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2020 (Member of The Nigerian Stock Exchange) 114135 - Capital ...
2020
       (Member of The Nigerian Stock Exchange) 114135
2020 (Member of The Nigerian Stock Exchange) 114135 - Capital ...
Content

                  1                                3                              6
Global Economy: The impact Nigeria Mid-year Economic             Gross Domestic
of COVID-19                review 2020                           Product (GDP)

                  7                                8                              9
Monetary Policy (MPR)            Inflation Rate                Capital Market Update

                15                                17                             19
Banking Sector                    Insurance Sector             Consumer Goods
                                                               Sector

                21                                23                             29
 Oil & Gas Sector                  Industrial Sector           H2 Outlook 2020

    Chukwuemeka Nwagwu                     Faith Igbokwe
    Capital Market / Research Analyst      Capital Market / Research Analyst
    T: +234-806-020-0321                   T: +234-810-512-5545
    E: cnwagwu@capitalbancorpgroup.com     E: figbokwe@capitalbancorpgroup.com

 Capital Bancorp Plc
2020 (Member of The Nigerian Stock Exchange) 114135 - Capital ...
30 June 2020
Global Economy.
The impact of COVID-19 on global Trade
The COVID-19 pandemic is causing the worst contraction in global trade in the post-war era
and it has had negative impact on activities in the Half year 2020 than anticipated, the pandemic
is likely to leave lasting scars on the global economy by threatening investor confidence and
human capital. The sharp fall in activity in the first half of this year is expected to contribute to
a contraction in global trade of about 13.4 percent in 2020. As the pandemic has spread,
stringent border controls and production delays have weighed on trade. Measures to slow the
outbreak have limited or delayed the supply of critical inputs.
Brent crude Oil slumped in the face of swelling crude supplies and weak fuel demand due to the
coronavirus pandemic, while investors also grew cautious over expectations that the world’s
biggest producers would quickly agree on output cuts.
A gradual recovery is assumed to start during the second half of the year as controls are lifted,
travel returns to more typical levels, and manufacturers rebuild inventories. This recovery is
expected to be historically feeble, however, reflecting the exceptional character of the present
crisis, as well as the length of time that it will take to restore confidence, to replace bankrupted
firms, and to establish virus-safe working and entertainment environments
                                                                                                        1
Capital Bancorp Plc
2020 (Member of The Nigerian Stock Exchange) 114135 - Capital ...
Market note
                                                                    (Member of The Nigerian Stock Exchange) 114135

Global markets

Global stocks rebounded on Tuesday as investors appeared willing to put their faith in vast
stimulus moves from central banks and governments to shore up economies against the fast-
spreading coronavirus pandemic. However, the gains were not enough to offset the previous
days’ rout as stocks were still headed for a weekly loss as at the time of writing. Consequently,
US (DOW JONES: -0.3%; S&P: 0.5%) and European (STOXX Europe: 2.01%; FTSE 100:
1.07%) shares were on track to close the Half year in the green. Asian shares (Nikkei 225:
0.11%; Shanghai SE: 1.38%) made a partial comeback from the global rout but still nursed
massive losses for the month.

World Map

  Source: Business Insider

  World markets also posted solid gains on economic recovery hopes, with the MSCI-EAFE
  Index rising 5.15%. European markets moved higher, with gains in France, Germany, and
  the Netherlands. The U.K. slipped 1.07%.

  Pacific Rim stocks were mixed, with advances in Australia (+1.52%) and Japan (+0.11%).
  Hong Kong gained (+0.52%) due to China-related tensions. The volatile Merval Index,
  which tracks the largest companies based in Argentina, dropped (-2.33%).

                                                                                                                     2
Capital Bancorp Plc
2020 (Member of The Nigerian Stock Exchange) 114135 - Capital ...
(Member of The Nigerian Stock Exchange) 114135

2020
2020 (Member of The Nigerian Stock Exchange) 114135 - Capital ...
Market note                                                      (Member of The Nigerian Stock Exchange) 114135

                                                                                             30 June 2020
Nigeria Economic
•   Projection of Nigeria’s GDP
•   Naira remains under strain after devaluation
•   Inflation rate jumps to 12.40%, highest in over
    2 years
• Government measures in response to COVID-
    19
Earlier this year, the outlook for Nigeria’s GDP was
optimistic, the World Bank and IMF forecasted 2.10%
and 2.30% growth respectively. However, recent
events – the decline in oil prices and the COVID-19
pandemic - has led to a review of the economic
outlook and a likelihood of a recession which means
that the pandemic has led to a reduction in GDP
growth by more than five percentage points.

Due to the collapse in oil prices coupled with the
COVID-19 pandemic and its negative impact on
global economic activities, the Nigerian government
slashed its 2020 budget by NGN1.5 trillion to
NGN9.09 trillion (excluding GOEs: NGN8.21
trillion).
In March, the crash in Oil prices led CBN to devalue the naira 4% against the US dollar
which is a major concern for Nigerian banks’ credit book and capital metrics “as the banks
have high proportion of foreign-currency denominated loans.
CBN weakened the Naira market rate to 380 naira per dollar from 365 naira while the
official exchange rate was allowed to depreciate by 15% to 360 naira per dollar from 307
naira.

Source: Bloomberg                                                                                                 4
Capital Bancorp Plc
2020 (Member of The Nigerian Stock Exchange) 114135 - Capital ...
Market note
                                                                   (Member of The Nigerian Stock Exchange) 114135

 The Coronavirus Disease (COVID-19) continues to significantly impact people’s health,
 businesses and the global economy. From country shutdowns, disruption of supply chains,
 crash in stocks, drop in commodity prices, loss of daily income, the negative economic effects
 are numerous. Now a global pandemic, corporates, regulators and governments across the
 world are responding to the scourge.
 Policymakers’ immediate priorities are to address the health crisis and moderate the short-term
 economic losses, the likely long-term consequences of the pandemic highlight the need to
 forcefully undertake comprehensive reform programs to improve the fundamental drivers of
 economic growth, once the crisis abates.

 The Nigerian Private Sector Coalition Against COVID-19 was announced as the umbrella body
 under which industrialists and corporate organizations would donate funds to support efforts in
 combating the contagious virus.
 Some of the top Nigerian billionaires who rose to the occasion and contributed to the good
 cause and the donations have grossed to N15.325 billion.

                                                                                                                    5
Capital Bancorp Plc
2020 (Member of The Nigerian Stock Exchange) 114135 - Capital ...
Market note
                                                                  (Member of The Nigerian Stock Exchange) 114135

                                                                                                  30 June 2020
 Gross Domestic Product (GDP).

 According to data published by the National Bureau of Statistics, Nigeria’s Gross Domestic
 Product (GDP) advanced by 1.87% year-on-year in the first quarter of 2020. The growth rate
 represents a decline of 0.23% compared to the 2.10% growth rate recorded in Q1 2019, and a
 drop of 0.68% compared to Q4 2019 figure of 2.55%.

Source: National Bureau of Statistics

 The Oil sector grew by 5.06% in real terms in Q1 2020, compared to a shrinkage of -1.46%
 recorded in Q1 2019, but lower than 6.36% growth rate achieved in the previous quarter.
 Average daily crude production rose to 2.07mbpd in Q1 2020 from 2.00mbpd in the preceding
 quarter. However, a supply glut caused by the Russia-Saudi price war, coupled with a drastic
 reduction in global demand for crude due to lockdowns, led to a precipitous decline in oil
 prices.

 The effect of the COVID-19 pandemic was felt more sharply in the Non-oil sector. The sector
 grew by 1.55% year-on-year in Q1 2020, compared to higher expansions of 2.48% recorded
 last year, and 2.27% in the fourth quarter of 2019.

 Going forward into Second Half year (H2’ 2020), we expect two sectors to either
 continue with negative growth. First, we expect Trade to continue with negative
 growth, given the fact that US dollars are in short supply and that logistical issues
 appear not to be fully resolved and Secondly, despite rising oil production, we expect
 the Oil & Gas sector go into recession. It is difficult to know exactly when the effects
 of low prices will translate into negative growth, as oil can be sold three or six months’
 forward (or more).
                                                                                                                   6
Capital Bancorp Plc
2020 (Member of The Nigerian Stock Exchange) 114135 - Capital ...
Market note
                                                                    (Member of The Nigerian Stock Exchange) 114135

                                                                                                    30 June 2020
Monetary Policy.
The Monetary Policy Committee (MPC), in its first-rate decision of the year, took a striking
decision by electing to adjust the Cash Reserve Ratio (CRR) upward by 500bps to 27.5%, while
holding all other parameters constant. While the committee highlighted increasing concerns
around sustained inflationary pressure, which has persistently run ahead of the CBN target of
6.0% - 8.0%, its disposition reflects signs of the ineffectiveness of monetary policy tools in
curbing consumer price pressures.
Cash Reserve Ratio in Nigeria remained unchanged at 27.50 percent in June from 27.50 percent
in May of 2020.

Source: Central Bank of Nigeria (CBN)

Inflation accelerated for the fourth consecutive month in December to reach a 20-month high
of 12.0% (November: 11.9%), amid rising money supply and the closing of land borders since
August which has stoked food inflation. Despite the pick-up in inflation, the MPC deemed
that keeping the policy rate stable “is essential for sustainable support to growth before any
possible adjustments”. Instead, the CNB opted to tighten liquidity conditions, and thus restrain
inflationary pressures, by increasing the amount of cash that banks are required to keep at the
CNB. Previous measures that encouraged lenders to extend more credit to stimulate growth
have led to an excess of liquidity in the system, which could stoke price increases further down
the line.

                                                                                                                     7
Capital Bancorp Plc
2020 (Member of The Nigerian Stock Exchange) 114135 - Capital ...
Market note
                                                                (Member of The Nigerian Stock Exchange) 114135

                                                                                                30 June 2020
Inflation Rate.
The Nigerian Bureau of Statistics (NBS) released the Consumer Price Index (CPI) which
serves as the measure of inflation in the country. The report shows that Headline Inflation
rose moderately by 6bps to 12.40% for the month of May 2020, compared to 12.34% recorded
in the month of April 2020.

Core Inflation surged once again, rising by 14bps to
10.12% from 9.98% in April, 2020, while Food
Inflation inched up by 1bp to 15.04% from 15.03% in
the previous month. On a monthly basis, Headline
Inflation rose by 1.17% in May, 2020 compared to
1.02% in the previous month. Food Inflation soared
by 24bps during the month to 1.42%, from 1.18% in
April, 2020. However, Core Inflation grew at a
reduced rate of 0.88% this month, compared to
0.93% in the previous month.
In line with the recent events, the inflation rate in
the economy will continue its upward movement,
though at a declining rate. The increase was
driven mainly by core inflation as prices of goods
and services in this basket continue to rise due to
the current economic condition.                                                                                  8
Capital Bancorp Plc
30 June 2020
Capital Market update.
 •   It was a positive market start 2020 for Nigeria’s equity bourse, as the benchmark index
     rose by 0.10% to 26,867.79 points, following investors’ interest in MTNN stock and
     Dangote Cement (Dangcem) buy-back share.

 Market momentum was mostly bearish in 2019 as the benchmark index fell to 26,842.07
 points, sinking deeper with a 14.6% loss after losing 17.8% in 2018. Taking a clue from the
 poor performance in 2019, the market started 2020 with a marginal appreciation of 0.10% in
 January, which started the Bullish run for the year.
                                                                                                   9
Capital Bancorp Plc
Market note
                                                                         (Member of The Nigerian Stock Exchange) 114135

                                               The All Share Index and market capitalization
                                               ascended by 0.10% to 26,867.79 and N12,970.80Bn
                 2-Jan-20 %Change       YTD
                                               respectively. Market activity was low as volume and
NSE ASI        26,867.79     0.10%    0.10%    value traded declined. Volume traded declined by -
MCAP N'Bn      12,970.80     0.10%    0.10%    74.93% to 264.10Mn shares, while value traded fell
VOLUME Mn         264.10   -74.93%         -   by -4.82% to N5.23Bn. The Nigerian equities market
VALUE N'Bn           5.23   -4.82%         -   posted a whopping 9.1% w/w gain, the largest
NSE 30          1,180.79     0.25%    0.25%    weekly return for 2-years (12 January 2018: +10.0%),
Consumer Goods    592.24    -0.10%   -0.10%    to become the world’s best-performing stock market
Oil & Gas         249.38    -5.01%   -5.01%    for the week.
Banking           355.46    -0.39%   -0.39%    The Equities market ended the month of January
Industrial      1,051.34    -2.26%   -2.26%    2020 on a bullish note, gaining 7.46% compared to
Insurance         127.04     0.97%    0.97%    the loss of 0.59% recorded in the month of
 Source: NSE, CBP Research
                                               December 2019.

                                               Equities hit new low as Coronavirus rattles
                                               markets
                                               Going into February, the market was unsettled by
            25,694                             investors’ reactions to the outbreak of Coronavirus
                                               in China and the aggressive pace of infections. On
                                               25 February 2020, the index case of the novel
                                               Coronavirus, Covid-19, was announced in Nigeria.
            9,746                              Since then, the number of cases has risen to 11,166
                                               confirmed cases with 3,329 discharged and 315
                                               deaths as at 20 April 2020.
            590                                The stock market ASI YTD crash began on
                                               Thursday, February 27. The NSE ASI fell by -0.13%
                                               YTD that day to 26,808.24 index points after a
                                               global market recognition as “THE WORLD’S
                                               BEST PERFORMER” with a positive price return
                                               of 4.22%. Some labeled the crash as “BLOODY
                                               VAL” that started the ASI YTD drop to date.
                                               The local bourse ended the month of February 2020
                                               on a bearish note, reversing the gain of 7.46%
                                               recorded in January 2020 to a loss of 9.11% in the
                                               month of February 2020. This translated to a Year-
                                               to Date loss of 2.33% as at February 28, 2020. The
                                               market cap deteriorated to N13.36trillion in
                                               February 2020 from N14.86trillion in January 2020.
                                                                                                                          10
Capital Bancorp Plc
Market note
                                                                    (Member of The Nigerian Stock Exchange) 114135

 We opine that this may have been as a result of weak investor sentiment, towards to nation’s
 equities markets on the back of the epidemic arising from the Corona Virus which caused a
 slowed down in economic activities in the global space. Similarly, the uncertainty around
 regulation of banks could have caused sell-offs in some of the majors banking names.

                               Dec-19                Jan-20   Feb-20       %Change                     YTD
 NSE ASI                    26,842.07            28,843.53 26,216.46         -9.11%                 -2.33%
 MCAP N'Tn                      12.96                14.86     13.66         -8.08%                  5.40%
 VOLUME Bn                       1.05                  0.35     0.42         20.00%                -60.00%
 VALUE N'Bn                      5.50                  4.21     6.19         47.03%                 12.55%
 Deals/Trades                   2,445                4,207     5,220         24.08%                113.50%
 NSE 30                      1,177.83             1,180.79  1,148.03         -2.77%                 -2.53%
 Consumer Goods                592.85               592.24    458.03        -22.66%                -22.74%
 Oil & Gas                     262.54               249.38    234.01         -6.16%                -10.87%
 Banking                       356.84               355.46    315.50        -11.24%                -11.59%
 Industrial                  1,075.60             1,051.34  1,214.60         15.53%                 12.92%
 Insurance                     125.82               127.04    116.30         -8.45%                 -7.57%
Source: NSE, CBP Research

COVID-19 Dampens Investors’ Sentiment
The weak performance of the nation’s bourse may be attributed to the fear of devaluation
following the sustained weakness in oil price as well as the continued spread of COVID-19,
which continues to dampen the nation’s growth expectation. Additionally, weaknesses in the
country’s ability to defend its currency with FX reserves at US$34.97 following 9 months of
decline, and risk off sentiments towards Emerging and Frontier markets has led to reversal of
FPI inflows from the local bourse.
The NSE All-Share Index (ASI) declined by -0.14% to its worst First – quarter performance
(Q1’ 2020) at -20.65% in NSE history to close at 21,300.47 points.
                           Dec-19       Jan-20        Feb-20    Mar-20       %Change                    YTD
 NSE ASI                26,842.07   28,843.53      26,216.46 21,300.47        -18.75%               -20.65%
 MCAP N'Tn                  12.96       14.86          13.66     11.10        -18.74%               -14.35%
 VOLUME Bn                   1.05         0.35          0.42      0.42          0.00%               -60.00%
 VALUE N'Bn                  5.50         4.21          6.19      1.72        -72.21%               -68.73%
 Deals/Trades               2,445       4,207          5,220     3,448        -33.95%                41.02%
 NSE 30                  1,177.83    1,180.79       1,148.03    902.37        -21.40%               -23.39%
 Consumer Goods            592.85      592.24         458.03    325.50        -28.93%               -45.10%
 Oil & Gas                 262.54      249.38         234.01    215.25         -8.02%               -18.01%
 Banking                   356.84      355.46         315.50    235.86        -25.24%               -33.90%
 Industrial              1,075.60    1,051.34       1,214.60  1,041.18        -14.28%                -3.20%
 Insurance                 125.82      127.04         116.30    119.40          2.67%                -5.10%

Capital Bancorp Plc
                                                                                                                     11
Market note
                                                                         (Member of The Nigerian Stock Exchange) 114135

 Nigerian equities suffered high price volatility in the first quarter of 2020 as a result of the
 impact of the Coronavirus (COVID-19) pandemic, as well as the crash in global oil prices.

 In the month of April, the market experienced significant gain which was as a result of
 investors reacting to the inflow of corporate earnings and actions released by listed companies.
 Similarly, there was bargain hunting by local investors who took advantage of cheap prices of
 fundamental stocks to average down despite the declines in reserves and oil price as well as
 weak macro economic condition.

Source: NSE, investing.com

The raging bull ended the month of April 2020 in the positive territory as NSEASI gained
8.08%, retracing some of the losses in March 2020 (-18.75%). This translated to a Year-to-Date
loss of 14.24% as of April 30, 2020. The market cap improved to N11.99trillion in April 2020
from N11.10trillion in March 2020.
                         Dec-19       Jan-20      Feb-20      Mar-20    Apr-20        %Change                 YTD
NSE ASI               26,842.07   28,843.53    26,216.46   21,300.47 23,021.01           8.08%            -14.24%
MCAP N'Tn                 12.96       14.86        13.66       11.10     12.00           8.08%             -7.43%
VOLUME Bn                  1.05         0.35        0.42        0.42      0.36         -14.29%            -65.71%
VALUE N'Bn                 5.50         4.21        6.19        1.72      3.26          89.53%            -40.73%
Deals/Trades              2,445       4,207        5,220       3,448     4,946          43.45%            102.29%
NSE 30                 1,177.83    1,180.79     1,148.03      902.37    987.17           9.40%            -16.19%
Consumer Goods           592.85      592.24       458.03      325.50    371.99          14.28%            -37.25%
Oil & Gas                262.54      249.38       234.01      215.25    209.13          -2.84%            -20.34%
Banking                  356.84      355.46       315.50      235.86    271.57          15.14%            -23.90%
Industrial             1,075.60    1,051.34     1,214.60    1,041.18  1,012.59          -2.75%             -5.86%
Insurance                125.82      127.04       116.30      119.40    121.88           2.08%             -3.13%
Source: NSE, CBP Research
                                                                                                                          12
Capital Bancorp Plc
Market note
                                                                                  (Member of The Nigerian Stock Exchange) 114135

Bloomberg has ranked the Nigerian Stock Exchange as the second best performing
primary equity in the last one month. The ranking which covers April 4 to May 5 shows
that the local bourse rallied by 16.395 percent in the 31 days period.

The ease of the lockdown has significantly added to improved trading on the local bourse
as the total market capitalisation stands at N12.53. Several factors have been identified as
the reason for this rally including oil price recovery, the gradual easing of the lockdown in
several economies, and the expectation of dividend payments attracting investors to blue
chip stocks.

  Source: NSE, investing.com
 From the above chart, May continued the upward movement as the Bull stood strong to
 maintain growth. Investors are positioning for the high dividend yields of blue cheap
 companies ahead of their qualification and closure dates.
 The local bourse ended the month of May 2020 in the positive territory as NSE ASI gained
 9.76%. This translated to -5.86% Year-to-Date
                         Dec-19       Jan-20      Feb-20      Mar-20      Apr-20    May-20        %Change              YTD
  NSE ASI             26,842.07   28,843.53    26,216.46   21,300.47   23,021.01 25,267.82           9.76%          -5.86%
  MCAP N'Tn               12.96       14.86        13.66       11.10       12.00     13.17           9.78%           1.62%
  VOLUME Bn                1.05         0.35        0.42        0.42        0.36      0.33          -8.33%         -68.57%
  VALUE N'Bn               5.50         4.21        6.19        1.72        3.26      4.48         37.42%          -18.55%
  Deals/Trades            2,445       4,207        5,220       3,448       4,946     5,647         14.17%          130.96%
  NSE 30               1,177.83    1,180.79     1,148.03      902.37      987.17 1,096.28          11.05%           -6.92%
  Consumer Goods         592.85      592.24       458.03      325.50      371.99    424.96         14.24%          -28.32%
  Oil & Gas              262.54      249.38       234.01      215.25      209.13    228.30           9.17%         -13.04%
  Banking                356.84      355.46       315.50      235.86      271.57    304.11         11.98%          -14.78%
  Industrial           1,075.60    1,051.34     1,214.60    1,041.18    1,012.59 1,204.70          18.97%           12.00%
  Insurance              125.82      127.04       116.30      119.40      121.88    131.81           8.15%           4.76%
                                                                                                                                   13
Capital Bancorp Plc
Market note
                                                                      (Member of The Nigerian Stock Exchange) 114135

 In the month of March 2020, we see the panic of investors towards the stock market as a result
 of crash in Oil price (Saudi & Russia oil war), Coronavirus (COVID-19) pandemic and Naira
 devaluation. The same investors are now taking advantage of capital gain and dividends
 proposed by most companies.
 As at the end of the Half year June 30, 2020 the NSE ASI ytd is -8.80% compare to
 March ending which closed at -20.65%, the Bull has been up and running.

  Source: NSE, investing.com

 Outlook for the Third quarter

 The performance of the capital market will be shaped by how Government policies could
 quickly address the coronavirus pandemic. A rise in the fortune of crude oil will bolster
 investor’s confidence in the nation’s capital market. Also, we foresee a pick in the activities of
 private equity firms due to the fact that equity valuations of most stocks are far below their real
 worth. In addition, the current valuations offer opportunities to those who want to position for
 long term.

 Since the first day in the third quarter started on a good note, we foresee investors positioning
 for interim dividends but will the Banking sectors pay their final dividends? This will determine
 investors fate.
                                                                                                                       14
Capital Bancorp Plc
Market note
                                                                            (Member of The Nigerian Stock Exchange) 114135

                                                                                                           30 June 2020
Nigerian Banking Sector
                                                              ACCESS                         N6.55                      BUY
In January 2020, the Monetary Policy Committee                                            2018      2019           Q1' 2020
(MPC) of the Central Bank of Nigeria (CBN) raised             EPS                          3.31       2.9                2.8
the Cash Reserve Ratio by 5% to 27.5%. The move               P.E (x)                      2.3x      2.9x               2.3x
shocked bankers who had expected the CBN to taper             Net Asset per share        17.17       13.8             17.88
down on its tight monetary policies considering the           Dividend Yield             8.70%     9.20%
economic headwinds. The CBN also imposed a loan
to deposit ratio of 65% which means banks will also
have to lend out 65% of their deposits.                       FBNH                           N5.25                      BUY
                                                                                          2018          2019       Q1' 2020
                                                              EPS                          1.61          1.95          2.18
                                                              P.E (x)                      4.9x          2.1x           2.4x
                                                              Net Asset per share        14.74         18.42          18.95
                                                              Dividend Yield             4.60%         0.00%

                                                              GUARANTY                       N22.05                     BUY
                                                                                          2018       2019          Q1' 2020
                                                              EPS                          6.54      6.96              6.98
                                                              P.E (x)                      5.3x       3.4x              3.2x
                                                              Net Asset per share        19.58      23.35             22.46
                                                              Dividend Yield             9.40% 10.40%
Source: NSE, investing.com
The outbreak of COVID-19 and the sharp downturn
                                                              UBA                           N6.25                       BUY
in crude oil prices have continued to stoke fears of a
further devaluation in the Naira.                                                        2018      2019            Q1' 2020
The Nigerian Stock Exchange’s banking index                   EPS                          2.2     2.52                2.53
declined by -1.32% to close at -20.68%. The positive          P.E (x)                     3.5x      2.7x                2.5x
performance in FY’2019 & Q1’2020 financial results,           Net Asset per share         14.7    17.49               17.91
investors’ reaction to the result is positive as the bank’s   Dividend Yield           11.00% 15.00%
shares kept pushing up.
The International Monetary Fund (IMF) has advised             ZENITH                        N16.10                      BUY
top commercial banks in the world to suspend                                             2018      2019            Q1' 2020
dividend payment to their shareholders so as to retain        EPS                         6.15     6.65                6.66
earnings during the COVID-19 pandemic. retaining              P.E (x)                     3.9x      2.9x                2.4x
earnings through suspension of dividend payments              Net Asset per share       25.98         30
would provide banks with enough capital to serve as a
                                                              Dividend Yield           13.60% 16.60%
buffer against the adverse effects of the pandemic.
                                                              Market Price @ 30th June, 2020
                                                                                                                             16
Capital Bancorp Plc
Market note
                                                                         (Member of The Nigerian Stock Exchange) 114135

                                                                                                        30 June 2020
Nigerian Insurance Sector
•    NAICOM gives insurance companies additional
     one year to recapitalise                                  AIICO                          N0.92            UR
The National Insurance Commission (NAICOM), the                                             2018    2019 Q1' 2020
insurance regulator in Nigeria, has recently introduced        EPS (N)                      0.44    0.83     0.27
higher minimum capital requirements for insurers with a        P.E (x)                       N/A     N/A      3.4x
                                                               Net Asset per share           N/A     N/A
31 December 2020 deadline. Under the revised
                                                               Dividend Yield                N/A     N/A
capitalization requirements, life insurance firms are
                                                               UR: Under Review – We are current updating
required to have a minimum paid-up capital of N8.0             the Valuation model
billion from N2.0 billion previously while general
insurance companies are required to raise their minimum
                                                               CUSTODIAN                      N5.50            UR
paid-up capital to N10.0 billion from N3.0 billion
                                                                                            2018    2019 Q1' 2020
previously.                                                    EPS (N)                      1.16    0.97     0.31
The regulatory capital for composite insurance was raised      P.E (x)                       N/A     N/A    17.7x
to N18.0 billion from N5.0 billion previously while            Net Asset per share           N/A     N/A     7.92
reinsurance businesses are now required to have a              Dividend Yield                N/A     N/A
minimum capital of N20.0 billion from N10.0 billion            UR: Under Review – We are current updating
                                                               the Valuation model
previously

                                                               NEM                            N2.06            UR
                                                                                            2018    2019 Q1' 2020
                                                               EPS (N)                      0.39    0.45
                                                               P.E (x)                       N/A     N/A
                                                               Net Asset per share           N/A     N/A
                                                               Dividend Yield                N/A     N/A
                                                               UR: Under Review – We are current updating
                                                               the Valuation model

                                                               WAPIC                          N0.35                UR
                                                                                           2018         2019 Q1' 2020
Source: NSE, investing.com                                     EPS (N)                      0.03         0.02    0.02
                                                               P.E (x)                     11.0x        15.5x   17.5x
NAICOM has extended the deadline for insurance and
                                                               Net Asset per share          0.71         0.77
reinsurance companies to meet its new capital                  Dividend Yield               N/A          N/A
requirements to September 30, 2021 from December 31,           UR: Under Review – We are current updating
2020. It disclosed this in a circular, titled, ‘Segmentation   the Valuation model
of minimum paid-up share capital requirements for
                                                               Market Price @ 30th June, 2020
insurance companies in Nigeria but the regulated entities
must meet about half of the capital requirements by the
end of December 2020.
                                                                                                                          18
Capital Bancorp Plc
Consumer Goods
Sector
Market note
                                                                      (Member of The Nigerian Stock Exchange) 114135

                                                                                                     30 June 2020
Nigerian Consumer Goods Sector
The federal government of Nigeria closed the land
borders to the country on the 20th of August 2019 with      DANGSUGAR                    N12.00                  BUY
a view to curtailing the smuggling of goods into the
country from neighbouring countries as well as ensuring
                                                                                       2018         2019    Q1' 2020
compliance with existing trade rules as to how trade        EPS (N)                    1.85         1.87        0.53
should be conducted.                                        P.E (x)                     8.2x         6.9x      22.6x
In essence, there are both advantages and disadvantages     Net Asset per share        8.25         9.01        9.54
to this land border closure. It is difficult to ascertain   Dividend Yield
which outweighs the other but one thing is for sure, the
government cannot continue to make the citizens pay for
their inefficiencies.                                       FLOURMILL                   N19.00        HOLD
                             441.71 +0.18
                                                                                       2017    2018 9M' 2019
                                                            EPS (N)                    4.83      1.3    1.84
                                                            P.E (x)                            15.2x 10.3x
                                                            Net Asset per share                        37.61
                                                            Dividend Yield

                                                            NB                          N36.10                   BUY
                                                                                       2018         2019    Q1' 2020
                                                            EPS (N)                    2.43         2.01          1.7
                                                            P.E (x)                   21.6x        25.6x       21.2X
                                                            Net Asset per share       20.86        20.98       21.67
                                                            Dividend Yield
Source: NSE, investing.com

The covid-19 pandemic took the world by storm. While
people are caught up in the fear of contracting the virus   NESTLE                     N1,256.80           BUY
and the nationwide lockdown announced by Federal                                       2018      2019 Q1' 2020
Government, led to severe disruptions and widespread        EPS (N)                   54.26 57.63         55.5
confusion among people. The lockdown resulted in            P.E (x)                   27.4x 19.6x 22.6X
panic buying and people hoarding essential items like       Net Asset per share       63.36 57.47
beverages, homecare products while the demand for           Dividend Yield
breweries products like beer declined.
                                                            Market Price @ 30th June, 2020

                                                                                                                        20
Capital Bancorp Plc
Oil & Gas
Sector
Market note
                                                                          (Member of The Nigerian Stock Exchange) 114135

                                                                                                         30 June 2020
  Nigerian Oil & Gas Sector
   Outbreak of Coronavirus Drives Oil Prices Lower
   • Reduction of the Budget benchmark price of
        crude oil                                             CONOIL                      N21.00                UR
   • Global and local crude oil production cuts                                         2018         2019 Q1' 2020
                                                              EPS (N)                   2.59         2.86
   • Reduced crude oil demand and unsold
                                                              P.E (x)                    8.9x         6.9x
        cargoes                                               Net Asset per share      26.37        27.23
   On January 6th crude oil prices briefly rose above         Dividend Yield             N/A          N/A
   US$70/barrel as US-Iran tensions escalated in the days     UR: Under Review – We are current updating
   following a US air strike that killed one of Iran's most   the Valuation model

   senior military figures, General Qassem Suleimani.
                                                              OANDO                       N2.30            UR
   Brent oil price came under significant pressure from
                                                                                        2018    2019 Q1' 2020
   supply and demand sides of the market. While the           EPS (N)                    N/A     N/A       2.3
   supply side was driven by the price war between Russia     P.E (x)                    N/A     N/A      1.0x
   and Saudi Arabia, the demand side was driven by weak       Net Asset per share        N/A     N/A
   oil demand on the back of series of shutdowns in           Dividend Yield             N/A     N/A
   different parts of the world due to the spread of          UR: Under Review – We are current updating
   COVID-19. As such, Brent oil price lost 38% to             the Valuation model

   US$41.15 per barrel                                        TOTAL                       N97.50                UR
                                                                                        2018         2019 Q1' 2020
                                                              EPS (N)                    N/A          N/A      7.6
                                                              P.E (x)                    N/A          N/A    12.8x
                                                              Net Asset per share        N/A          N/A
                                                              Dividend Yield             N/A          N/A
                                                              UR: Under Review – We are current updating
                                                              the Valuation model

                                                              SEPLAT                       N386          HOLD
                                                                                        2018     2019 Q1' 2020
                                                              EPS (N)                   78.9    149.4 -60.19
                                                              P.E (x)                    7.8x     3.6x   (6.4x)
                                                              Net Asset per share     835.21 941.14 1,042.97
   Source: NSE, investing.com                                 Dividend Yield             N/A      N/A
   The year has seen a renewed oil price war and the Market Price @ 30th June, 2020
   spread of a global pandemic which has in turn seen oil
   price fall sharply which will further erode investment
   and production in Nigeria. The refining sector is due to
   be transformed with the start-up of the Dangote
   facility, for which we now expect to see first
   production in 2021, reaching full capacity in 2022.
                                                                                                                           22
Capital Bancorp Plc
Industrial
Sector
Market note
                                                                  (Member of The Nigerian Stock Exchange) 114135

                                                                                                 30 June 2020
Nigerian Industrial Sector
•      BUA Cement Plc is a product of a merger between       BUACEMENT                   N38.7               BUY
       the Cement Company of Northern Nigeria                                          2018        2019 Q1' 2020
       (CCNN) and OBU Cement                                 EPS (N)                   1.89        1.79     0.58
•      Dangote Cement: Creating Value For Shareholders       P.E (x)                  16.83       16.83     66.7
       Through Share Buyback                                 Net Asset per share       9.11       10.74
                                                             Dividend Yield             N/A         N/A
On Thursday 9th January, Abdul Samad Rabiu, chairman,
Cement Company of Northern Nigeria, CCNN and
Founder/CEO of BUA Cement rang the traditional closing
gong on the floor of the Nigerian Stock Exchange to mark     DANGCEM                 N127           BUY
the end of trading for that day and also signals the                              2018    2019 Q1' 2020
successful completion of the scheme of merger                EPS (N)             22.83 11.79       11.8
CCNN/Kalambaina Cement and listing of the shares of          P.E (x)                9.2 14.42     10.8x
the expanded entity.                                         Net Asset per share  57.9 52.69
Dangote Cement is the first Nigerian corporate body to       Dividend Yield        N/A     N/A
undertake a share buyback as a corporate action, to buy       Market Price @ 30th June, 2020
back 10% of its entire issued shares from shareholders was
unanimously granted on January 22, 2020 as the company’s
shareholders’ voted in support of the share buyback plans.

    Source: NSE, investing.com

                                                                                                                   24
Capital Bancorp Plc
Market note
                      (Member of The Nigerian Stock Exchange) 114135

                                                                       26
Capital Bancorp Plc
Market note
                      (Member of The Nigerian Stock Exchange) 114135

                                                                       27
Capital Bancorp Plc
INVESTMENT QUOTE

Warren Edward Buffett is an American investor, business tycoon, and philanthropist,
who is the chairman and CEO of Berkshire Hathaway. He is considered one of the
most successful investors in the world and has a net worth of US$88.9 billion as of
December 2019, making him the fourth-wealthiest person in the world.

                                                                 ………Wikipedia

                                                                                  28
Capital Bancorp Plc
30 June 2020
 Global Market H2 Outlook 2020.
  The Covid-19 crisis drove the global economy into an unprecedented deep freeze in the first
  half of 2020. The combination of monetary and fiscal stimulus will help the global
  economy de-freeze in H2. As was the case with the virus cycle, the recovery will be
  sequential and involve different regions at different times - on a ‘first in, first out’ basis - and
  will depend on the size of the policy response. As the global economy gradually de-freezes,
  investors will turn their focus back to geopolitics. The climax will be the US presidential
  election – the outcome of which appears increasingly open. It will influence the US vs.
  China dispute, which will shift from trade to technology and healthcare supremacy.

                                                                                                            29
Capital Bancorp Plc
ABOUT CAPITAL BANCORP PLC
Incorporated in 1988, we have been around for over three decades delivering superior
value to our clients in the capital market.

We consistently help our clients weather storms produced by harsh economic cycles,
imbalanced and unfavourable economic environments. We leverage technology and our
unique specialities to preserve legacy companies and accelerate the growth of start-ups
across industries.

We have 3 subsidiaries strategically incorporated to address the unique financial and
capital demands of our clients – Bancorp Finance Limited, Bancorp Bureau De Change
and Bancorp Asset Management Limited.

Corporate Directory
                                                        Branch Offices:
Registered Address (Head Office):                       Ground Floor, OKLEN Suites
3rd Floor, UNTL House 1, Davies Street,                 1, Evo Road, Off Olu Obasanjo
Off Marina, Lagos, Nigeria                              Road,
                                                        GRA Phase 2, Port Harcourt,
                                                        Rivers State
       +234 - 01 – 462-2367, 462-2371 - 5
RC Number: 114135                                       No. 8, Lagos by pass GNI Building
Trading Code on The Stock Exchange: BNCO                Oke – Ado, Ibadan, Oyo State.

    Capital Bancorp plc                                      @CapitalBancorp
    @CapitalBancorpPlc                                        info@capitalbancorpng.com

    @capital_bancorp                                          www.capitalbancorpng.com
(Member of The Nigerian Stock Exchange) 114135
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