01 Feb

Daily Watch – Forte Oil had a 2016 to remember, Manufacturing activity falls

  • OPEC’s oil output is set to fall by more than 1 million barrels per day this month, a Reuters survey found on Tuesday, pointing to a strong start by the exporter group in implementing its first supply cut deal in eight years. OPEC agreed to cut its output by about 1.2 million bpd from January 1 – the first such deal since 2008 – to prop up oil prices and get rid of a supply glut. Supply from the 11 OPEC members with production targets under the deal in January has averaged 30.01 million bpd, according to the survey based on shipping data and information from industry sources, down from 31.17 million bpd in December. Compared with the levels that the countries agreed to make the reductions from, in most cases their October output, this means the OPEC members have cut output by 958,000 bpd of the pledged 1.164 million bpd, equating to 82 percent compliance.
  • Nigeria’s manufacturing activity fell to 48.2 index points in January 2017, down from 52.0 recorded in December, the CBN said in its Purchasing Managers’ Index released on Tuesday. The report showed that while the manufacturing PMI dropped to 48.2 index points, the non-manufacturing PMI stood at 49.4 points, indicating a slower decline compared with the 47.1 points recorded in December 2016. In the PMI report posted on its website, the CBN said, “A composite PMI above 50 points indicates that the manufacturing/ non-manufacturing economy is generally expanding, 50 points indicate no change and below 50 points indicate that it is generally declining.” Though the manufacturing PMI grew in December 2016, it had recorded declines for eleven consecutive months and averaged 45.2 in the last 12 months. The report showed that 10 of the 16 sub-sectors surveyed recorded decline in the month under review while the remaining six sub-sectors expanded. The six sectors are: petroleum and coal products; appliances and components; nonmetallic mineral products; food, beverage and tobacco products; textile, apparel, leather and footwear; and computer and electronic products.
  • Seplat Petroleum Development Company says dealings on its shares will be in a closed period between January 29, 2017 and March 30, 2017. Within this period, dealing on the company’s shares would be suspended. The oil firm said the development was in pursuant to Clause 17.2 of the amendments to the NSE listings rules which it filed on Monday. The company in a letter said, “In the run-up to the announcement of the 2016 full year results of Seplat, please be aware that a closed period on Seplat share dealings for the entire company, Seplat directors and Seplat insiders will commence on Sunday, January 29, 2017. Therefore, you and your ‘connected persons’, as described under the Seplat share dealing policy, are not expected to and must not trade in Seplat shares from January 29 until March 30, both dates inclusive.”
  • Forte Oil reported a profit before tax of ₦5.34 billion for the year ending December 31, 2016. The firm disclosed this on Tuesday in its result filed with the NSE. The group’s profit before tax for the same period last year, closed at ₦7.01 billion. It recorded revenue of ₦148.61 billion in 2016 compared to ₦124.62 billion reported a year ago. In November 2016, Forte Oil succeeded in raising ₦9 billion from the capital market to support its operation and drive its expansion strategy. The capital-raising (in bonds) was a five-year fixed rate issue and the first series of its proposed ₦50 billion bond issuance programme. The oil firm had said at the time that the funds raised would be deployed to refinance existing short-term commercial bank loan obligations and its retail outlet expansion. The company has an issuer rating of A- long-term and A1- short term rating by the Global Credit Rating Company. In other earnings news, Neimeth International Pharmaceuticals reported Q1 pre-tax loss of ₦248.4 million against a profit of ₦51.9 million recorded for the same period last year. It also recorded Q1 turnover of ₦137.4 million, which is a drop compared to ₦396.2 million reported for the same period last year.
  • United Capital has added two new products to its Asset Management Mutual Funds portfolio: The United Capital Nigerian Eurobond Fund and the United Capital Wealth for Women Fund. The products were launched to consolidate United Capital’s position as a market leader in the African investment banking space. Both funds opened for subscription on January 25, 2017 and would close on March 3, 2017. According to the Managing Director of United Capital Asset Management, Jude Chiemeka: “The current economic challenges have altered investment interests in the market. We designed these new products specifically to suit the changing needs of our clients. Our Mutual Funds have consistently offered attractive dividend returns for investors and we expect our two new funds to follow suit.” He said the United Capital Nigerian Eurobond Fund is an open-ended mutual fund that would be invested in dollar denominated Eurobonds. The FG, top tier banks and other corporate issuers, whose securities are registered with the SEC, floated the fund. On the other hand, the United Capital Wealth for Women Fund was designed to encourage women to imbibe a saving culture, provide an avenue for women to be financially independent and create a sustainable foundation for their financial empowerment and development in the country. Under this fund, a maximum of 80 percent of the assets would be invested primarily in naira denominated fixed income and high yielding instruments while 20 percent will be invested in carefully selected quoted stocks on the NSE.