MoM in farm produce. Similarly, core inflation rose 1bp to 0.82% MoM following increases in HWEGF, Health, Transport, Clothing, Education.

We retain our view for an expanse in headline inflation owing to two key factors. First is the lingering impact of the low base on food inflation. Secondly, the increase in VAT from 5% to 7.5% which took effect from 1st of February 2020 with the aim of the generating more revenues for the government is expected filter into inflation numbers. Consequently, we expect the northward trend to persist, with headline inflation for the month of February printing at 12.3% YoY and 0.88% MoM. Against this backdrop, we expect average inflation for 2020 to print at 13.0% (FY 19: 11.4%).

Figure 1: One-year trend in Inflation rate

Source: NBS, ARM Research

Stock Recommendation for the Week, February 17

The Nigerian equities market maintained a downward trend with the ASI, dropping by 1.11% to 27,755.9 pts, with the market capitalization closing at N14.46 trillion as investors lost N162 billion during the prior week. All sectors closed negative WoW except Cement (+0.37%) and Construction (+0.13%). The deterioration was driven by the Food (-7.27%), Brewers (-2.02%), Oil & Gas (-1.34%), Insurance (-0.94%), Telecoms (-0.53%) and Banking (-0.21%) sectors. The key losers are NESTLE (-10.00%), DANGSUGA (-4.10%), GUINNESS (-16.56%) and MTNN (-0.85%), while GTB (+1.36%), BUA CEMENT (+1.13%) and WAPCO (+1.31%) yielded positive returns.

• Dangcem– STRONG BUY (FVE: N240.87): DANGCEM’s FY 19 earnings is expected to be pressured (EPS: N14, vs N22 in 2018) owing to lower volumes in Nigeria business (due to increased competition from BUA Cement) and some of its Pan Africa business, as well as high base of tax credits from 2018. However, DANGCEM currently trades at FY 19E P/E of 11x on our estimates, which is cheap compared to WAPCO and CCNN of 17.7x and 16.8x, respectively. We believe current valuation is unjustified given the superior ROE of 24%.

• Zenith Bank Plc – STRONG BUY (FVE: N31.50): Zenith bank 9M results saw a moderate expansion in PBT and PAT by 5.3% and 4.5% YoY respectively. We note however, that the banks valuation may remain depressed in the near-term given the regulatory overhang over the industry. Nonetheless, at current levels and based on our FY 19E dividend of N2.90, we view expected dividend yield of 15% as attractive and could be compelling to investors. We value Zenith at N31.50 which implies STRONG BUY by our recommendation.

• Guaranty Trust Bank Plc – STRONG BUY (FVE: N49.66): GTB’s 9M 19 earnings expanded modestly with PAT and EPS expanding only 3.4% YoY to N146.9 billion and N4.99/share respectively. Although we expect slower growth in EPS (+4% YoY to N6.53) over 2019, our case for GUARANTY remains the resilience in NIR, improved cost management, still strong loan book with moderate expansion in credit loss provision to 0.5%.

• Nestle Plc – OVERWEIGHT (FVE: N1447.39): Amongst the food producers, Nestle Nigeria Plc has managed to stay afloat, reporting modest growth in earnings amidst incessant competition. For 9M 19, EPS expanded by 11.2% YoY to N46.48 driven largely by the absence of impairment charges which created a high base for input costs over the same period last year. Asides from improved earnings, its strong cash balance, return on equity and 100% dividend payout further supports the case for an OVERWEIGHT rating.

• Seplat Plc – STRONG BUY (FVE: N828.90): Seplat’s total production declined in Q3 19, as the drop in gas production offset improvement in the oil segment. That said, we remain positive on growth in production (especially in oil) into 2020 as Seplat increases capex. Cashflows remain healthy. Upsides reside in the ANOH Gas project and acquisition of Eland Oil & Gas Limited, while decline in oil prices pose a threat to our estimates.

See attached for full report.

Kindly, visit ARM Research Portal for full stock reports.

LABS by ARM 2.0 Accelerator Programme Commences

The ARM Group is pleased to announce the commencement of the second cohort of the LABS by ARM Accelerator programme on the 10th of February, 2020. Similar to the maiden edition ARM is partnering with Ventures Platform to support and fund compelling fintech startups solving key problems in innovative ways around the financial industry, unlocking verticals and markets thereby changing how users access and consume financial services.

During the 12-week Accelerator programme, we will work intensively with each FinTech startup in a series of activities aimed at exponentially advancing the growth of their companies within the short time frame. We will also invest $20,000 (twenty thousand Dollars), offer office space, Amazon Web Services (AWS) credit of up to $10,000 (ten thousand Dollars), access to the ARM network capabilities and support the companies with carefully selected mentors comprising seasoned business leaders from the fintech industry who will provide hands-on support to the companies.

After the application deadline for LABS by ARM 2.0 , we had one hundred and ninety-one (191) submissions that were eventually reduced to thirty-three (33) and further reduced to eleven (11) companies after a tedious third round of evaluations. These eleven (11) companies were invited to the ARM headquarters in Ikoyi, Lagos for a chat with seasoned professionals, and technology entrepreneurs.. Finally, five (5) of the companies were selected and have now been invited into the Accelerator programme. They are:

TRUESAVER:

Truesaver provides access to zero-interest loans by leveraging rotational savings. The solution is a contact-based platform where contacts can save a set amount monthly over a period with lump-sum savings being given to each saver monthly in rotation.

OWOAFARA:

Owoafara is building tools and platforms to curate, verify and match small and medium-size businesses with financial institutions for loans as well as provide support for companies that do not qualify for financing to enable the businesses grow their business and better prepare to access financing.

RISE:

Rise helps Nigerians grow wealth by connecting customers with the best investment opportunities around the world, cheaply and seamlessly.

KWABA:

Kwaba is a property rental financing platform that is solving bulk rental payment problems for low to middle income earning Nigerians Kwaba makes the upfront rent payment for retail customers and these customers are able to pay their rent on a monthly basis.

QUANTIS FINANCE:

Quantis is leveraging technology to automate trading and investments in order to make financial markets and instruments more accessible to local investors.

Henrietta Bankole-Olusina (MD, ARM Financial Advisers)
Barbara Ezeife (Head, Marketing and Corporate Communications, ARM)

ARM

Established in 1994, ARM is a leading Nigerian diversified and integrated asset management group firm that offers wealth creation solutions and opportunities through a unique blend of traditional asset management and alternative investment services to retail, high net worth and institutional investors.

ARM currently manages total assets of approximately N 1.25 trillion (as at December 2019). www.arm.com.ng

Ventures Platform

Ventures Platform is creating inclusive and sustainable wealth in Africa, by building the capacity of African entrepreneurs and innovators leveraging technology to create sustainable solutions to the most urgent problems on the continent. They are one of the most active early-stage investors on the continent.

Ventures Platform also works with big corporations in driving innovation internally and in building lasting relationships with the startup ecosystem to help fuel business growth and achieve innovation goals.
www.venturesplatform.com

Stock Recommendation for the Week, February 10

Last week, the Nigerian bourse witnessed a steep decline as the ASI closed -2.69% WoW, while market capitalization lost N239 billion to close at N14.62 trillion. All sectors closed in red, save the insurance sector (+0.15%). The decline was anchored by the Breweries (-5.62%), Cement (-4.94%), Banking (-2.26%), Oil & Gas (-5.74%), and Telecom (-1.48%) sectors. On stock performance, FBNH (-8.40%), ZENITH (-5.04%), NB (-6.36%), INTBREW (-5.56%), DANGCEM (-5.50%), BUACEMENT (-4.32%) and MTNN (-2.17%) yielded negative returns amongst other stocks.

• Dangcem– STRONG BUY (FVE: N240.87): DANGCEM’s FY 19 earnings is expected to be pressured (EPS: N14, vs N22 in 2018) owing to lower volumes in Nigeria business (due to increased competition from BUA Cement) and some of its Pan Africa business, as well as high base of tax credits from 2018. However, DANGCEM currently trades at FY 19E P/E of 11x on our estimates, which is cheap compared to WAPCO and CCNN of 17.7x and 16.8x, respectively. We believe current valuation is unjustified given the superior ROE of 24%.

• Zenith Bank Plc – STRONG BUY (FVE: N31.50): We have made adjustment to our FY 2019 expectation for Zenith Bank following some surprises in the Q2 numbers. In specifics, we revised net interest income lower due to compressed yields on its loans and treasury asset (H1 18:10.6%, H1 19 9.1%) amidst contraction in funding cost. Elsewhere, we adjusted NIR higher due to upward review of electronic fee income and trading book. Thus, we now forecast PBT of N218 billion (-5.5% YoY), while we cut our FVE to N31.57/share (previously: N33.71/share).

• Guaranty Trust Bank Plc – STRONG BUY (FVE: N49.66): GTB’s 9M 19 earnings expanded modestly with PAT and EPS expanding only 3.4% YoY to N146.9 billion and N4.99/share respectively. Although, we expect a slower growth in EPS (+4% YoY to N6.53) over 2019, our case for GUARANTY remains the resilience in NIR, improved cost management, still strong loan book with a moderate expansion in credit loss provision to 0.5%.

• Nigerian Breweries Plc – STRONG BUY (FVE: N75.82): With intense competition from International Breweries (IB) and graduated excise duty (+17% YoY) that kicked-off in Jan-19, revenue growth is expected to be slow even as we expect higher finance cost (+38% YoY) to be another pressure point to earnings this year. However, given our case for a slight improvement in volumes and decline in cost of sales (-1.1% YoY) which translates to gross (+120bps YoY) and EBIT (+101bps YoY) margin expansion, the misery seems moderated. Overall, the net impact of all our adjustments translates to PBT of N29.9 billion and EPS of N2.58 (+6.3% YoY) over 2019.

• Seplat Plc – STRONG BUY (FVE: N828.90): Seplat’s total production declined in Q3 19, as the drop in gas production offset improvement in the oil segment. That said, we remain positive on growth in production going into the final quarter of the year (especially in oil) and into 2020 as Seplat increases capex. Cashflows remain healthy. Upsides reside in the ANOH Gas project and acquisition of Eland Oil & Gas Limited.

Kindly, visit ARM Research Portal for full stock reports.

Stock Recommendation for the Week, February 03

For the first time this year, the equity market closed the prior week on a negative note with the NSE ASI declining by 2.65% to 28,843.53 index points. Loses were observed in the Banking (-6.13%), Cement (-0.90%), Telecom (-2.96%), Personal Care (-13.72%), Food (-0.50%), Oil & Gas (-2.58), and Real Estate (-0.14%) sectors. On the other hand, gains were seen across only the Brewers (4.89%), Construction (2.64%) and Insurance (0.54%) sectors. Major drivers for the week decline were stocks such as; FBNH (-10.27% WoW), STANBIC (-10% WoW), BUACEMENT (-2.12% WoW) and MTNN (-4.32% WoW).

• Dangcem– STRONG BUY (FVE: N240.87): DANGCEM’s FY 19 earnings is expected to be pressured (EPS: N14, vs N22 in 2018) owing to lower volumes in Nigeria business (due to increased competition from BUA Cement) and some of its Pan Africa business, as well as high base of tax credits from 2018. However, DANGCEM currently trades at FY 19E P/E of 11x on our estimates, which is cheap compared to WAPCO and CCNN of 17.7x and 16.8x, respectively. We believe current valuation is unjustified given the superior ROE of 24%.

• Zenith Bank Plc – STRONG BUY (FVE: N31.50): We have made adjustment to our FY 2019 expectation for Zenith Bank following some surprises in the Q2 numbers. In specifics, we revised net interest income lower due to compressed yields on its loans and treasury asset (H1 18:10.6%, H1 19 9.1%) amidst contraction in funding cost. Elsewhere, we adjusted NIR higher due to upward review of electronic fee income and trading book. Thus, we now forecast PBT of N218 billion (-5.5% YoY), while we cut our FVE to N31.57/share (previously: N33.71/share).

• Guaranty Trust Bank Plc – STRONG BUY (FVE: N49.66): GTB’s 9M 19 earnings expanded modestly with PAT and EPS expanding only 3.4% YoY to N146.9 billion and N4.99/share respectively. Although, we expect a slower growth in EPS (+4% YoY to N6.53) over 2019, our case for GUARANTY remains the resilience in NIR, improved cost management, still strong loan book with a moderate expansion in credit loss provision to 0.5%.

• Nigerian Breweries Plc – STRONG BUY (FVE: N75.82): Intense competition from International Breweries (IB) and graduated excise duty (+17% YoY) that kicked-off in Jan-19, revenue growth is expected to be slow even as we expect higher finance cost (+38% YoY) to be another pressure point to earnings this year. However, given our case for a slight improvement in volumes and decline in cost of sales (-1.1% YoY) which translates to gross (+120bps YoY) and EBIT (+101bps YoY) margin expansion, the misery seems moderated. Overall, the net impact of all our adjustments translates to PBT of N29.9 billion and EPS of N2.58 (+6.3% YoY) over 2019.

• Seplat Plc – STRONG BUY (FVE: N828.90): Seplat’s total production declined in Q3 19, as the drop in gas production offset improvement in the oil segment. That said, we remain positive on growth in production going into the final quarter of the year (especially in oil) and into 2020 as Seplat increases capex. Cashflows remain healthy. Upsides reside in the ANOH Gas project and acquisition of Eland Oil & Gas Limited.

Kindly, visit ARM Research Portal for full stock reports.