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Dangote Sugar Grows 227% To Emerge 2017 Best Performing Stock

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In the outgone year 2017, the best performing stock on the Nigerian Stock Exchange (NSE) was Dangote Sugar Refinery Plc. Last year was a very good one for the local bourse and a number of equities performed relatively well at the market. For the first time in three years, the Nigerian stocks market closed the year in the positive territory, as the NSE All-Share Index (ASI) returned 42.30 percent year-on-year. Consequently, market capitalisation advanced significantly to close at N13.61 trillion in contrast to N9.25 trillion as at the end of 2016. Eyes Of Lagos gathered that, A report by CNN, a global news platform, revealed that the Nigerian stock market was the third best performing market in the world in 2017, doing better than the United States market. Performance across sectors was broadly impressive, with 65 stocks posting price appreciation, while 32 stocks recorded price declines. Dangote Sugar Refinery recorded highest capital appreciation as it closed the year at N20, from N6.11 it opened, leaving its shareholders 227.33 per cent better. Another stock that did well was International Breweries Plc, which recorded a 194.59 percent growth, Fidelity Bank Plc increased by 192.86 percent in 2017, Fidson Healthcare Plc went up by 189.06 percent, while Dangote Flour Plc advanced by 185.88 percent last year. The company’s share price close the year higher ahead of analysts’ projection. Analysts at Cordros Capital Limited, in November projected a target price (TP) of N19.03 at full year 2017, while analysts at Cardinal Stone Finance, another Lagos based investment house, put their TP for Dangote Sugar at N16.29. But both projections were beaten by huge margins with the stock closing the year at N20. However, analysts at both institutions as well as others had given a bullish perspective to the nine-month 2017 financial results and other business facts of the sugar giant, a major factor in stimulating the ensuing bullish position on the stock by investors in the period. Dangote Sugar in third quarter financial results for the period ended September 30, 2017 reported impressive earnings of N 26.5 billion, which is already 1.8 times higher than N10.1 billion reported in full year of 2016. Reflecting on this performance, analysts at CardinalStone had stated “given this run rate, we believe the company is on track to deliver its strongest earnings in full year 2017.” Focusing on the third quarter, despite a 0.95 per cent year-on-year (YoY) decline in revenue, earnings rose by 244.3 percent YoY as a result of a faster decline in cost of sales. This largely steered the 2,153 bases points (bps) YoY increase in third quarter 2017 gross margin. Likewise, on a quarterly basis, gross margin expanded albeit modestly by 68bps, also driven by lower production costs. Industry commentators noted that Dangote Sugar continues to benefit from easier accessibility to foreign exchange (for its imported inputs), relatively improved gas supply as well as currently soft raw sugar prices in international markets. It would be recalled that on the 2016 full year earnings call, management of Dangote Sugar said it plans to achieve 20 per cent gross margin in 2017 full year versus 13.5 per cent in 2016 full year, assuming forex is purchased at a relatively lower average rate and higher output is realised from Savannah where margins are higher. Last week, analysts at Cordros Capital had placed Hold on Dangote shares, meaning investors should hold on their shares, having potentials to grow higher. According to them, the shares of Dangote Sugar appreciated by 1.83 per cent toN20.00. Dangote Sugar trades at forward Price Earning (PE) of 6.5x, lower than its five-year historical average of 7.5x. They noted that Dangote Q3, 2017 result, showing revenue declined one per cent year-on-year, while Earnings Before Interest Tax Depreciation and Amortization (EBITDA) and profit after tax grew strongly by 226 per cent and 244 per cent year-on-year, respectively. According to Cordros Capital, continued stronger gross margin and tamed operating expenditure (Opex), primarily, in addition to higher investment income, was the lever for earnings growth. The decline in revenue, was driven by lower sales volume, which more than offset the relatively higher price. Compared to 2016, sales volume has closed lower in all three quarters in 2017 in response to the sharp increase in price. “The management reduced the per bag price of sugar by N1, 000, effective in April, to help support sales. Despite cuts to sales estimates, we raise Dangote Sugar’s 2017 full year EBITDA and net profit by 50 per cent each, and for 2018 and 2019 full year by 55 per cent and 56 per cent respectively. The upward revision follows better margin outlook on declining per tonne production cost, which we expect will offset price cuts. “Our revised estimates translate to EBITDA and net profit growth of 158 per cent and155 per cent respectively in 2017 full year and three per cent and five per cent average growth in 2018 to 2019 full year. “We cut revenue estimates for 2017 to 2019 full year by 10 per cent average, on downwardly revised volume and selling price estimates Sales volume has been hit by weakened demand and more recently, by both the influx of smuggled sugar and the terrible condition of the road to the Apapa factory” the analyst firm said. They also foresaw better performance of the sector following better energy efficiency and stronger exchange rate, stable outlook of global raw sugar prices and positive mix from growing contribution of higher margin Savannah. A further financial analysis and forecast by CardinalStone gives more investor information on positioning in the sugar giant’s stock in the short-to-medium term. The analysts stated, “Dangote Sugar continues to carry a modest debt balance sheet thus, in the absence of finance cost pressures as well as sustained efforts to contain operating expenses, we expect the benefits of expanded gross margin to filter through to earnings, and project full year 2017 EPS (earnings per share) at N3.14, representing a 161.7 per cent increase over full year 2016. “In the last three years, Dangote Sugar has on average paid 48 per cent of its earnings as dividend. Given this, we estimate a final dividend of N1.00, bringing our estimated total dividend to N1.50. The company paid an interim dividend of 50 kobo following the release of its first half 2017, earnings. In 2018, they expect the impact of lower production costs to reinforce earnings on the back of sustained foreign exchange (FX) stability, strengthened by improved crude oil output and higher crude oil price and favourable raw sugar prices, which is expected to remain lower in the near term on improved harvest in Brazil and India

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Study: Excess alcohol intake within a short period can lead to stroke

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Study: Excess alcohol intake within a short period can lead to stroke

A high intake of alcohol in a short space of time might upset your heart rhythm, a new study warns.

Researchers at the University Hospital of Munich, Germany arrived at the conclusion after a study was carried out on 3,000 volunteers.

The volunteers, who were deemed sober enough to take part in the tests, had their heart rhythm traces taken using a mobile phone app while they partied.

They found that the odds of heart arrhythmia increased as beer consumption went up.

5 per cent of the volunteers were found to have atrial fibrillation which is linked to an increased risk of stroke and heart failure.

“What we have found is that alcohol does interfere with heart rhythm, which hasn’t been shown like this before,” said Moritz Sinner, assistant professor of medicine at University Hospital, Munich.

“What we still don’t know is what happens after people stop drinking or continue to drink. What happens the next day or the day after?” he added.

The journal was published in European Heart Journal.

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Are Insurance Products hard to sell?

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Are Insurance Products hard to sell?

Insurance business remains unviable and its products hard to sell in the Nigerian market place. This unpalatable news raised worries for the captains of industry, who gathered at just concluded 2018 Insurance Industry Consultative Council (IICC) in Abuja, few weeks ago.They described the challenge as “bad message” in the ears of insurance companies and allied stakeholders, given the fact that the industry has been in existence in the country for nearly a century.

Although the desirability of insurance policy has always been a hotly debated issue, a new study does appear to have driven the message home: “More Nigerians won’t and don’t intend to take up any form of insurance cover if given the choice.”

Outcome of new study

The available records in the industry indicate that 86.6 million Nigerians have no form of insurance, while 1.3 million adults, representing 1.5 per cent of the entire Nigerian adult population, maintain some category of formal insurance cover.While the jury is still out contesting the veracity or otherwise, of the survey, which has shown that the nation is probably recording a recurring decimal in the insurance sub-sector as a result of diminishing patronage, a recent survey by NOIPolls, further underscored the situation, saying that nine out of 10 Nigerians do not have any form of insurance.

According to the survey, among those that have insurance policy, 63 per cent has vehicle/car insurance, 20 per cent has life insurance, 17 per cent have property insurance, 16 per cent has health insurance and 16 percent have fire, burglary and travel insurance.Also, few years ago, a survey by Enhancing Financial Innovation and Access (EFInA) indicated that Nigerians are not insured against the most vulnerable risks- life, health and agriculture, adding that death and ill-health are the top two risks, with an economic impact, but the most widely experienced.

Growing apathy

It is anybody’s guess why there is growing apathy for insurance by Nigerians. While giving plausible explanations as to why many Nigerians don’t consider acquiring an insurance cover as a priority, the Founder/Chairman of Zenith Bank Plc, Jim Ovia, during an interactive session at IICC conference in Abuja, affirmed that a number of factors were responsible.

The major hiccup, which is responsible for the growing apathy for insurance, according to him is the low level of disposable income. “The only problem we see in the Nigerian market is that per capita income of the people is very low and people tend not to take insurance as a priority against other things related to them,” he said.He, however, said it was heartening to note that the Federal Government has made group life insurance compulsory for all employers of labour, with a minimum of five employees. The banker said there has been a turnaround in the fortunes of that class of insurance business.“I believe with the improvement in income, regulation and other things, many people will come to take insurance and gradually, we will get an increased participation by the insuring public in the country.

“Again, with the awareness campaign being embarked upon by the regulator, the Nigerian Insurers Association and some industry players, showcasing the need for individuals to be protected and have life insurance cover for their own benefit and the benefits of members of their families, I believe in the next five years, there will be a turnaround in the way and manner people take up life insurance in Nigeria.

“With the coming of retail businesses set up by the various underwriters and microinsurance, this awareness will get to the people at the grassroots and they will embrace insurance as a way of life. Despite the low per capital income, there should be an increase in the rate at which people patronise the insurance industry,” he said.

What NAICOM is doing

To revamp the insurance sector, the National Insurance Commission (NAICOM) had in the past, come up with a number of measures, including raising the capital base of insurance companies in line with current economic realities.Commenting on the different initiatives by NAICOM, which is the apex regulating body of the sector, the Chairman, Planning Committee for the 2018 IICC Conference, Alhaji Femi Hassan, said the commission under the headship of Mohammed Kari, has not done badly thus far.

“NAICOM is currently doing very well. The commission has been coming up with good regulations that are now moving the industry forward. All that is required is continuous cooperation among the members of the Nigerian Insurers Association, so that we can be united and able to turnaround the image and fortunes of the industry in Nigeria,” he said.

Besides, NAICOM has introduced the Market Development and Restructuring Initiative (MDRI), retail insurance, microinsurance, compulsory insurance and others.

Hassan said: “There are lots of things being done to make the people aware of what they stand to gain by taking insurance. It is not something that will automatically impact on the industry immediately, but overtime, the impacts will surely be felt.

“The MDRI revolution has been on ground for years now, and in the next few years, all these things would have come to pass as people will now have more knowledge about insurance. The industry is also trying to create more insurance awareness through advert placement and by sending people to the grassroots.”In line with the Insurance Act 2003, NAICOM introduced the “no premium, no cover”, all aimed at not just improvement in the industry but to achieve integrity and quality of income generated by the industry.

Source: Guardian Newspapers

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Nigerian Bloggers and Rhetorics: Which way forward?

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Nigerian Bloggers and Rhetorics: Which way forward?

Going through the numerous outputs of some bloggers in this part of the world these days could be as discouraging as they come as some of them appear to have lost focus.

The challenge they pose is a tragedy of our time, when we thought we should be having the best of time with information dissemination.

Indeed, one could conclude that this era of social media a la blogging and all kinds of news sites comes with its disadvantages and painful consequences.

While it is apt to agree that news is broken immediately it happen through the help of some of these next door social media; but how do you explain the use of obvious exaggeration and rhetorics in some of the outputs of bloggers and their media?

In a bid to grandstand and be commended for coming up with newsworthy materials, it is not uncommon to see these sites resorting to cheap blackmail and repackaging old reports to embarrass the organisation or person concerned.

If what we read in some of these reports should be taken retrospectively, then there is a need to apply decorum, at least for the sake of the reading public and of course the concerned organization (s).

Many readers are worried

Many readers are worried with the way few of these bloggers dwell on the past and insult the sensibility of the readers in their reports.

One of such reports that threw discerning minds off balance was a story relating to a popular bank, which was repackaged by an online medium as if the incident just happened.

It was reported by the online publication that nine staff of the new generation bank conspired to steal customers’ money running into N600 Million.

The story was not only repackaged, if the figures given in the breakdown are added they are not up to the N600 Million said to have been stolen by the staff of the bank.

This only confirms that some online media are just passionate about creating tension where there is none and misleading members of the public all in a bid to be relevant.

If we are going to get there as a nation, we have to get things right and do things the way they should be done.

Let the bloggers know that to build takes years, but a big edifice can be brought down in a day and when that is done it will take years to build again.

So, why destroying in the first instance, we should be building edifices and institutions.

It is certain that the bank must have handled the matter, when it occurred and do all within its powers to prevent a re-occurence.

Journalism is about timeliness

Journalism is about timeliness and not writing for the sake of writing. Why repackaging an event that happened long ago, and presenting such as if it just happened?

Imagine a scenario, where it is being reported that the first Nigerian civil war is ongoing, this was an incident that happened about 50 years ago. This could mislead members of the public and cause more damage than good.

Blogging has been taken to a new dimension with what is being reported by some, may be, misinformed or unfocused bloggers, whose pastime is bringing up stale news and making it appear as if it is just breaking.

When issues like these are repeated without caution, then the essence of online media is eroded and slaughtered on the altar of charlatans and uncoordinated writers.

We must do all within our means to avoid publishing reports that have been stale as if they just happened.

Such reports belong to the past and they must be allowed to go into the dustbin of history.

There are so many things to write about today. There are issues that could engage the minds of the readers other than matters that belong to the past.

What comes to mind, when a story is read, especially in an online medium is, “oh it has just happened, ha, there they go again, let us see how it ends.’ But alas it has ended, someone is just trying to be mischievous and score a cheap goal like Argentina’s Diego Maradona in that famed World Cup finals of several years ago.

Social media and blogging sites dwell on immediate occurrences, presenting lucid accounts of fresh happenings and events, rather than bothering the readers with what belongs to the past.

We can do better

People want to know what is happening now and not then. They want to know if President Muhammadu Buhari has returned from his trip abroad, or if the National Assembly is sitting on Monday to consider the virement proposal of the president, or if anybody has defected from any of the leading political parties in Nigeria and what is the latest about the detained boss of the Department of Stated Security Service (DSS),

Lawal Daura and the likes.

We may have started from somewhere, but we can do better than what is being done presently.

When the chips are down only the deep can call to the deep and the future belongs to those, who can do it better and give the people what they need now rather than insulting their sensbilities with old stories that belong to the past.

When things are done ríght, then we will get it right and avoid being left behind by the countries that started with Nigeria and have gone past us in all ramifications.

Ade Oni, a social media commentator writes from Lagos, Nigeria.

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