What Makes Zenith Bank Tick?

ZENITHBANK, a top-tier bank domiciled in Nigeria, was founded on May 30, 1990 and commenced business on 16 June 1990.  Being one of the eight systemically important banks in Nigeria, ZENITHBANK boasts of total assets surpassing NGN4 trillion and market capitalisation of over NGN600 billion. 

ZENITHBANK is adequately capitalised. And we have no reason at the moment to believe that the quality of its assets is impaired. However, loan loss provision seems low (2016:3%; 2015:2.1%).

Gross earnings of the bank increased by 17.5% to NGN508 billion at the end of 2016 financial year. Shareholders' fund climbed 18.5% and was about doubled in six years. Earnings Per Share (EPS) surpassed the 7-year average of NGN3.7 by NGN2.1. Book Value Per Share of NGN24.4 was 18.4% better than what was achieved a year before.

We advise investors to buy below NGN22 per share.

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Invest in Societe Generale Ghana Limited

The present name, Societe Generale Ghana Limited, was adopted in 2013 ten years after Societe Generale bought controlling interest in the bank.  SG Financial Services Holding, a wholly-owned subsidiary of Societe Generale (France), controls 56.7% of the bank at present. Societe Generale (France), one of the foremost global financial institutions, has presence in 66 countries including 18 African countries.

Operations are being streamlined to improve efficiency. Corporate banking remains the bank's forte. The bank's fundamentals have not deteriorated.  Gross revenue has been growing at a compound rate of 27% over the past three years. 

Also, the bank is adequately capitalised and generates free cash flow for shareholders. A value between GH¢1.8 and GH¢2.6 per share was estimated for the bank.

We expect a total return of 78.4% in the medium term.

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How much should you pay for Julius Berger?

Julius Berger Nigeria Plc  constructs infrastructures and buildings, and provides services such as facility management. The company has acquired good reputation for its success in the construction of infrastructure in Nigeria. 

Buy 

JBERGER benefits from the technical competence of Julius Berger International GmbH(Germany)  to build projects to the specifications of its clients. Being a foremost government contractor, JBERGER  stands to benefit from the huge infrastructural gap in the country. JBERGER's experience grants it the ability to charge a premium on its construction projects.

Currently, it trades at 2.4 times book value. JBERGER consistently rewards its shareholders. We expect a total return of 48% in the next three years.

A share of JBERGER is worth between NGN50.8 and NGN62.4 by our analysis. 

Recommendation: Buy 

Vital Statistics

Ticker:                                JBERGER                   

Nature of Business:           Infrastructure/Heavy Construction

Location (Headquarters): Nigeria                                                

Recent Price:                      NGN34.30                        

52-Week High/Low:           NGN48.39/32.14   

Estimated Fair Value:        NGN50.8-NGN62.4             

3-Year Expected Return:   48%         

Consider Buy:                     Below NGN50                       

Business Risk:                     Medium                  

Financial Risk:                    Average                    

Economic Moat:                  Strong                

Corporate Governance:     Average