TRANSNATIONAL CORPORATION OF NIGERIA PLC

TRANSCORP buys out companies and subsequently runs them as part of a diversified group. Following the success achieved in the management of Transcorp Hilton Hotel Abuja, TRANSCORP has branched out into power, agriculture, and oil and gas in order to spread its risk. Though incorporated as a private company in November 2004, its shares were not listed for trading on  the floor of the Nigerian Stock Exchange until December 2006. 

Members of the TRANCORP Group include Transcorp Hilton Hotel Abuja, Teragro Commodities Limited, Transcorp Power Limited, Transcorp OPL 281 Nigeria Limited and Transcorp Energy Limited. Transcorp OPL 281 Nigeria Limited which was licensed to prospect for oil in the Western Delta Region of Nigeria has yet to discover commercially viable oil and hence presently contributes nothing to total revenue.  

The company benefits from the goodwill and global distribution network of the Hilton Group to bolster up revenue from its hospitality business. Revenue  from the hospitality division rose from NGN14 billion to NGN15.3 billion between 2015 and 2016.

Transcorp Power Limited produced 65.4% revenue increase as a result of 54% upward revision of electricity tariff by the regulatory agency, the Nigerian Electricity Regulatory Commission. And on top of that the power generation company still lost about NGN8 billion before tax  at 2016 year end.

Debts are rising and liquidity is being hurt as receivables are mounting.

Power generation in Nigeria is inadequate and the company stands to benefit from this going forward.We are of the opinion that TRANSCORP would be a good investment over the long haul. 

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Is UAC OF NIGERIA PLC fairly priced?

UACN is a diversified business whose operation in Nigeria dates back to 1879.  The company is an active player in the food and beverages, real estate, paints and logistics sectors of Nigeria's economy.

UACN is a leading player in the food and beverages industry with its brands of Mr. Bigg's, Gala, Supreme Ice Cream and SWAN Natural Spring Water.

Food remains its core business and revenue from this segment has been increasing over the years. UACN should benefit from the Quick Service Restaurant business owing to the large branch network of its franchised restaurant, Mr.Bigg's.Gala Sausage Roll remains a leading brand in the country. 

Operating profit covers interest obligations and current assets cover short-term debts. In a nutshell, we believe that UACN is liquid and solvent.

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University Press Plc

UPL, one of the foremost publishers in Nigeria, started as Oxford University Press in 1949. A change of nomenclature to University Press Limited was effected following incorporation as a limited liability company in 1978.Thereafter, its shares were listed on the Nigerian Stock Exchange.

UPL has yet to have a foothold outside Nigeria. Offshore sales account for about 2% of sales over the years. Primary education remains the major contributor to revenue. The western and northern parts of Nigeria are responsible for about 78% of both revenue and operating profit. Tertiary and general reference books generated less than half of the revenue of three years ago.  

The company is generating free cash flow. It pays dividend to shareholders consistently and it is not bogged down by debts.

Slack sales that can be attributed to the current economic realities could make stocks build up and capital tied up in stocks. Also, better working capital will help prevent cash flow and liquidity problem. 

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BERGER PAINTS NIGERIA PLC

 BERGER, a paint manufacturer of premier rank, started paints manufacturing in Nigeria in 1959. BERGER prides itself on the production of   decorative finishes, marine coatings, industrial coatings, automative coatings and wood finishes with leading brands such as Texcote, Luxol andSuper Star. 

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BERGERpartnered with KCC Corporation (South Korea), a world-renowned chemical company, in 2012 to offer quality coatings to the marine industry. In addition, the company has embarked on automation of its plant in order to improve productivity and efficiency of its operation. 

Management has not rested on its laurels.Apart from manufacturing, the company also engages in painting for customers. The company made NGN52.5 million from painting contracts in 2016 (2015: NGN327.8 million). At present the company derives all its revenue from Nigeria.In our opinion, the offshore expansion being pursued by the management would help diversify its revenue sources and reduce its business risk.

Beta

Beta is a measure of the volatility of a security in relation to the

market. It helps the investor to understand the impact of market movements on the expected return from a security. The

market has a beta of 1.00.

A stock with a negative beta moves in opposite direction to the stock market while a positive beta indicates movement in the same direction. 

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Real Estate: Another Source of Excitement?

Whether you are contemplating buying your 1st house or your 20th property, you will find this article helpful. The responsibility to uncover areas with potential cannot be delegated. Even when armed with good advisers, you have to rip open the curtain to reveal the truth behind any hype, rumour, misinformation, and sweeping sales statements.

Fundamentals, not emotions!

Although there is a lot of money to be made in property speculation, you need a deep pocket to do this well. But you can achieve the same result with less risk by investing based on the economics of the area the property is situated. Investment decision founded on reality is more profitable than the one centred on someone else’s opinions or perceptions.

Emotional investing only provides a short-term gain followed by frustration and despondency. The property market is like a bus transit system; when one leaves, another arrives. So, take time to ask probing questions and follow through.

You ought to jettison your simplistic approach and embrace a more robust, fundamental analysis.

You are the prime target as an investor!

The numbers and brilliant presentations by vendors should be independently confirmed. After all, that is their job: providing you with strong arguments to buy their properties.

Before a deal is consummated, cut through the hype and complete your investigation. Do not be pressured into taking rash decisions.

You are buying the future, not the past!

To unearth the future potential of an area in which your desired property is situated, pay attention to the following:

1. Population growth rate of the area.

2. In-migration and the drivers.

3. Average income in the area.

4. Political atmosphere

5. Area undergoing redevelopment and surrounding areas.

6. Area witnessing major infrastructural development.

7. Vacancy rate, sales price trend, rental price trend and the yield.