Inflation down for the first time in Fifteen months, FX reserve improvement and exchange rate gaining traction as MPC kicks off it’s second meeting for 2017 . The missing piece is yet missing.

Good Morning and Happy new week.

The Nigeria Monetary Policy Committee (MPC) will commence its two day meeting today the 20^th of March 2017 through to tomorrow the 21^st of March 2017. This meeting will probably be the easiest meeting  of the committee in the recent past considering that it has recorded the best string of positive results on key economic data that measures the committee’s performance.

·         Inflation came down for the first time in fifteen months in the recently released CPI data for February 2017 to 17.785%.

·         Foreign Exchange Reserve strengthened  to $30.30billion

·       The Naira/$ has firmed up toN454 in the parellel market market that has experienced a seere volatility of the the past couple of years and has accounted for the exit of afaoreing Portfolio Investors (FOI) from the Nigerian Market.

·         Slow negative expansion in Gross Domestic Product (GDP)

However, the 2017 Fiscal Budget s yet to receive final aprroval from the Senate and as such, the potential effects of the budget implementation on the economy can at best only be anticipated .  As  a result of the absence of this critical piece, we expect the MPC will leave all key decisions unchanged to allow the full impact of the pass through effect of its current MPC decision to achieve maximum inpact on the economy. CLICK to read our latest CPI report

Our MPC Expectation

We expect the MPC to leave key rates unchanged and allow time for the National Assembly to pass the Budget into law.

My 2cents

If ever there was another window for the convergence of monetary and fiscal policies, that window has once again opened wide.  The  back and forth between the Federal Government and the National Assembly in signing the 2017 budget into law is very counter productive to the plan of the respective policy administrators to lead the country out of its current state of recession. Their absolutely has to be cohesion between both policy arms and NOW is the  next best time for that cohesion to be established.

A lot has been asked of the Monetary policy and eventhough they got off to a very shaky start and were often caught napping rather than being proactive with policy decisions, they have managed to steady the tide. The National Assembly  and the Federal Government Must take advantage of this string of positive economic data to sustain the momentum by passing the budget to law, at which point the largest economy in Africa would have taken a giant leap on its march to recovery.

If you would require any help to ensure that your portfolio is positively aligned, or any inquiry on your portfolio, please send an email to research@gti.com.ng  or to c.anyanwu@gti.com.ng

We will also like to implore you to encourage your friends to subscribe to the GTI  Research mailing list by visiting  www.gti.com.ng and clicking on email subscription to join our ever growing mailing list.

Have a fantastic trading week.

Chuks Anyanwu

Head, Research and Strategy

Market Review

Dangote Cement gain of 3.75% on Friday significantly impacted on the Nigerian equity market and subsequently pushed uptrend to the fourth day in a row. Market breadth equally firmed up with 16 advancers against 14 decliners. In summary, the All-Share Index (ASI) gained 235.08 absolute points, representing a growth of 0.92% to close at 25,653.16 points. Similarly, the Market Capitalization gained N81.35 billion, representing a growth of 0.92% to close at N8.88 trillion. The upturn was equally impacted by value appreciation recorded in the following capitalized stocks; Lafarge WAPCO (+4.35%), Cadbury (+2.17%), FBNH (+1.95%), GT Bank (+1.94%), and UBA (+1.85%). Week-on-week, the market gained 415.15 absolute points, representing a growth of 1.64%.

MARKET STATISTICS- March 17, 2017                                               YTD: -4.55%
Cap (N)	8,878,071,984,085.20	One Day(ASI CHG)	+0.92%
Index	25,653.16	One Week(ASI CHG)	+1.64%
Volume	151,384,092	One Month(ASI CHG)	+1.94%
Value (N)	1,857,230,771.31	Six Months(ASI CHG)	-7.92%
Deals	2,325	52 Weeks(ASI CHG)	-0.10%
Gainers	16	Losers	14
Un-Changed	57	Total	87

Source: GTI Research

GTI 5 WEEKLY STOCK PICK FOR THE PERIOD 03/20/2017 - 03/27/2017

Zenith Bank Plc
Target Price	N22.02
Investment Horizon	12.Months
Statistics
Industry	Financial Services
Price (N)	N14.13
Shares Outstanding (Mn)	31,396
Symbol	ZENITH
Expected Return 52Week High 52Week Low	55.83% N18.05 N10.35

Zenith Bank: Despite the challenges in the Nigerian financial services sector, with rising loan loss provisions as a result of their exposure to the oil and gas sector as well as the potentially toxic power sector, doubts about asset quality and weakening CAR, we still see opportunities in the tier one banks. Zenith bank has one of the strongest CAR’s in the sector and continues to leverage on its stringent risk assessment framework to mitigate capital erosion.  The Bank’s balance sheet size is a major incentive for us at this time because we believe that its size/liquidity is a competitive edge in an economy awash with opportunities like the Nigerian economy.  The bank also has strong brand acceptability and a wide branch spread.

Dangote Cement Plc
Target Price	N230.20
Investment Horizon	12.Months
Statistics
Industry	Industrial Goods
Price (N)	N166.00
Shares Outstanding (Mn)	17,040
Symbol	DANGCEM
Expected Return 52Week High 52Week Low	38.67% N203.96 N149.26

Dangote Cement:  Dangote Cement is Africa's leading cement producer with three plants in Nigeria and plans to expand into 13 other African countries. The Group is a fully integrated quarry-to-customer producer with production capacity of 29 million tonnes in Nigeria and new operations set to begin across the rest of Sub-Saharan Africa. The Group plans to have 42 million tonnes capacity by the end of 2016 and 50-60 million tonnes of production, grinding and import capacity in Sub-Saharan Africa by 2016. Dangote Cement's Obajana plant in Kogi State, Nigeria, is the largest in Africa with 13 million tonnes capacity across four lines. The Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12 million tonnes.  The Gboko plant in Benue State has 4 million tonnes capacity. Over time, Dangote Cement has eliminated Nigeria's dependence on imported cement and is transforming the nation into an exporter of the product serving neighboring countries.  

Total Nigeria
Target Price	N320.00
Investment Horizon	12 Months
Statistics
Industry	Oil & Gas
Price (N)	N274.55
Shares Outstanding (Mn)	339.52m
Symbol	TOTAL
Expected return	16.55%
52Week High	N345.00
52Week Low	N140.01

Total Nigeria:  Total Nigeria is one of the foremost oil and gas companies in the Nigerian oil sector. The company is one of the largest in terms of retail outlets across the country and leverages on these outlets to push sales volume. The company has also benefitted from the deregulation of the downstream sector where it operates as a result of its retail presence in the volume driven oil marketing space.  The company pays consistent dividend and is a firm pick with PFA’s and FPI’s .The Company has declared a final dividend of N7.00 bringing total dividend for 2016 to N17.00

Presco Plc
Target Price	48.00
Investment Horizon	12.Months
Statistics
Industry	Agriculture
Price (N)	47.00
Shares Outstanding (Mn)	1,000
Symbol	PRESCO
Expected Return 52-Week High 52-Week Low	2.12% 48.00 34.60

Presco: A fully integrated agro-industrial establishment. The Company specializes in the cultivation of oil palm, extraction, refining and fractionation of crude palm oil into finished products. It recently forayed into rubber plantation. This is to serve the purpose of diversifying its operations and protecting the company from exposure to global commodity crisis. It has commenced investment on 14,000 hectares of land for rubber and oil palm plantations expected to be additional income generator by the end of this decade. The Company’s products are mostly sold directly to wholesalers, industrial users and consumers. The industrial users are; Nestle Nigeria, Friesland Food (WAMCO) Nigeria, Kraft Foods (Cadbury), Kentucky Fried Chicken (KFC), Golden Pasta Company Ltd, Fan Milk Plc and Dangote Group. Our estimates show that the total local palm oil processing capacity is significantly below the total demand. This gives a lot of room for growth to meet demands.

Okomu Oil Palm Plc
Target Price	N49.00
Investment Horizon	12 Months
Statistics
Industry	Agriculture
Price (N)	N48.00
Shares Outstanding (Mn)	0.954
Symbol	OKOMU
Expected Return 52-Week High 52-Week Low	2.08% 48.70 28.36

Okomu OilPalm: Currently stands as one of the lead quoted firm operating in the agricultural sector.

Its operations primarily covers oil palm and rubber production, extraction and processing. With the increasing efforts by the government to boost activities in the agricultural sector in order to provide effective diversification of the economy from oil, the company is well positioned to benefit from this.  Towards this goal, it recently acquired 11,400 hectares of land with a plan to establish 10,000 hectares of oil palm plantation on it within the next 3 years. This is expected to lead to a doubling of its Crude Palm Oil (CPO) output.  The Company’s refinery capacity has also been increased to 100 metric tonnes per day, while its fractionation plant capacity and refined products capacity have both increased to 60 tonnes per day. Okomu refining and oil mill expansion initiatives will enable the company alleviate the local palm oil production shortage and in turn acquire a greater share of the Nigeria market

Watch List    

UBA, Julius Berger, Nestle, Dangote Sugar.