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Analysts bullish on Dangote Cement, Zenith Bank

By on March 20, 2015

INVESTMENT analysts at Afrinvest (West Africa) Limited have recommended the stocks of Dangtoe Cement Plc and Zenith Bank Plc as possible investment options investors should consider.

In their weekly stock recommendation report made available to THSIDAY, the analysts picked the two companies and justified their decision with various reasons.

Justifying their selection of Dangote Cement, for instance,  they  have said  it is  the largest cement manufacturing company in Africa with a production capacity of 19.25metric tonnes per annum

“The company is currently expanding its operations across 15 African countries with an ambitious construction of 19 metric tonnes cement production, grinding and import capacity expected this year. Also, it  intends to add 13 metric tonnes  to its domestic production capacity.  Commercial scale production scheduled to start this year at new plants in South Africa, Senegal, Sierra-Leone, Ethiopia and Zambia,” they said.

The  analysts added that  Dangote Cement is  largest publicly TRADED STOCK on the Nigerian Stock Exchange, accounting for about 30 per cent of  the  all-share index.

“Dangote Cement has  a 64 per cent  market share of the annual 11.1mmt domestic capacity. It has consistent growth in top line as gross premium nudged to 7.3per cent. On the flip side, a decline was recorded in bottom line as profit after tax declined by 10 per cent to N140.5 billion in the third quarter of 2014.

However, the company has consistent dividend payment history. Currently trading at a price of N153.01 (as at last Friday) relative to our 12-month target price of N257.73 presenting  an upside. Full year 2014 corporate action declaration expected this week, hence attractive for income investors,” they said.

Speaking on Zenith Bank,  they said  it operates an international banking licence in Nigeria, and has subsidiaries in Ghana, Sierra Leone, the Gambia and representative offices in South Africa and The People’s Republic of China.
“Zenith Bank is the largest Nigerian bank by total equity and Tier-1 capital. The third largest bank by asset  as at third quarter of 2014.   The bank has a reputation for efficient risk management. Non-performing loan (NPL) was 2.9 per cent in 2013 (below Tier-1 average of 3.3 per cent), second lowest impairment cost as at Q3 of 2014.    Recorded a 37.6 per cent increase in risk assets growth in Q3:2014, the second highest amongst Tier-1 lenders. Relative Strength Index Indicator at 59.4, between the overbought and oversold threshold, providing an attractive entry point for long term investors,” they said.

 

[ThisDay]