Tag: Art

#ILoveMyFamily: I Want To Leave Banking For Carpentry.

It was Saturday and I had been in my workshop putting together a new small bookshelf since after breakfast. I checked the time, it was mid-afternoon and my wife would be done with lunch. The plan was to take a nap right after lunch and head to a football viewing center after. I prefer watching football matches at viewing centres because of the argument. What is a football match without fans’ sentimental argument?

I stepped into the kitchen through the back door and was welcomed by the aroma of a mouth-watering Afang soup. My stomach rumbled in response and my wife laughed and teased me about how much I love her meals.

“Where’s Nifemi?” I asked. Our daughter likes to hang around the kitchen while her mother cooks.

“In the playroom with Chinedu and Maxy. She has stopped helping me out in the kitchen since Maxy came.” My wife protested, and we laughed it off.

As we had our meals around the dining table, my wife told me about a park that she learned is very close to our home.

“Mrs. Okafor across the street told me about the small park last evening and I informed her that she can bring her furniture over to your mini-workshop for a quick fix at a reasonable amount.” She said.

“Oh thank you, sweetheart!” I responded. “You know, I have been thinking of taking this carpentry business more seriously. Who knows, I could be the Ikea of Africa”

“How do you mean?” She asked.

“You know how much I really love carpentry. I will like to go into it fully soon and be my own boss.” I went on to explain to her how good it will be to save up to start my own business.

Chidinma didn’t look too pleased with the idea and she stared at me like I had suddenly grown two heads, “You would quit a banking job for a start-up carpentry workshop?”

“The plan is to go big,” I responded even though her reaction was making me a little uncomfortable.

“Let’s assume that we can swap banking for carpentry, I still don’t think it’s wise that we both have these big career changes at the same time. I mean we just started saving up for my restaurant business!” She exclaimed.

“Hey… Relax dear.” I glanced anxiously at the kids. Thankfully, they weren’t paying us close attention. “But that doesn’t mean that we can’t save for a workshop too,” I responded, trying to make her see reason with me.

“Where are we even going to get the money from, to start a large-scale carpentry business?”

I thought about the recent changes we made; new housing, the children’s new school and the insurance plans we have in place to save up for my wife’s business and the children’s education plan. We already have so much pressure placed on both of our salaries and we can’t afford to put more strain on it. It also means that now, I couldn’t afford to think of quitting my present job to pursue my passion.

I saw clearly what the challenges were to achieving my dream career. I wasn’t ready to give up without a fight but at the moment, I let things cool down so as not to upset my dear wife any further.

I reached across the table and took her hand. “Okay dear. You have made very good points.”

She sighed deeply and smiled at me.

We continued the rest of the meal in silence, but my mind was busy searching for a plan that will make my carpentry business dream come true. Suddenly, a thought dropped into my mind, a fantastic thought that will see my dream come to fruition.

To be continued next week…

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Initial View – Zenith Bank Plc FY 2018 – Lower impairment, harbinger of 2018 earnings

Lower impairment, harbinger of 2018 earnings

• Zenith Bank Plc (Zenith) released its audited FY 18 result yesterday with EPS expanding 11% YoY to N6.16 (below our estimate of N6.72), largely on the back of strong declines in interest expense (-33% YoY to N144 billion) – which masked the 7% YoY decline in interest income to support 15% YoY growth in net interest income – and loan loss provision (-81% YoY to N18 billion). The bank declared a final dividend of N2.50, which alongside interim dividend of N0.30 translates to total dividend of N2.80 (FY 17: N2.70). At current pricing, final dividend translates to a yield of 10% (FY 17: 8%).

• NIMs moderates in Q4 despite strong FY 18. As earlier stated, while yields on assets contracted 162bps YoY to 8.1% over FY 18, the contraction in WACF by 217bps YoY to 3.1% supported 15bps expansion in NIM to 5.4%. However, over the last quarter of 2018, the contraction in asset yields intensified to more than outweigh the moderation in WACF, which depressed NIMs by 128bps QoQ to 6.0%. Much of the decline in interest income (-8.5% QoQ to N100.9 billion) emanated from lower interest on loans (-13% QoQ) and bonds (-19% QoQ). The moderation in interest on loans largely reflects the year to date decline in loans to customers by 13.2%.

• Non-interest Revenue bottomed out in 2018. NIR declined by 31% YoY to N179.9 billion over FY 18, largely on the back of loss in the bank’s FX trading position of N16.7 billion (FY 17: N68.7 billion) and lower operating income (-20% YoY to N17.9 billion). However, Q4 18 standalone, NIR grew 6% QoQ to N44.4 billion largely on the back of higher trading income (+69% QoQ to N27.3 billion) and 426% QoQ growth to N6.7 billion.

• Lower impairment provisions, harbinger of 2018 earnings. In line with the development over the first nine months of the year, loan loss provision ended the year significantly lower by 81% YoY to N18.4 billion (2017: N98 billion), with associated cost of risk contracting 367bps YoY to 1%. However, despite our expectation of a higher provisioning over Q4 following haircut on the resolution of 9Mobile, Zenith recorded additional loan loss provision of just N4 billion over the quarter with cost of risk of 0.9%.

• Reflecting the moderation in operating income by 8.7% over 2018, cost to income ration expanded by 453bps to 47.4%, while actual operating expenses grew 0.94% YoY with most of the decline emanating from the slowdown in Q4 (-17% QoQ to N43 billion). Overall, while operating expenses and slight moderation in loan loss provision was a positive in Q4, the material contraction in net interest income and higher effective tax rate over the period drove a 21% QoQ decline in EPS to N1.57 over Q4 18.

• Our take. Overall, while the performance was impressive over the full year, we note the weakness in core earnings over Q4 18. However, given the faster decline in loan loss provisions compared to our estimates of N26 billion we expect a positive reaction to bank in the interim.

• Our last communicated FVE on Zenith Bank is N38.83 translates to a STRONG BUY rating on the stock. We will revisit our numbers after further analysis and discussion with management.

Contact [email protected] for full report

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#ILoveMyFamilySeries: At Last, Help Found Us

Our new home is way more comfortable than the former one. It is more spacious, the kitchen tastefully furnished and finally, I have a workspace for my favorite hobby – Carpentry.

The kids love the space in the house and the driveway. As they are on mid-term holidays, they spend most of the day playing with Maxy.

Maxy is a new addition to our family. My wife had always wanted us to have a pet dog, but our former Landlord warned us against having pets in his house based on reasons best known to him. The moment we moved into the new house, she went to get a cute Puppy. Ever since Maxy came into our family, our kids can’t get enough

We have also transferred Nifemi and Chinedu, our children to a school closer to the new house. Although they miss their friends from their old school, they have adapted quickly and Nifemi talks non-stop about his new friends and teachers.

As they say, nothing good comes without a price. We found out soon enough that the schools around here with the desired good standards and quality education cost more than our former place. My wife couldn’t hide her worries, but I calmed her down. We agreed to make some adjustments to our spending to accommodate the new fees.

When the mid-term holidays are over, it will be time to pay up the balance upon the school fees payment and thankfully that coincides with Payday

Yesterday evening after church, my friend Kola came with his family to see our new place. They loved it too. Kola told me how his kids, Titi and Edwin, miss Chinedu and Nifemi since we moved away, and the children got transferred too.

While the wives were catching up in the living room, I took Kola to see my new workspace. He loves woodwork too and was impressed with the simple setup. I told him I was already planning to make it a side hustle since I need more income streams now that my bills have taken a hike.

We caught up on the usual; sports, work, money and I quickly confessed to him that I couldn’t wait for the salary to come in, so I could balance up on the school fees that we are still owing.

Kola was surprised to hear that I still owe school fees. That was when he gave me an expo to how he handles his owns kids school fees. He introduced me to an affordable Education Plan he started years ago with ARM Life for his children and how he’s had zero worries when it came to paying school fees.

After they left, I told my wife what Kola told me and we checked it out online. We found that the offers in the plan were even better than what Kola described and it. Taking the step now will ensure that things will become a whole lot better for us in the future!

Suddenly, things are looking up. As soon as the salary arrives, I know exactly what do!

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Valentine’s Day: Five Magical Shades of Love

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Five budget friendly ways to show love this valentine

Love is a beautiful thing! But it can also be expensive, especially at a season like Valentine. While it is OK to splurge on the person you love, sometimes you are unable to. Your wallet and your heart just refuse to cooperate. We feel your predicament and agree that you and your bae still deserve a good time, even if you are not balling right now. Let’s hook you up with a few not -so- expensive ways to show your boo you care and give you both memories to treasure.

1. Dinner for two- at home

Who says a romantic dinner has to be at the most expensive rooftop restaurant in town? You can turn your balcony or a section of your house into the right atmosphere for an intimate dinner. What do you need? Two chairs and a table(not compulsory really, sitting on the floor can also be romantic), petals and flowers, good wine, soft music collection and good food. If you can cook, making the delicacy yourself gives it extra thrill (especially if you are a guy). Picking the right songs is also important, as is lighting. Create a walkway to the dinner table with the petals and provide desserts and appetizers.

P.S You have to handle this with all seriousness, even if it’s at home. Dress up, go all out, your date deserves it.

2. Movie night – at home

Let’s be honest, all the big cinemas will be extremely full that day. Spend half of the money you would have spent at the cinema on good wine and corn which you can pop together at home. You can each select your favourite movie and enjoy the evening watching old movies while creating new memories.

P.S Don’t show up in your pajamas just because it’s your house. Dress appropriately, just as you would if you were going to the movies. Of course, popcorn fights are more than welcome.

3. Handy man on duty

You know all those low key (or not so low key) complaints your beloved has been making about stuff that needs to be done around the house (especially if you are married)? Well, this is the perfect time to be Prince Charming. How about you take some time to actually change that padlock, repair that gadget, attend to all the little things you never have time for. You will be surprised at how pleased your spouse will be. Nothing says I love you like showing you listen and going out of your way to make him/her happy.

P.S Given that this is Nigeria, the above might not be enough to be termed a Val gift, consider buying the Gift of a Lifetime to complement this loving gesture.

4. Art or Park day

If you both are into that sort of thing, you can easily find art galleries in your vicinity which you can visit at very little cost. You can enjoy an evening of interpreting art works together and taking pictures with your favourite pieces. Imagine how cute a picture of both of you at Nike art gallery will look on the gram. The danger with this is your boo might ask you to buy that art work she really loves. Well, you will need a creative response at this point. Alternatively, parks like Omu resort and Freedom park only demand an entry fee or no fee at all for a plethora of fun activities.

5. Take her home to mama

This is the ultimate ‘I love you’ gesture. Give her the best valentine story to share with her friends by taking her home to meet your parents. This shows you are committed to your relationship and the future. It also makes her feel valued and puts her mind at rest.

P.S Be very sure you are in it for the long haul before you take her home. Once she bonds with your family my brother, just go and start ring shopping.

Lastly, experiences form the best memories, but keepsakes cement them. They are like tangible proof that the special moment happened. The perfect keepsake for beautiful valentine’s day memories is the Gift of a Lifetime, it is flexible enough to adjust to your pocket and keeps growing, making you look really good long after Valentine is over.

We wish you a happy valentine and a wonderful life filled with love.

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The Pentad – Urban Retail Price Tracker | Market Research

Prices take an inch back
 Our Urban Retail Price Tracker – the PURP index – recorded a modest pace of price increase of 0.42% MoM to 111.3 pts in January (vs 0.45% MoM in December). Price pressure remained more evident in the commodities and consumer basket, with the increase in the latter driven largely by reversal of price discounts following weeks of discount sales. On other fronts, prices were lower across the brewery and oil & gas sectors.

 In the consumer basket, average prices increased by 2.2% MoM largely due to reversal of price discounts following weeks of discount sales. Elsewhere, we noted increases in price of Close Up (+8.1%) and Dangote Pasta (+4.6%) which was not linked to any reversal of price discounts. Current price of Close Up now match the price of its closest competitor, Oral B. On the other hand, the increase in price of Dangote pasta now places it at a premium to Honeywell and Golden penny pasta.

 Prices in the brewery basket moderated slightly by 0.10% MoM as competition remained stiff in the sector. Price moderation was more evident in Goldberg (-1.2% MoM) and Satzenbrau (-0.6% MoM).

 Average price in the commodities basket remained elevated over January with prices rising by 0.57% MoM. Importantly, Palm Oil prices extended its rally into the month following festive period induced price hike. Nonetheless, prices are almost 10% lower compared to same period in the prior year. Similarly, vegetable oil prices were during the period. In a different trend, average price of rice moderated over January. Despite incessant floods, bumpy harvest continued to support crop production and supply during the period.

 Prices in the oil & gas sector witnessed moderated over January with average prices down by 0.78% MoM largely on the back of lower Cooking Gas price (-2.3% MoM). We believe this is largely due to increased domestic and foreign supply.

 Prices in the cement sector increased by 1.0% MoM following a decline in the previous month. On other fronts, activities in the cement sector picked up slightly relative to December gauged by demand for cements over the period.

For the full report, send a mail to [email protected]

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#ILoveMyFamilySeries: The Death That Taught Us A Big Lesson

I was shocked when my wife, Chidinma, called to inform me about the death of one of her Uncles, Uncle John. He had died of a heart attack.

Uncle John was such a good man. When we were planning our wedding ceremony five years ago, he was one of those that supported us financially. He was an easy-going man who would go any length to give his family the best.

He left behind five children and an unemployed wife because he never allowed his wife to work. He was a hardworking man. He worked for one of the top IT companies in Lagos.

When the news of his death came, one of the things that came to my mind was how his family will continue without him because he was the sole breadwinner.

His first child, Chibuzor, just got admitted into the university some months ago, while the others are still in secondary and primary schools. How would their mother continue without having any job?

When I got home that evening, I tried my best to console my wife. She was deeply concerned about the children and the wife Uncle John had left behind. She said the family is already planning on how the children will be handed over to different family members that will cater to them. The pain of separating from your immediate loved ones to stay with extended family members due to the death of one of your parents can be devastating.

When Uncle John was alive, he didn’t have much savings or any backup plan for his family. He was not prepared for what happened to him (nobody ever willingly prepared for death at his age) He didn’t have any family welfare insurance plan that covers his family welfare. This experience was a big lesson for me and my wife and we instantly went to open a Family Welfare insurance plan with ARM.

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ARM Research”: Initial View – Flour Mills of Nigeria Plc Q3 19

Earnings drown on higher cost and operating expense

Yesterday, Flour Mills of Nigeria released its third quarter (FQ3 19) result for the period ended December 2019, which showed a 27.4% YoY contraction in EPS by 27.4% YoY to N0.69 following persisting pressure on margins from higher cost of sales (+7.3% YoY) and higher operating expense (+10.6% YoY). Accordingly, EPS over the first nine month of the year declined 40.4% to N1.93.

Despite the downward adjustment to prices which started in FQ1 19, the company reported slight revenue growth in FQ3 19 (+1.4% YoY N130.9 billion) with management linking this to accelerated volumes growth in the period.  According to management a sizeable chunk of the revenue growth emanated from the food segment following strong sales from Flour and Pasta products. Furthermore, the revenue growth was in-part fed by marginal growth in the Agro Allied and Support Services – driven by festivity related improved sales of edible oil and the bagging business respectively.

However, reflecting the 21% YoY increase in global wheat prices over FQ3 19, raw material costs expanded 4% YoY – the largest constituent of COGS –with cost of sales coming higher by 7.3% YoY. Accordingly, gross margin contracted 480bps YoY to 11.1%. This in addition to higher operating expense over the period (+10.6% YoY to N6.9 billion) resulted in EBIT margin contraction by 530bps to 5.8%.

On the positive, following the rights issue proceed of N39 billion in FQ4 18, which was used to pay down expensive short-term borrowings, coupled with the successful completion of the first tranche of the N70billion bond program with N20 billion being raised with 3 and 5 years maturity at respective rates of 15.5% and 16%, compared to average rates on short term borrowings of 18% in FQ3 18, finance expense in FQ3 19 declined by 40.1% YoY to N5.3 billion. Notwithstanding the moderation in finance cost, the combination of weaker gross margin and higher operating expense translated to a 27.4% YoY decline in PAT to N2.8 billion.

The key takeaway, as regards future performance, from our discussion with the management yesterday, was management’s plan to embark on corporate restructuring of the agro allied division to optimize investments and costs. The process has been initiated and expected to be concluded by end of the 2018/19.

Flourmill trades at P/E and EV/EBITDA multiples of 8.78x and 3.81x compared to Bloomberg Middle East and Africa peers of 18.1x and 7.2x respectively.

Download full report Initial View – Flour Mills of Nigeria Plc Q3 19 – Earnings drown on higher cost and operating expense

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5 Investment Principles to Use During an Election Period

Okoro was busy talking to himself, murmuring in his room after looking at his investment portfolio and reviewing the current situation in the country. What do I do now? Election is coming up in 3 months – will the incumbent be retained, or will a new president be voted into power? There is so much uncertainty. Where do I keep the funds I intend to invest, and where do I transfer my existing investment portfolio to maximize returns? Okoro was disturbed.

Just before the last election, he withdrew his investments from the stock market only to hear that there was a growth of 12.5% over a 3-day period immediately after the announcement that a new president was voted into power as well as the peaceful transition that followed.

Okoro wants to know how he can manage the situation this time to get the best value from his investment portfolio and ensure he never gets broke?

Hmmm…. Let’s try to provide some solution to Okoro’s dilemma……

Election comes every 4 years but we have financial goals to achieve regardless of who wins- incumbent continues with the existing policies or a new winner emerges and promotes new policies to better the achievement of the previous government. These actions are not expected to influence your investment goals if you always apply the five investment principles highlighted below;

1. Be clear on your financial goals- Why are you keeping the funds away? How long are you looking at? Apply the SMART acronym to your goals- ensure that your goal is Specific, Measurable, Achievable, Realistic and Time Bound.
2. Know your financial status- What is your Net worth? Deduct your liabilities (what takes money away from you) from your assets (what makes money for you). Measure your cash flow and expenses with the help of a Budget. All of these would help you create a convenient savings plan towards achieving your financial goals.
3. There are so many goals running through your mind. Therefore, it is required that we split our goals into 3 different categories namely: Short term (those you want to achieve in 2 years), medium term (those you want to achieve between 2 to 10 years) and long term (those you want to achieve above 10 years).
4. Implement your strategies- You need to understand that the different financial instrument available are suitable for specific category of goals identified above. For instance, short term instruments are Treasury bills, Money Market Fund. Medium Term are Balanced mutual fund while long term are Stocks and real estate. You might need a Financial Advisor to help out.
5. Review your investment- Align your investment plan with new policies to ensure you are making the most value for yourself. Always review your short-term investment every 3 months, medium term goals every 6 months, Long term goals annually.

These are tested and trusted principles that will provide the hedge required on your investment portfolio at all times regardless of what changes in the economy.

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