A Review of the Nigerian Energy Industry

UBA shares surge as positive results boost demand

08 September 2015, Lagos – The release last week of United Bank for Africa Plc’s audited half-year results, which showed that the bank’s profit after tax rose by 40 per cent to N32bn, has led to massive demand for its stocks, according to analysts.

In the three trading sessions that have followed the release of the results, the bank’s shares have risen by 27.3 per cent. On Monday, it topped the gainers chart, rising by 10.24 per cent or 39 kobo to close at N4.20.

The Chief Executive Officer, Highcap Securities Limited, Mr. David Adonri, said the share price appreciation was linked to the positive results and an unexpected interim dividend of 20 kobo per share.

UBA-Logo“For the bank to come up with an interim dividend of 20 kobo, it means things are getting better for the bank and it is a sign of good things to come in the future,” Adonri said, adding that it also showed that the bank’s expansion into other African countries is paying off.

According to financial analysts, the rise in UBA’s share price is an indication of the strong demand for the shares, after the positive results, which analysts at FBN Capital Research said was positive across board.

Since the release of the results, the stock has been among the most traded and on Monday, it was the most traded with 64 million shares worth N265.2m traded.

The attraction, according to the analysts is further increased by the fact that the shares are trading at “significant undervaluation to its intrinsic value,” which they put at between N6.59 and N8.50 over the next 12 months.

Analysts at CSL stockbrokers while reaffirming their ‘Buy’ rating of UBA stocks and a target price of N7.20, almost twice the bank’s closing price of last week, noted that based on the half year results, UBA is likely to surpass the current profit and earnings forecasts.

Analysts at Renaissance capital also reaffirmed their ‘Buy’ rating on UBA stocks with a target price of N8 per share.

On their part, analysts at Chapel Hill Denham said some of the key strategic decisions taken by UBA in the last few months had brought impressive results, adding that this was evident from increased earnings reported by the bank.

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