NGX bearish trend persists as ASI slides 0.48% amid sell-pressure

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  • MTN widens losses to N392.69bn in Q1, shows sign of financial distress.

During Tuesday’s session, the local bourse witnessed subdued trading activity, marked by a 0.48 percent decline in the All-Share index, closing at 98,228.50 points.

This downturn translated to a corresponding 0.48 percent decrease in the market capitalization of listed equities, amounting to N55.55 trillion, resulting in a total market loss of N268.75 billion.

The imbalance between declining and advancing stocks was evident, with 28 stocks experiencing losses compared to 15 gainers on the Exchange.

Both the total deals and value experienced declines, falling by 9.45 percent and 6.76 percent, respectively, to 9,620 deals and N8.35 billion.

Notable losers included UNITYBANK, FBNH, CHAMPION, LIVESTOCK, and WAPIC, each recording significant share price declines of -10.00 percent, -9.91 percent, -9.78 percent, -9.71 percent, and -9.33 percent, respectively.

Sectoral performance leaned towards the bearish side, with the Banking, Insurance, and Consumer Goods sectors registering declines of 3.11 percent, 1.48 percent, and 0.66 percent, respectively, while the Oil/Gas and Industrial Goods indices remained unchanged. Despite the overall market decline, trading volume managed to maintain stability, edging up by 0.93 percent to 425.66 million units.

Noteworthy gainers for the session included PRESCO, JAPAULGOLD, MAYBAKER, FTNCOCOA, and WEMA, each recording significant share price appreciation.

UBA emerged as the most traded security in terms of volume and value with 102.23 million units, worth N2.68 billion, transacted in 952 trades.

NIBOR rates moved in mixed directions for the maturities tracked. Notably, the Overnight NIBOR rose by 1.07 percent to conclude at 29.18 percent signaling system illiquidity. Likewise, Key money market rates, such as the open repo rate (OPR) and overnight lending rate, increased to 28.53 percent and 29.47 percent.

The Nigerian Interbank Treasury Bills True Yield closed in a varied manner across yield options. However, the secondary market on the Nigerian Treasury Bills recorded positive trading activity as the average yield declined by 3-basis points to 21.67 percent.

In the bond market, the average secondary market yield declined by 0.23 percent to settle at 18.59 percent. In the sovereign Eurobonds market, positive sentiment prevailed, causing a 14-basis points decrease in the average yield to 9.62 percent.

Market shifting focus to the foreign exchange market, the naira depreciated against the dollar, by 4.60 percent to close at ₦1,416.57 per dollar in the official market. At the parallel market, the Naira closed at ₦1,415.

MTN widens losses to N392.69bn in Q1, shows sign of financial distress

MTN Nigeria Communications Plc continues to perform poorly, posting a loss after tax of N392, 694 billion in the first quarter of 2024 due to the concentration of funds outside its core operations.

The company’s unaudited financial statements for the three months ended March 31, 2024, also indicate that the telecommunications giant is in financial distress.

A breakdown of the report shows that MTN Nigeria posted a loss after tax of N392, 69 billion relative to a profit after tax of N108.43 billion in Q1 2023.

The company reported an increase in revenue to N752.98 billion from N568.14 billion and a drop in operating profit to N174.08 billion from N206.62 billion.

Operating profit is the net income derived from a company’s core operations.

Despite the drop in operating profit, the loss after tax reported indicates that MTN Nigeria concentrated funds outside its core operations.

For instance, the company’s net foreign exchange loss widened by over 14,489 per cent to N656.37 billion from N4.499 billion. Its finance cost rose to N98.74 billion from N45.84 billion in the review period.

A cursory look at the Q1 report shows that the company’s financial position reflects its poor performance and suggests that MTN Nigeria is headed for insolvency.

At the end of the Q1 operation, the company’s total liabilities stood at N3.89 trillion, higher than its total assets value of N3.46 trillion, wiping out investors’ funds and leaving MTN Nigeria with a debt obligation of N434.724 billion.

The debt obligation widened by 964.35 per cent in Q1 2024 from N40.844 as of Q1 2023.

According to the MTN Nigeria chief executive officer, Karl Toriola, the company is navigating a challenging operating environment.