April 25, 2014

Real Estate Amongst Best Sectors in Grim Q1 performance

Dolapo Omidire

Putting it lightly, the performance of the Nigerian Stock Market in the 1st quarter of 2014 was very grim. The numbers indicated that Nigeria was the 3rd worst in terms of returns globally, yet our African counterparts Kenya, Ghana, South Africa and even Egypt achieved positive Q1 returns of 5.6%, 11.2%, 3.3% and 15% respectively. We underperformed with -6.2%.

The lion-share of the negative performance can be attributed to the sell off from foreign and institutional investors, which was caused by liquidity tightening from the CBN and the surprise removal of the CBN governor earlier this year.

real estate nigeria lagos abuja property news update research
Nigerian Stock Exchange Floor

Despite the gloomy performance in other sectors, real estate outperformed the market with single digit returns, which were still above the market average. UAC Property Development Company was arguably the key driver for the performance of the real estate sector. The property development company which is behind many of the well-known residential and commercial developments across Nigeria declared a N3.2b PAT (Profit after Tax) for the financial year ended 31st December, 2013. An impressive 45% growth from 2012’s N2.2b. They also declared a dividend of 70k per share representing a 3% dividend yield AND a bonus of 1 for every 4. (Jackpot?)

The stock price has soared and produced a shareholder return of 35% in the past month alone, where it reached its all time high of N26. It hasn’t shown signs of letting up either as it has remained at N25 since the 15th of April. It adjusted to N24.85 on Friday.

real estate nigeria lagos abuja property news update research stock market uac property
Source: Bloomberg. UAC PROP 1 Month Return

Other sectors like Construction & Materials, Industrial Goods & Services and Health Care achieved single digit returns. However, BusinessDay reported that the double-digit negatives from other sectors eroded the gains these sectors brought.

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