Will Nvidia Disappoint?

Good morning and welcome to this week’s edition of 4 Customs Street, our weekly newsletter on the stock market.

The newsletter is divided into two:

Green White Green—focused on the Nigerian stock market.

Star-Spangled Banner—focused on the US stock market

Green White Green Last Week

On Wednesday, August 21, 2024, 141,429,525,556 International Breweries shares were listed on the NGX. The additional shares listed on NGX arose from the company’s rights issue of 161,172,395,100 ordinary shares of 2 kobo each at N3.65 per share. The offer was 87.75% subscribed.

Following the listing, the total issued and fully paid up shares has increased from 26,862,065,850 to 168,291,591,406 shares.

Oando Plc announced the successful completion of the acquisition of 100% of the shareholding interest in the Nigerian Agip Oil Company (NAOC) from Eni, for a total consideration of US$783 million.

The transaction increases Oando’s current participating interests in OMLs 60, 61, 62, and 63 from 20% to 40%. It increases Oando’s ownership stake in all NEPL/NAOC/OOL Joint Venture assets and infrastructure which include 40 discovered oil and gas fields, of which 24 are currently producing, approximately 40 identified prospects and leads, 12 production stations, approximately 1,490 km of pipelines, three gas processing plants, the Brass River Oil Terminal, the KwaleOkpai phases 1 & 2 power plants (with a total nameplate capacity of 960 MW), and associated infrastructure.

The transaction is immediately cash generative and will contribute significantly to the cash flows of the company.

BUA Foods Plc has signed an agreement with IMAS, a Turkish flour milling equipment manufacturer, to build 4 wheat and flour milling factories with a cumulative milling capacity of 3,200 tonnes per day.

Airtel Africa has commenced the second tranche of its $100 million share buy-back programme The second tranche of the share buy-back will amount to a maximum of $50 million and is anticipated to end on or before December 19, 2024.

The sole purpose of the buy-back is to reduce the capital of the company. As such, all shares purchased under the buy-back programme will be cancelled.

MTN Nigeria provided a bit more colour on the cost savings from the renegotiation of the tower lease agreement with IHS Nigeria. It will result in a 3% to 4% EBITDA margin gain for FY 2024. On an annualised basis, this approximates to 4% to 5%.

In terms of cash flow, the new terms will result in a benefit of between N75 billion and N85 billion for FY 24. On an annualised basis, this approximates to between N100 and N110 billion.

The full balance sheet and cash flow effects of the renegotiated term will be reflected in the firm's Q3 2024 numbers.

DAAR communications (parent company of AIT television and Raypower FM) has retired the following staff following a decision taken to retire executive management who have spent over 10 years in that capacity.

Those within that bracket include Tony Akiotu, Oluwatosin Dokpesi, Ambrose Somide, Anthony Uyah, Paulyun Ugbodagha, Mary Lawrence-Dokepsi, Faith Ikems, Imoni Mac Amarere, John Iwarue and Johnson Onime.

The retirements are effective October 31, 2024.

Green White Green This Week

PZ Cussons Nigeria will hold a board meeting on Wednesday, August 28, 2024, at 45/47 Town P to consider, amongst other things, the audited financial statements for the year ended May 31, 2024 (AFS).

Star-Spangled Banner Last Week

Stocks closed sharply up last week following Fed Chair Jerome Powell’s declaration that the time had come for interest rate cuts. Lower interest means lower borrowing costs for companies and a bit less pressure on the consumer.

The S&P 500 gained 1.5%.

The NASDAQ gained 1.4%.

The Dow gained 1.3%.

Gold keeps going up

The price of a gold bar crossed the $1 million mark for the first time ever, as it crossed $2,500 per oz for the very first time.

Star-Spangled Banner This Week

It is a fairly crucial one in terms of earnings. Nvidia earnings will be out this week. Some analysts have dubbed that day the most important for the week because the stock has been one of the hottest in terms of gains for the year. Year-to-date the stock is up over 160%. It is also part of a group of stocks known as the Magnificent 7 (others are Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta and Tesla).

So if the earnings are “disappointing” (relative to analyst expectations), it should be expected that they would pull down the price of the others.

CrowdStrike will also drop earnings within the week. The question everyone would like to know would be how much damage has last month’s outage cost the firm financially and in terms of clients.

From the retail side of things, Best Buy and Dollar General will drop their earnings.

From beauty and apparel, Ulta Beauty, Gap and Lululemon will drop theirs.