L-R: Mr. Aminu Ismail, Executive Director, Operations, Asset Management Corporation of Nigeria (AMCON); Mr. Ahmed Kuru, AMCON Managing Director/Chief Executive Officer; Chairman of House of Representatives Committee on Banking and Currency, Hon. Sir Jones Chukwudi Onyereri; Mr. Kola Ayeye, AMCON Executive Director, Credits and Dr. Eberechukwu Uneze, AMCON Executive Director, Assets when the House Committee visited AMCON as part of its routine oversight function at AMCON Head Office, Abuja.

The Chairman of House of Representatives Committee on Banking and Currency, Hon. Sir Jones Chukwudi Onyereri yesterday in Abuja said the House of Representatives of the Federal Republic of Nigeria will soon pay a visit to Arik and Aero airlines for what he described as on the spot assessment of recent positive developments at the two airlines since they were taking over by Asset Management Corporation of Nigeria (AMCON).

Hon. Onyereri who made the declaration when he led the members of the committee to their routine oversight function at the Corporate Head Office of AMCON in Maitama, Abuja noted that members of the House of Representatives Committee on Banking and Currency owe it a duty to Nigerians to visit some of the critical institutions AMCON was mandated to take over in the interest of the nation.

He said, “As a matter of fact, apart from coming here (AMCON) today to carry out our routine oversight function, which necessitated this briefing with the management and staff of AMCON led by Mr. Ahmed Kuru, Managing Director/Chief Executive Officer, we need to particularly pay a visit to Arik and Aero Contractors airlines to know for ourselves and on behalf of all Nigerians what is going on at those airlines. There are positive reports emanating from the two airlines since the involvement of AMCON but it is our duty to ensure that the right things are done in both airlines for the continuous growth and development of the aviation sector and Nigerian economy in general.”

He further said the committee’s visit to AMCON was in order because the Corporation is an interventionist institution of the Federal Government, which falls under the purview of the House Committee’s oversight function. Again he said, “We are here to review the 2017 budget performance of the corporation vis-à-vis what was approved for them and the outcome would help the committee make projections and also provide guidance as the case may be against the budget defence slated for February 28.”

Welcoming the committee in the company of the other Executive Directors of AMCON, Kuru remarked that it is always rewarding and a good feedback mechanism to have the committee come around for oversight function because it affords AMCON the opportunity to rub minds with the legislature as well as draw from what he described as the “legislative wealth of knowledge.”

The AMCON boss however assured the committee that the incumbent management of AMCON has remained prudent and would continue to persevere in the face of adversity posed by the challenging economic realities in the country, which is improving by the day.

Again Kuru said, “2017 was quite challenging businesses in the country. At AMCON, we are sitting on a lot of assets because of the unstable liquidity situation and as you know most of our assets are challenged one way or the other. But with things looking up in 2018, AMCON’s projection looks positive. However, we will continued to be prudent in terms of our spending and running cost generally.”

In line with the equities market correction currently being experienced across the developed markets, the Nigerian All Share index (ASI) extended losses into the second consecutive trading session, down 0.9% to close at 43,877.30 points while YTD return further moderated to 14.7%.

Accordingly, investors lost N138.2bn as market capitalization reduced to N15.7tn. Today’s negative performance is largely on account of broad based sell-offs across sectors, although banking stocks – ZENITH (-4.4%) FBNH (-5.2%), UBA (-2.4%) and GUARANTY (-0.7%) were the main drags on performance.

However, activity level strengthened as volume and value traded surged 68.0% and 77.5% to 717.2m units and N4.9bn respectively.

All Sectors Close in the Red
Sector performance was bearish as all indices closed in the red. The Banking index was the biggest loser, shedding 2.1% following price depreciation in market bellwethers – ZENITH (-4.4%), UBA (-2.4%) and GUARANTY (-0.7%).

The Industrial Goods index followed, falling 1.0% owing to losses in WAPCO (-1.1%) and CCNN (-0.8%) while the Insurance index declined 0.5% on the back of sell offs in MANSARD (-3.4%) and CUSTODIAN (-2.1%). Similarly, the Oil & Gas index slid 0.4% as MOBIL (-2.8%) and FORTE (-0.2%) closed lower while the Consumer Goods index shed 0.3% due to profit taking in UNILEVER(-4.4%) and FLOURMILLS (-4.7%).

Investor Sentiment Softens 
Investor sentiment as measured by market breadth (advance/decline ratio) softened to 0.4x from 0.6x recorded the previous session as 18 stocks advanced against 48 decliners. The top performing stocks today were PRESTIGE (+7.7%), CAVERTON (+6.9%) and AFRINSURE (+5.0%) while HMARKINS (-9.1%), SKYE (-8.9%) and TRANSCORP (-6.8%) were the worst performers.

Following sustained sell offs across global equity markets, we anticipate a further decline in the local bourse in trading sessions ahead. As a result, we envisage possible bargain opportunities for investors ahead of the full year earnings season.

A Nigerian Royal has unveiled her ambitious plans for a hotel group covering 196 countries by 2026.

Queen Catherine Ajike, owner of Ugwunwa Ajike Hotels, says the group’s first eight hotels will open in August this year.

The aim is to develop a hotel in 196 countries by 2026. To launch the ambitious programme, Ugwunwa Ajike Hotels has announced its first eight hotels will open in August this year. The first hotels will be opened in Aberdeen UK, Kansas City, USA, Lagos, Nigeria, Rome, Italy, Barbados, Ireland, Saudi Arabia and Accra, Ghana.

The concept is to develop quality hotels in cities that are popular for tourists. By having a hotel in every country, wherever they are in the world guests will be able to stay in a Ugwunwa Ajike Hotel, and be confident of the consistent style, high quality and service that they will receive.

All the hotels in the group will have a 5 start rating and will feature a restaurant on-site. Other features of the hotels will include penthouses, casinos, bars, nightclubs, an in-house retail store selling Queen Catherine’s private designer collections, beauty spas, fitness areas,  prayer rooms, and amusement parks.

Ugwunwa Ajike Hotels is part of the Kate Ajike Corporation, which is registered and based in London. Queen Catherine Ajike herself is based in London and Abia State, Nigeria.

Queen Catherine Ajike said: “2018 is going to be the year that our vision starts to become a reality. Our site in Lagos Nigeria is being constructed and will open for business in August this year. Our other seven sites are existing hotels which we are in the process of purchasing and they will then go through a complete renovation to bring them up to the Ugwunwa Hotel five star standard.

“We have identified a further 20 countries where we will open Ugwunwa Ajike Hotels during 2019, and the ambitious development programme will continue until 2026, when we will have realised our dream of having hotels in 196 countries across the globe.

The Kate Ajike Corporation is financing the development of the initial set of hotels, but Queen Catherine Ajike is open to welcoming major investments of $3 million plus.  She continued: “We are on a very exciting journey. Our hotels will stand out in the marketplace due to the quality, location and facilities, such as our in-house retail store offering unique, high-end designer collections.”

Yesterday, GUINNESS released Q2-17/18 results showing net profit of NGN2.09 billion (vs. NGN2.44 billion loss last year), driven by (1) continued revenue growth, (2) better margin, and (3) lower opex and finance charges.

The net profit was equally higher compared to Q1-17/18’s NGN41.4 million, but below our NGN2.70 billion estimate and consensus expectation of NGN2.8 billion.

Revenue grew by 11% y/y and 36% q/q, sustained by festive demand, strong marketing effort, and relatively higher prices. DIAGEO (GUINNESS’ parent company) stated in a press release recently that the group enjoyed positive price in Nigeria, and that mainstream spirits and value beer (Dubic precisely) recorded faster growth during the period.

Sales volume was reported to have grown by about 17% y/y over H1-17/18. Value beer (23% y/y), Guinness (14% y/y), Malta Guinness (6% y/y), and main stream spirits (22% y/y) recorded net sales growth in the first half.

While gross margin remained higher relative to the last financial year (+601 bps y/y), we are quite surprised by the 118 bps decline compared to the first quarter. Compared to our estimate, gross margin was lower by c.650 bps, and has weakened consistently since reaching record 55% in Q3-16/17, reflecting, as we stated in the Q1 note, growing contribution of value beer and inflationary pressure on key raw material input prices (Sorghum in this case).

On the positive, opex was lower by 12% y/y and was below our estimate by 25%. Admin and distribution expenses were lower by 25% y/y and 24% y/y respectively while marketing expenses increased (following focused campaigns on Guinness) by 20% y/y. EBITDA margin of 15.4% was reported, significantly higher y/y, but lower by 96 bps q/q.

Also worth highlighting is the 65% y/y decrease in finance charges, comprising NGN583 million loss (NGN857 million in Q2-16/17) on foreign exchange transactions and N374 million (vs. NGN1.9 billion in Q2-16/17) related to interest expense on loans and borrowings and overdraft facilities.

Compared to Q1, FX loss and interest expenses were lower by 74% and 77% respectively. Gross debt now stands at NGN12.5 billion post-Rights Issue, and the consequent reduced interest burden will remain supportive of earnings for the rest of 2018.

Continued growth in revenue and the savings on both operating and financing costs bode well for GUINNESS’ earnings in 2018.

However, continued weakening margins dampens earnings growth expectation from 2019, as the effect of low revenue and finance cost bases tapers. The stock has gained 20% YtD, and positive reaction to the result is expected. Our estimates are under review.

The Middle East and Africa (MEA) Internet of Things (IoT) market is set to grow 15% year on year in 2018, according to a recent update to the Worldwide Semiannual Internet of Things Spending Guide from International Data Corporation (IDC).

The global technology research and consulting firm’s latest forecast shows MEA spending IoT reaching $6.99 billion in 2018 and $12.62 billion by 2021 as organizations ramp up their investments in the hardware, software, services, and connectivity that enable IoT solutions.

“IoT adoption in the MEA region is expected to accelerate over the coming year as organizations from both the public and private sectors increasingly digitalize their businesses in a bid to automate their operations and ramp up productivity,” says Wale Babalola, a research analyst for telecommunications and IoT at IDC MEA. “And as organizations increasingly realize the added value that is provided by IoT, we can expect to see further development of innovative industry-specific solutions.”

Totaling $2.48 billion, IoT services is forecast to be the market’s largest technology category in 2018, with the majority of this total going towards ongoing services, IT services, and installation services. Hardware will be the second-largest technology category, followed by software and then connectivity.

The vast majority of hardware spend (85%) will go towards modules and sensors. Meanwhile, software will be market’s fastest growing category over the coming years, with spending in this area increasing at a compound annual growth rate (CAGR) of 21.3% over the 2016–2021 forecast period.

The industries that are expected to spend the most on IoT solutions in 2018 are manufacturing ($1.07 billion), transportation ($0.85 billion), cross industries ($0.76 billion), utilities ($0.75 billion), and consumer ($0.68 billion).

Manufacturers will direct most of their IoT spending over the coming 12 months towards solutions that support manufacturing operations and production asset management. Over in the transportation sector, fleet management and freight monitoring will account for up to 78% of IoT spending in 2018.

In the “cross industries” category, which represents use cases common to all industries, IoT spending will largely focus on smart buildings and connected vehicles. Smart grids for electricity will account for a little over 82% of total IoT spending in the utilities sector, while around 50% of consumer IoT spending will be driven by investments around smart buildings.

The IoT use cases that IDC expects to attract the largest investments in 2018 are smart grid electricity ($0.62 billion), manufacturing operations ($0.57 billion), freight monitoring ($0.52 billion), smart home ($0.41 billion), and remote health monitoring ($0.40 billion).

IDC forecasts manufacturing operations to overtake smart grid electricity into top spot by 2021. The use cases that will see the fastest spending growth over the 2016-2021 forecast period are insurance telematics (32.4% CAGR), smart buildings (31.4% CAGR), airport facility automation (30.5% CAGR), in-store contextualized marketing (28.8% CAGR), and electric vehicle charging (28.3% CAGR).

“The growing implementation of initiatives that leverage digital solutions will continue to fuel IoT adoption over the coming 12 months, particularly in Saudi Arabia and the UAE, ” says Babalola. “As such, these two countries combined are expected to contribute $1.57 billion of the MEA region’s total IoT spending of $6.99 billion in 2018.”