By Kelechi Mgboji
Assistant Business Editor
Shares of petroleum marketing companies on the Nigerian Stock Exchange (NSE) dived in November as worsening global crude oil prices combined with domestic scarcity of petroleum products to worsen the woes of equities.
TheNiche learnt that huge supply deficit owing to some oil marketer’s refusal to import the product left only the Nigerian National Petroleum Corporation (NNPC) as sole importer.
Consequently, the share prices of Forte Oil, Mobil, and Total plummeted sharply.
Investors in Forte Oil lost 28.3 per cent of the price value as the company’s share price declined to N261.73 from N290 per share.
Mobil also recorded 28 per cent decline in share price from N154 to N126.01 while Total had a decline of nearly 5 per cent from N150.01 it opened in November to N145.07 end of the month.
Other top losers include Nigerian Breweries (NB) and Nestle Nigeria that shed 16.9 per cent and 15 per cent to N120 and N810.01 per share respectively.
Diminishing returns on investments seem was further exacerbated by poor corporate earnings of firms quoted on the exchange in the third quarter ended September 2015.
Mobil posted 25.3 per cent decline in third quarter 2015 revenue to N45 billion from N60.7 billion recorded in the prior period of 2014.
Its profit before tax fell 33.5 per cent to N5.2 billion from N7.9 billion, while profit after tax reduced 39 per cent to N3.650 billion from N5.996 billion posted in the same period of 2014.
NB’s unaudited results for the third period showed a decline of 11.8 per cent and 12.2 per cent in profit before tax and profit after tax respectively over the corresponding period of 2014.
Analysts at FBNQuest Research, a Lagos-based company, said foreign investors’ appetite for Nigeria’s capital market remains low mainly due to foreign exchange challenges stemming from subdued global oil prices.
They expressed hope that Central Bank of Nigeria (CBN’s) reduction in both Monetary Policy Rate and Cash Reserve Ratio to 11 per cent and 25per cent will boost liquidity, at least in the near term.
The analysts said: “The decline in oil prices year-to-date is 24 per cent; this broadly mirrors the decline in the stock prices of oil/gas on the Exchange. Subdued oil prices have weighed negatively on oil-related stocks such as Seplat and Mobil Oil Nigeria.
“In third quarter of 2015, Gross Domestic Product (GDP) growth was 2.8 per cent year-over-year, well below the 6.2 per cent year-over-year posted in third quarter of 2014.
“The slowdown in growth has put a strain on the performance of listed manufacturing companies.
“There has been a noticeable slowdown in top-line (sales) growth of the listed companies we cover.
“Banks are also feeling the impact. Having started the year guiding to 10-20per cent loan growth for 2015, several companies have revised down their guidance towards the 10per cent mark.
“We forecast earnings per share for banks under our coverage to decline by about negative seven per cent year-over year in 2015 on average.”
They, however, noted that new listings on the stock market would be welcomed by investors as these would improve their appeal as well as give a better representation of the economy.
“Whether listings will feature in 2016 is difficult to say. However, clarity on the government’s fiscal position could prove to be a positive catalyst.”
