Dialectic Africa Analyst

Dear Africa Interested Professionals: I will make this one quick while leaving you enough reason not to comfortably believe the earnings provided to you by the management of FCMB.  1. FCMB has delayed its Q3 result on the basis of the result being audited and formally made an announcement to this effect on October 17.  Finally, it releases the delayed result that is actually unaudited like the other banks that had released their Q3 earnings over a month ago.  This is never a sign of honesty.  2. FCMB has struggled to generate pre-tax income of N7.1B over the first six months of the 2018 fiscal year.  Suddenly, over the period July 1 - September 30, 2018, FCMB tells the world it has generated pre-tax income of approximately  N7.7B.  In my experience covering African companies, most of the time in scenarios like this, I uncover an act of desperation and chicanery somewhere embedded within the financials to tell a better story than the reality of the day.  FCMB has not failed to di

Dear Africa Interested Professionals: Both banks that are the subject of this article, currently have CEOs that are sons of their owners/founders: Subomi Balogun for FCMB and Pascal Dozie for Diamond Bank.  Both CEOs were selected by their fathers and  groomed  for the top corporate office they now hold.     Ladi Balogun has been with FCMB for 18 years consecutively (post business school) and Uzoma Dozie has been with Diamond Bank for 20 years consecutively.  The former has been the CEO of FCMB for approximately 12 years and the latter has been the CEO of Diamond Bank for four years.  Now lets get down to the crux of the matter.  I have always been against the running of companies in Africa by children of the owners and/or founders.  This is not driven by any inherent form of incompetency; but, the bleak expectation for shareholders when  family interests are pitted against shareholder interests  as they often are on an almost daily basis in companies of this nature and i

T his ‘big picture’ analysis will look at what has happened in the economy and the stock market in Nigeria in 2018, why it is happening and how to make the best of the present situation.  Nigeria’s economy rose by 1.95% in Q1 2018, slightly below the revised figure of 2.1% for the fourth quarter of 2017. Q1 2018 is Nigeria’s fourth consecutive quarter of positive economic growth. The GDP growth of 1.95% for Q1 2018 broke a positive trend of five consecutive quarters of improving GDP growth. The non-oil sector (which the government had made its perennial focus for a more resilient economy) grew 0.8% annualized in Q1 2018 compared to 1.5% in Q4 2017. The oil sector grew by 14.8% annualized in Q1 2018 relative to the revised figure of 11.2% in Q4 2017. Overall, Nigeria’s four consecutive quarters of positive economic growth was driven mainly by recovering oil production and steadily rising prices. The Nigerian economy appears to be moving back to its perennial over reliance on the

Dear Africa interested professionals: On April 25, 2016, I wrote an article (can be found as the featured post on this blog or using the  search function) and stated that the domestic retail investor will determine the performance of the Nigerian stock market.  2018 has brought more evidence to buttress my assertion. The Nigerian stock market’s most ignored and maligned customer base is the domestic retail investor.  This largely ignored customer base determines how the stock market in Nigeria will perform. In January 2018, domestic retail investors put N 106.5B in the Nigerian stock market and the stock market rose approximately 16%. The contribution of domestic retail investors has not even reached half of that figure per month from February to June 2018 and the Nigerian stock market is now in negative territory at approximately 1.6%. Total foreign portfolio investment from January - May 2018 rose by 121% compared to the same period in 2017. Domestic institutional in

Dear Africa interested professionals:                                                            When I ponder on earnings quality, it goes beyond the financial performance of the companies as provided to us by their directors.  Are the numbers provided to us possess the qualities of transparency, authenticity and longevity?  Are this year's numbers going to be adjusted (restated) next year with the reality of this already known today?  Do restatements suddenly become an annual recurring act for some companies, just the way financial reports are audited annually? Public companies that continually restate their books, change key figures significantly without any clear, detailed explanation are guilty of poor earnings quality as their audited financials are not as reliable as they should be.   I have randomly selected visible companies across different industries in Africa and reviewed their two most recent annual reports (covering three fiscal years) for restatements an

Dear Retail Investors:                                                            As the  buying frenzy continues , be wary of where you are investing your money.   Most  stocks are rising on  momentum and vested interests manipulating the share price upward   and not because of improved financial performances and near-term expectations.   The banking industry takes the brunt of bulls and bears so, I will focus on this industry.  I will mention (briefly) three banks to be wary of when the tide turns and stocks start heading south as investors panic and seek for the exits while trying to hold on to their unrealized gains.   1.  FCMB:  The bank's nine-month (September 2017) result is not on the Nigerian Stock Exchange's corporate disclosures page.  Not surprising given the below... Pre-tax income  declined by 52%  year-on-year and Gross Earnings  declined by 16%  year-on-year.  To put this result further into perspective:  Pre-tax income was  7.57 Billion nai

Dear Readers:                            On  May 4, 2016,  I sent an email with a link to the current featured article on this blog.  I said that  FBN Holdings (First Bank)  will return at least 200% in  two years (twenty-four months) or less  from that date.  My call has come to fruition.   The article can be found as the  featured post (left side)  on my blog for reference and verification purposes.  Featured post  can only be viewed  using a desktop, tablet or laptop and not on mobile/cell phones.   On May 4, 2016, the price of FBN Holdings was  N3.50;  the price of FBN Holdings on January, 10, 2018 is  N10.63.   This is a  204% return.    My call was achieved in  twenty (20)  months.   I   will offer another one now without delving into the pitch details: Diamond Bank will return 200% return within the next 15 months or less.  Reference price date is January 8, 2018.   Do not miss this one...   Tell others to tell others.