The Nigeria Exchange Group Limited (NGX) started 2021 on a good note as the last trading day of 2020 earned the local bourse a warm ovation by reflecting over 50% growth year–to–date.
Although the NGX began the year with an air of optimism, its performance has been beset by a number of macroeconomic factors that have influenced the investment decisions of retail and institutional investors and affected local and foreign direct investments.
In the first half of the year 2021, the All-Share Index (ASI) of Nigeria’s stock market declined by 7.87% from 41,147.39 to 37,907.28 points.
Despite the negative movement, 54 of the 168 companies listed on the exchange appreciated with the top 10 stocks gaining no less than 61% year-to-date. It is worthy of note that most of the stocks on the top best-performing list are insurance companies and none are banks.
The top 10 best-performing stocks for the first half of the year 2021 are as follows:
Vitafoam Nigeria Plc
The consumer goods company declared an increase of 36.59% and 47.34% in Q1 and Q2 respectively which explains the buy interests in the company’s shares. Despite the 49% growth in taxes, earnings per share appreciated by 66.92% from N1.30 to N2.17. The company declared a dividend of N0.70 per share which was paid on the 5th of March, 2021.
On June 1, 2021, Vitafoam led other companies to record N94 billion gain for the stock market. Year-to-date, the stock appreciated 97.44%. Vitafoam Plc currently trades at N15.40.
Regency Assurance Plc
Regency Assurance Plc is the second best-performing insurance company in the top 10 list. The company engages in the provision of general insurance cover to corporate and individual clients.
In Q1 2021, the company recorded an impressive increase in Net Profit of 95.79%. As a result, earnings per share went up by 95.73% from N3.28 to N6.42. The company share price grew by 109.09% from N0.22 to N0.46 year-to-date.
Royal Exchange Plc
Royal Exchange Plc recorded a year-to-date increase of 134.62% in its share price, from N0.26 at the start of the year to N0.61. The financial services company in Q4 2020, realized a 7% increase in income and 112% growth in Profit after Tax.
Royal Exchange Plc is the only financial services company that ranked amongst the top 10 best-performing stocks in the half-year 2021. The company is engaged in providing life, healthcare and general insurance, financing, asset management, trusteeship and microfinance banking services.
Champion Breweries Plc
The share price of Champion Breweries Plc, one of the four listed breweries, increased by 144.19% to N2.10.
The brewery recorded revenue growth of 22.05% in the first quarter of the year, from N1.95 billion in the corresponding period of 2020 to N2.38 billion. Net profit for the quarter grew by 53.14%, the highest amongst all 4 breweries in the same period.
Morison Industries Plc
The share price of Morison Industries Plc, the second-best performing stock for the period gained 185.71% from N0.49 to N1.40.
In Q1 2021, the medical products manufacturing company recorded a loss after tax of 34.17% from N13.16 million to N19.99 million in loss and a 25% reduction in revenue. Despite this result, there is still a good buy interest in the company’s stock possibly because of the potential of pharmaceuticals in the present pandemic era.
Lasaco Assurance Plc
Lasaco Assurance Plc, which is the overall best-performing stock for the period under review gained an immense 328.57% in its share price from N0.35 at the start of the year to N1.50 on June 30, 2021.
The audited financial statement of the company revealed that gross premium grew by 17.13% Y-o-Y from N9.34 billion to N10.94 billion in FY 2020 while Profit after Tax went up by 100.26% when compared with the corresponding year, from N347.77 million to N696.44 million.
However, in Q1 2021, the company recorded a decline in Net Profit as Gross Insurance Premium earned was subdued by changes in unearned premium to beat down the bottom-line income by 22.39%.
Other stocks that ranked amongst the 10 best-performing stocks for the first half-year of the year 2021 include:
• Consolidated Hallmark Insurance Plc
• Seplat Energy Plc
• Linkage Assurance Plc
• Mutual Benefits Assurance Plc
What to expect
It is expected that the market may remain bearish as the second half of the year commences due to the increasing bond rates. The rising fixed income rates could make the equities market less attractive to investors, hence investors may witness a market rally towards sell-off in the coming months.