Total caught between fundamental, market rout as price slump 5-year low

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Shares of downstream oil and gas company, Total Nigeria, plunged to a five-year low, Tuesday, as a general market rout weighed on the oil and gas firm.

The stock resumed the trading week on a bearish note after price dipped 7.14 percent to N130 to further worsen its year to date performance to a negative return of 38.1 percent and negative 1 year return of 28.93 percent.

The performance of the company’s stock could be attributed to the negative sentiment inherent on the Nigerian stock exchange (NSE) market which has seen companies stock prices bottom, coupled with challenges faced in the industry.

Total Nigeria’s financial performance could also be attributed as reasons investors are selling off on the company’s stock.

A quick review of company’s financials revealed that in the first quarter of 2019, while revenue rose slightly by about 2 percent to N77.4 billion, total recorded a loss before tax of N418 million against a profit of N2.6 billion in the corresponding period of 2018.

This further saw Total into a loss after tax of N474 million in Q1 2019 against a profit after tax of N1.6 billion in Q1 2018.

On the back of an increase in interest rate on bank overdraft and loans, Total recorded a spike in its finance cost which rose to N1.7 billion in the period under review from N614 million in 2018.

An industry based analysis of oil and gas companies show that stocks of Total on the NSE stood as the worst performer YTD as investors have lost a whooping N24.7 billion in market value.

The last 10 years have seen investors in the Nation’s bourse demonstrate low appetite towards shares of companies in the oil and gas downstream sector on the back of a plethora of challenges … Read More...

Global debt expands $2 trillion in Q1 on easier financial conditions

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Global debt grew a hefty $2 trillion in the first three months of 2019 buoyed falling interest rates in the face of easier financial conditions, figures from the Washington-based Institute of International Financial (IIF) show.

Borrowers took on debt in first quarter at the fastest pace in over a year. At $246 trillion which equates to almost 320 percent of world Gross Domestic Product (GDP), global debt is just $2 trillion away from the all-time high of $248 trillion reached in the previous corresponding quarter last year.

“It is unsurprising that global debt grew on the premise that major central banks are tilting towards more accommodative policy stance” said Ifeanyi Obioha, Associate at Ernest & Young (EY). “While lower interest rates encourage consumers and businesses to borrow to boost growth, they can also dig an economy into a deeper hole.”

The global finance body maintained that going forward broad-based central bank easing could prompt more debt build-up across the board, thwarting deleveraging efforts and rekindling concern about long term headwinds to global growth.

Debt owed by emerging markets (EMs), which accounted for 28 percent of global indebtedness and 216 percent of world GDP, grew marginally 15 basis points to a record high of $69.1 trillion in first quarter.

The persistent economy-wide increase in EM borrowing continues to feed into higher contingent liabilities for many sovereigns.

With households and government debt reaching record high of $12.5 trillion and $15.6 trillion respectively, rise in overall debt to GDP ratio since last year has been most significant in China, South Africa and Brazil.

According to the global finance body, high reliance on short-term debt leaves many emerging markets exposed to sudden shifts in global risk appetite, saying dovish monetary stance of major central banks offers a renewed opportunity for … Read More...

Canal+ acquires Nollywood studio ROK from IROKOtv

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French television company Canal+ has acquired the ROK film studio from Video-On-Demand company, IROKOtv for an undisclosed amount. The new acquisition comprises ROK’s production, content distribution, and publishing channels.

As part of the transaction, Iroko Ltd will also take full control of JV Iroko+, a subscription video-on-demand (SVOD) service available in French-speaking Africa.

The ROK acquisition is not the Canal+ Group’s first collaboration with IROKOtv. The media company joined a $19 million Series E investment in 2016, that also saw Canal+ and IROKO launch a French VOD channel.

The acquisition comes as the CANAL+ group looks to strengthen its content production reach in Nigeria and across Africa. As part of the acquisition, ROK founder, Mary Njoku, will continue in a leadership role as director-general of ROK Productions SAS, and will maintain a material shareholding in the company.

According to a statement “ROK will produce thousands of more hours of Nollywood content to deliver movies and original TV series for CANAL+ group’s audiences in French-speaking Africa.”

“As part of the acquisition, CANAL+ group will continue to collaborate with Iroko Ltd, with the non-exclusive content distribution of ROK content through the IrokoTV SVOD app.”

ROK’s debut TV channel was launched in July 2016 by the Lagos-based studio, renowned for its original TV series and Nollywood movies, followed by ROK2 and ROK3 which are carried on satellite pay-TV services like MultiChoice’s DStv, with a differing channel selection in various African countries.

Speaking on the new acquisition, Jacques du Puy, CEO of CANAL+ International said through this acquisition CANAL+ group would develop and enhance the catalog of Nollywood contents and expand the ROK brand inside and outside the African continent.

According to GfK international ViewScape survey, which covered African countries including South Africa, Kenya, and Nigeria, for the first time, … Read More...

British private equity firm Actis boost African presence with Abraaj funds purchase

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Private equity firm, Actis LLP, has completed its takeover of two Abraaj funds run by now defunct buyout firm, Abraaj, in a deal that will boost Actis’ footprint across Africa and the Middle East.

Actis is taking over the management rights of the $1.6 billion Abraaj Private Equity Fund IV and Abraaj Africa Fund III, the deal includes investments in 14 portfolio companies across the two funds, bolstering Actis’ operations in Africa and the Middle East.

Actis has been in talks since January to take over Abraaj’s funds and it currently manages $12 billion in assets,  According to Abraaj,  it was invited to step in and provide a solution that was acceptable to investors, known as Limited Partners (LPs), of the two funds and liquidators of Abraaj.

Abraaj Africa Fund III focuses on investment in sub-Saharan Africa. Abraaj’s APEF IV, also known as Fund 4 or Fund IV was set up to invest in greenfield projects, privatisations, growth capital opportunities and buyouts in the Middle East, North Africa, South Asia and the Levant region.

Abraaj, which claimed to have managed almost $14bn in funds, was forced into liquidation in June of last year after a group of investors, including the Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation and The Overseas Private Investment Corporation (Opic), a US government agency, commissioned an audit to investigate the alleged mismanagement of money in its $1bn healthcare fund.

The investigation increased scrutiny of the firm and the alleged misappropriation of funds of US investors and a US government agency attracted the attention of the Securities and Exchange Commission and other US authorities.

Arif Naqvi, the founder of Abraaj and five other senior executives of the firm are alleged to have raided Fund 4 to plug shortfalls, … Read More...

Conoil Nigeria Plc: Innovative product underpins profit

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Investors crave for a company with strong earnings and attractive valuation. This is because they expect to be paid bumper dividend, the reward for taking risk in the entity; after all they could have invested the money in other ventures.

Concoil Nigeria Plc, a major player in the downstream oil and gas industry just released its first quarter financial statement that showed improvement in key performance ratios.

The stellar performance means the company has bolstered the optimism of investors because it isn’t easy to thrive in a harsh and unpredictable macroeconomic environment.   

Nigeria’s economy has been growing sluggishly since the country exited its first recession in 25 years in 2017 as GDP expanded by expanded by 2.01 percent in the three months through March from a year earlier. That compares with 2.4 percent expansion in the fourth quarter.

Inflation rate was 11.40 percent in May, a figure that is higher than the 6 percent and 9 percent central bank target range.

Unemployment rate is at an all time high of 23 percent, as the country dethroned India to become the poverty capital of Africa.

The country’s decrepit infrastructures such as the menacing Apapa gridlock and bad roads has continued to undermine the growth of downstream oil and gas firms that incur additional haulage cost.

Oil marketers are grappling with huge debt brought on by delay in the payment of subsidy arrears by the Federal Government. Consequently, a lot of firms are unable to settle outstanding salaries of workers and pay interest on money borrowed from banks.

Amid these monumentalor or huge challenges, Conoil continues to thrive as it recorded double digit growth in revenue and profit, while it maintains a solid working capital position.

Conoil reported a 13.85 percent increase in revenue to N35.63 billion … Read More...