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Analysts Assess Nigeria's Gas Supply Delivery, FG's Railway Route Plans, and Vitafoam Share Cancellation

Nov 17, 2022   •   by TheAnalyst, Proshare Research   •   Source: Proshare   •   eye-icon 216 views

Being an Analyst Note issued by Proshare Research on November 17th, 2022 


Abandoned Gas Projects Constrain Nigeria's Supply Capacity

Analysts have attributed the abandonment of Brass and Olokola LNG projects and the slow development of the NLNG trains to Nigeria's failure to bridge the gas supply gap to Europe occasioned by the Russian invasion of Ukraine. This is further compounded by the country's distance from the European market (compared with Morocco and Algeria) and the lack of operational infrastructure to make the deliveries. Brass and Olokola LNG projects have stalled due to the withdrawal of some IOC partners on concerns around the project viability and investment justification, causing a delay in the final investment decision (FID). Analysts advocated the adoption of the ownership and operating model of the NLNG in other public oil and gas projects and possible listing on the equity market.  

 

FG plans to add 3,658km to railway routes; Analysts State the Need for Security

At the 2nd International Railway Conference in Abuja, organised by the Abuja Chamber of Commerce and Industry, the Minister of Transportation, Muazu Sambo, disclosed that the Federal Government(FG) has carried out feasibility studies on another 3,658km of railway routes in the different parts of the country which is considered viable for development. The FG, which has made railway infrastructure one of its major planks, has completed the 326km Itakpe-Ajaokuta-Warri rail line and railway ancillary facilities; the 156.5km Lagos-Ibadan standard gauge railway modernisation project with extension to Lagos Port, Apapa. The 3658km of railway routes are intended to be inter-city mass transit rail services along Lagos, Abeokuta, Ibadan Oshogbo, Ilorin, Minna, Kaduna, and Kano corridors. Analysts, however, note that the spate of insecurity across the country has threatened the operations of the Nigeria Railway Corporation (NRC). Analysts, therefore, call on the government to address the challenge of banditry and kidnapping, rendering the government's infrastructural investment unproductive. Appreciating the enormous opportunities inherent in the potential privatisation of the NRC, Analysts have called for the listing of the NRC on the stock market.

 

Foreign Holdings of US Treasuries Drop in September 

According to the data from the US Treasury department, foreign holdings of Treasuries in September dropped to their lowest level since May 2021, led by Japan and China. Their currencies have struggled against the strong dollar this year. Japan's Stash of treasuries dropped to $1.120trn from $1.199trn in August, with the majority spent on currency intervention as $19.7bn was spent by BOJ in September for intervention. As for China, the treasuries fell to $933.6bn in September from $971.8bn in August. China's Treasuries have been under $1trn for six consecutive months. Generally, investors sold treasuries in September with the expectation that Fed would push the terminal fed funds rate to between 5%-5.25%. Despite the selloffs, foreigners piled into US treasury bonds and notes in September valued at $60.4bn. Analysts believe the foreign holdings of Treasuries will continue to decline as the recession risks have generated huge selloffs recently. 

 

Vitafoam Shareholders Approve Cancellation Of Unissued Shares

The Shareholders of Vitafoam Nigeria Plc have unanimously approved the cancellation of 1.15bn unissued ordinary shares of 50 kobos each, in compliance with the Allied Matter Act (CAMA) of section 124. The Act stipulates by December 31, 2022, all companies in Nigeria should have only issued shares as against the current system of operating issued and authorised share Capital. Analysts expect more companies to follow suit in compliance with the CAMA. Although some shareholders pleaded that the Company should convert the unissued shares to bonus issues, others believed the timing was too short. However, the cancellation of the unissued shares was approved at the EGM. Vitafoam presently trades at N20 per share with a market capitalisation of N25bn and a -11.11% decline in share price Year-to-Date (YTD), starting the year at N22.50.

 

Iran and Venezuela's Bromance Extends to Agriculture and the Mining Industry.

Iran and Venezuela have continued their bromance by signing a cooperation document in the agricultural field. The cooperation is for plant protection and quarantine, which is regarded as a prelude to the next agreements in the fields of technical, mechanisation, and cultivation, as well as exchanging know-how in the related areas. Iran's bromance with Venezuela started in June when a 20-year cooperation agreement was signed while not publicising the details. This cooperation between the two countries whose economies have been crippled by sanctions from the US gives off a symbolism that Iran's President has continued a push that has seen him craft his foreign policy around anti-US motifs after missing out on boosting relations with traditional Asian allies and lacks a roadmap for renewing ties with the West. 

 

Venezuela agreed to provide 1m hectares of agricultural land for Iran's overseas cultivation projects in June, helping grow crops like soybeans and corn. Venezuela can also provide Iran with 500k hectares to conduct extraterritorial cultivation, and the lands can be planted twice yearly. Iran is self-sufficient in the cement industry as the equipment and technology of building cement units in Iran are completely Iran-made and has also agreed to partner with Venezuela in the mining industry by supplying the country with technologies required in its mining sector

 

Elon Musk says SBF Donations to the Political System Preserve him from Scrutiny

The new Twitter owner, Elon Musk, has said Sam Bankman-Fried, the former CEO of bankrupt crypto exchange FTX, was not in regulatory crosshairs because he had donated to the Democratic Party. The statement came in response to a tweet by the president of the non-profit conservative activist group Judicial Watch, Tom Fitton. Fitton claimed Musk and his companies have been facing harassment and threats under the new administration, but SBF, the second-largest donor to the Democratic party and a regular congress guest, has conducted an awful fraud under their watch, and nothing has been done. Recall that the Twitter boss had declined an offer from SBF to finance his Twitter purchase with $3bn. Though Analysts believe the former CEO of FTX is undergoing criminal investigation from the US Department of Justice but not fairly sure if this would probably lead to prosecution, as many crypto community's hope. 

 

Meanwhile, the former Twitter owner Jack Dorsey also shared a tweet indicating that SBF reached out to him. However, there was no clarity that the former FTX boss wanted to discuss as there is no concrete evidence. Analysts expect the discussion to translate to transactions that could deliver SBF from bankruptcy.

 

 

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