Airtel Africa, 14 Other Blue Chip Stocks Contributes 88.8% to NGX Market Cap

Kayode Tokede

Airtel Africa Plc and 14 others listed stocks on the Nigerian Exchange Limited (NGX) as of July 8, 2022 contributed about 88.8 per cent or N24.7 trillion out of the overall NGX N27.80 trillion market capitalisation, THISDAY findings have revealed.

The 15 out of 161 listed stocks dominated the market on the backdrop of stronger fundamentals that continued to attract local and foreign investors’ surge interest.

Airtel Africa, a telecommunication giant throughout first half (H1) of 2022 remained most capitalized stock on the NGX, followed closely by Dangote Cement Plc.

Others most valued stocks are: MTN Nigeria Communications Plc, United Bank For Africa Plc, Zenith Bank Plc, Access Holdings Plc, Seplat Energy Plc, Lafarge Africa Plc., FBN Holdings Plc and Guaranty Trust Holding Company Plc.

In addition, Nestle Nigeria Plc, BUA Foods, BUA Cements, Nigerian Brew. Plc. And Stanbic IBTC Holdings Plc joined the list of most valued stocks on the NGX.

At the closing of trading activities last Friday, African telco giant, Airtel Africa made the top spot as the most valuable company on the Nigerian Exchange, with a market value of N6.51 trillion.

MTN Nigeria came second with a market capitalisation of N4.688trillion, followed by Dangote Cement that closed at N4.686 trillion in market capitalisation as of July 8, 2022.

Airtel Africa has witnessed an increase in its stock price, closing July 8, 2022 at N1,732.20 from N955.00 the stock price opened for trading this year.

MTN has been on the rise since the beginning of the year, starting from about N197 to as high as N230.30 per share last Friday.

According to analysts, the stock price of Airtel Africa and MTN increase can be linked to impressive 2021 full year results dividend payout that took their market capitalisation past N6 trillion and N4trillion, respectively.

Airtel Africa has appreciated by N2.92 trillion in market value this year, much higher that all the financial services firms listed on the NGX, while MTN with additional market capitalisation of N677.8billion this year is more significant as the company’s financials represent income generated from Nigeria alone, excluding other African countries.

Airtel’s income includes that of other sub-Saharan African countries even though the income of Nigeria is dominant.

Commenting, analyst at PAC Holdings, Mr. Wole Adeyeye, said, “Investors anticipation towards MTN Nigeria launching a Payment Service Bank (PSB) drive stock and the telecommuting corporate earnings is an indication for investors to take position.”

The CEO, Wyoming Capital & Partners, Mr. Tajudeen Olayinka noted that improved liquidity in the system is responsible for the positive performance of Airtel Africa, MTN Nigeria, among other most valued stocks on the NGX.

Other factors driving liquidity in the equities market he added are, “instant payment of dividends to shareholders through electronic means (e-dividend), provides opportunities for immediate reinvestment of these dividends, especially by institutional investors, who manage funds and portfolios for clients.

“Negative real return in the fixed income market and the need to hedge against inflation. Equity market is an inflation adjusting market, and so, some investors who were willing to hedge against inflation, irrespective of the downside risk that the market poses, decided to bring liquidity back to the equity market and it impacted on these companies’ stock prices.”

The doyen of the Nigerian capital market, Mr Rasheed Yusuf, said the key drivers to these stocks’ contribution to the capital market are increasing global oil price and impressive corporate earnings.

According to him, “The current global oil price that is above $100 per barrel has translated into more revenue for the federal government and more spending. Since there is more revenue for the government, there will definitely be more spending and more business opportunities for individuals and companies listed on the NGX.

“Everybody was thinking Nigeria will be in an economic crisis but with oil revenue above $100 per barrel over the Ukraine-Russia crisis, the government has been able to manage the subsidy.

“The global oil price has breathed a new life into companies in the country and investors’ expectation is that these companies will make good profit and it has contributed to growth in their stocks.

“Most of them recently released the 2021 financial year, first quarter results and we have seen impressive corporate earnings. The performance of these companies has reflected in their corporate earnings

However, Both MTN Nigeria and Airtel Africa had announced the commencement of PSB operation that was approved by the Central Bank of Nigeria (CBN).

MTN Nigeria’s fintech subsidiary, MoMo PSB Limited commenced following a successful pilot initiated on May 16, 2022, which was in commemoration of the launch of MTN’s GSM operations on May 16, 2001 and listing by introduction on the Exchange on May 16, 2019 and a key milestone in delivering the company’s Ambition 2025 strategic priorities.

Also, in a stock market statement, Airtel Africa announced subsidiary SmartCash PSB had started providing services through selected retail outlets with plans to expand across Nigeria in the coming months. Airtel Africa secured a full Payment Service Bank licence from the CBN through its subsidiary in April, having received an in-principle approval in 2021.

However, Both MTN Nigeria and Airtel Africa had announced the commencement of PSB operation that was approved by the Central Bank of Nigeria (CBN).

However, BUA Cement was the only company with over N2trillion in market capitalisation, following N55.85 per share trading of its stock on the bourse.

Cement manufacturing at its Annual General Meeting for the period ended December 31, 2020 declared a dividend of N70 billion at N2.067k per ordinary share in a move that shareholders applauded.

This is coming on the heels of a profitable year for the Cement producer with a turnover of N204 billion and declared Profits After Tax of N72.3 billion in the year under review.

While addressing shareholders, the Chairman of BUA Cement, Abdul Samad Rabiu had canvassed more investments in the cement industry saying that current national production levels across were not enough to meet the ever-increasing national demand for cement which was increasing at a rate over 3 million metric tonnes per annum.

He, therefore, canvassed new investments in the cement sector and encouraged other investors to develop new cement plants.

BUA Cement is constructing a 3 million metric tonnes which is expected to come on stream in Sokoto by the end of 2021 with new plants already in the works.

The Managing Director of BUA Cement, Yusuf Binji stated that the company is committed to remaining a value–driven, oriented company that prioritizes excellence and product quality.