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Unraveling Value: A Case for Restructuring Ecobank Group (ETI) to Unleash True Value
Summary: ETI’s share price has returned a disappointing -262.5% to shareholders since its listing by introduction in 2006 (2006: GHS 0.29p; 2020: GHS 0.08p) at its current market capitalisation of GHS 1.92B (USD 334.85M). Astonishingly, the Group’s Ghanaian subsidiary which represents 7.19% of the Group’s operating assets, commands an enviable market capitalisation of GHS 2.32B (USD 403 M) representing a total return of 1,209.5%. This article seeks to analyse the...
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Bargain Hunting - A Compelling Case for Purchase of Cal Bank Shares
Summary Cal Bank shares currently sell at GHS 0.69, which represents a Price to book ratio of 0.4x meaning the Bank is selling for less than half its book value or actual net worth. In theoretical sense buying Cal Bank at a price of GHS 432.34 million or GHS 0.69 per share is like buying the company at a significant discount of over 58% to its book value. At...
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BOPP’s earnings continue to benefit from higher CPO prices
Benso Oil Palm Plantation (BOPP) has reported a topline growth of 29.5%y/y (vs. 20.9%y/y in FY2019) to GHS123.82 million in FY2020 on the back of higher palm oil prices emanating from increased demand from China and India as well as production squeeze arising from labor shortages in key producing countries in the midst of the covid-19 pandemic. Commodity data from the World Bank shows that the price of Crude Palm...
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Why Unilever’s topline recovery failed to translate into earnings
The consistent improvement in consumer confidence in the second half of 2020 helped to boost Unilever’s revenue by 36.9%y/y to GHS456.28 million in FY2020 from GHS333.29 million in FY2019. This was a remarkable performance especially given that the company’s revenue was down in Q3-2020. The recovery in revenue enabled Unilever to post a gross profit of GHS78.67 million FY2020 from a gross loss of GHS15.39 million a year ago. ...
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Why Fan Milk posted its worst ever earnings in 2020
Although there was improved demand for Fan Milk’s products in the final quarter of the year as consumer confidence recover, overall revenue for 2020 dropped by 12.0%y/y to GHS373.58 million. This was attributable to unfavorable performance in the earlier part of the year as a result of the coronavirus pandemic, which significantly limited the movement of people including the company’s sales boys who use bicycles to penetrate communities and local...
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Benso Oil Palm profit jumps on higher commodity prices
The revenue of Benso Oil Palm Plantation (BOPP) rose by 14.1%y/y to GHS89.67 million for the first nine months of 2020 (9M-2020), driven by 37.%y/y rise in the price of Crude Palm Oil to USD798.12 per MT in September 2020. The price Palm Kernel Oil also increased by 25.1%y/y to USD767.14 per MT in September, according to data from the World Bank. The company’s margins were also buoyed...
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Why Ecobank’s earnings improved despite the pandemic
Ecobank Ghana maintained a strong revenue growth of 18.5%y/y (versus 19.5%y/y in 9M-2019) to GHS1.52 billion in 9M-2020 despite the impact of the coronavirus pandemic on banking activity. Revenue was mainly driven by a 14.5%y/y growth in interest income to GHS1.16 billion on back of a strong growth (+41.3%y/y) in interest bearing non-trading assets to GHS4.13 billion. However, non-interest income contracted on the back of lower fees and commissions as... Read more
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Unilever Ghana needs more time for earnings to rebound
The contraction in Ghana’s GDP by 3.2%y/y in the second quarter of 2020 on the back of the impact of the covid-19 pandemic on economic activity translated into a 6.7%y/y contraction in the revenue of Unilever Ghana to GHS319.82 million in 9M-2020 from GHS342.90 million in 9M-2019. However, like other companies in the consumer goods space, we expect the rebound in consumer confidence to boost the company’s sales in the...
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Downward trend in inflation could trigger policy rate cut in 1H-21
Ghana’s inflation has decelerated quickly to 9.9%, which is within the central bank’s target range of 6-10%, in January 2021 on the back of slowdown in the growth of food prices. Food inflation dropped by 130bps to 12.8% in January 2021 from 14.1% in the previous month. However, non-food inflation remained unchanged at 7.7% in January 2021, partly due to the stability of the GHS against the USD in January,...
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MPC likely to hold policy rate as inflation heightens
Ghana’s consumer inflation rose by 60bps to 10.4% in December 2020 from 9.8% in the previous month in line with our expectations, which were expressed in the November inflation note. Inflation was driven by increased spending in the run-up to the December 2020 elections and the festive period. Moreover, some retailers who took advantage of the increased demand to hike prices of their goods and services. The rising influence of...
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Ghanaian economy now in a recession, but could recover in Q4
The Ghanaian economy contracted for the second consecutive quarter by 1.1% in Q3-2020 on the back of contractions in the industrial and services sectors. This follows a contraction of the economy by 3.2% in the previous quarter. While the contraction is not as severe as the previous quarter, the recession experienced by the Ghanaian economy is contrary to earlier indications that economic activity has started to recover to the extent...
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Downward trend in inflation would reinforce desire to reduce yields
Ghana’s consumer inflation dropped to within the central bank’s target band of 6-10% for the first time in eight months. Headline inflation dropped by 30bps to 9.8% in November 2020 from 10.1% in the previous month. This was attributable to a 90bps drop in food inflation to 11.7% from 12.6% in October on the back of availability of recently harvested food crops in the market. The downward trend in inflation...
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MPC maintains policy rate at 14.5% as economy recovers
The MPC of the BoG held the benchmark policy rate at 14.50% in line with our expectations at its Nov-2020 meeting. Macroeconomic conditions have largely improved since the last meeting. Inflation continues to ease towards the medium-term target band while economic growth has shown a faster than expected path to recovery. The exchange rate has also been broadly stable as FX reserves have been robust. Headline inflation continues on a...
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Why consistent drop in inflation could drive down yields
Consumer inflation dropped by 30bps to 10.1% in October 2020 from 10.4% in the previous month, largely driven by a reduction in non-food inflation, which constitutes 45.3% of the inflation basket. The consistent drop in inflation towards the Bank of Ghana’s (BoG) target band of 6-10% could create a window of opportunity for the central bank to drive down treasury yields in the coming weeks, especially given that demand has...
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TOTAL’s dividend would be a welcome relief to shareholders
Total Petroleum has announced an interim dividend of GHS0.0694 per share for the 2020 financial year ending December 31, 2020. And based on the company’s corporate practices in the last decade, it is likely to declare a final dividend in respect of the 2020 financial year later in 2021. The interim dividend would result in a dividend yield of 3.0% given the company’s prevailing market valuation of GHS2.35 per...
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GGBL to pay dividend this year despite earnings contraction
GGBL has declared a dividend for the third consecutive year in respect of the 2020 financial year. However, the dividend per share of GHS0.0138 is 52.9% lower than the dividend of GHS0.0293 declared in the previous year. The lower dividend was driven by a contraction in earnings by 32.6%y/y to GHS12.16 million in 2020 from GHS18.05 million in 2019. The company is expected to pay a total dividend of...
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EGL announces 20.0%y/y rise in dividend to GHS0.054 per share
EGL has announced 20.0%y/y rise in dividend to GHS0.054 per share for the 2019 financial year on the back of 53.6%y/y rise in net profit attributable to shareholders to GHS79.63 million in 2019 from GHS51.86 million in the previous year. This
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CAL Bank's dividend payout ratio rises to a 7-year high of 32.2%
CAL Bank is set to pay a dividend for the second consecutive year. The bank has proposed a dividend of GHS0.089 per share for the 2019 financial year, and this reflects 85.4%y/y growth over the dividend of GHS0.048 per share paid in the previo
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Society Generale announces 125.0%y/y rise in dividend for 2019
Society Generale Ghana (SOGEGH) has announced a 125.0%y/y growth in dividend per share to GHS0.09 in respect of the 2019 financial year from GHS0.04 in the previous year. The significant growth in dividend was driven by 107.4%y/y rise in net e Read more
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MTN Ghana to pay a final dividend of GHS 0.04 per share
MTN Ghana has announced a final dividend of GHS 0.04 per share for the 2019 financial year. Having paid an interim dividend of GHS 0.02 per share earlier, this brings the total dividend in respect of the 2019 financial year to GHS 0.06 per sha Read more
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CAL Brokers initiates coverage of GGBL with a BUY recommendation
We initiate coverage of Guinness Ghana Brewery Limited (GSE:GGBL) With a BUY recommendation based on a price target of GHS2.70 per share, with reference from the current market price of GHS2.20, translating into capital appreciation of 22.73%.
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CAL Brokers continues coverage of TOTAL with a BUY recommendation, projects 56% return
The equity market return has been sluggish on a YTD basis, however, a number of opportunities have started emerging that offer investors the chance to make significant capital gains on the market. CalBrokers research identified that TOTAL's sh
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Bullion Securities initiates coverage of Republic Bank with a BUY recommendation
Republic Bank Ghana retraced its step into profitability by posting PAT growth of 95.64% Y/O/Y following two consecutive years of making losses. The turnaround in FY 2017 was mainly due to non-impairments on financial assets and loan recoverie Read more
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CAL Brokers maintains BUY recommendation on Unilever
We maintain a BUY recommendation on Unilever Ghana at a revised price target of GHS 22.79p from the current market price of GHS17.78, after assessment of their third quarter earnings report. Our valuation is derived from forward PE, PS and PB
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Why CAL Brokers initiated coverage of GOIL with a BUY recommendation
CAL Brokers has initiated coverage of Ghana Oil Limited (GOIL:GSE) with a BUY recommendation based on a price target of GHS 3.20p, from the current market price of GHS 2.60, which reflects potential price appreciation of 22.68%. In addition, CAL Brokers expects dividend yield
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CAL Brokers Initiates coverage of Fan Milk with a SELL recommendation
CAL Brokers has initiated coverage of Fan Milk Limited (GSE:FML) with a SELL recommendation based on a price target of GHS 12.61p which represent a do
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Boakye's Corner
Unraveling Value: A Case for Restructuring Ecobank Group (ETI) to Unleash True Value
Summary: ETI’s share price has returned a disappointing -262.5% to shareholders since its listing by introduction in 2006 (2006: GHS 0.29p; 2020: GHS 0.08p) at its current market capitalisation of GHS 1.92B (USD 334.85M). Astonishingly, the Group’s Ghanaian subsidiary which represents 7.19% of the Group’s operating assets, commands an enviable market capitalisation of GHS 2.32B (USD 403 M) representing a total return of 1,209.5%. This article seeks to analyse the...
Boakye's Corner Unraveling Value: A Case for Restructuring Ecobank Group (ETI) to Unleash True Value
Macro-Watch Downward trend in inflation could trigger policy rate cut in 1H-21
Earnings Update BOPP’s earnings continue to benefit from higher CPO prices
Dividend Watch TOTAL’s dividend would be a welcome relief to shareholders
Stock Ideas CAL Brokers initiates coverage of GGBL with a BUY recommendation