Sterling Bank (action plan announcement)

[idowu_k]

Originally Posted by olusolakemmy

the merger talk is taking for ever and no news seems to be coming from either ecobank or sterling.
well we are waiting for them to sort out their house.

Still sceptical about the so called merger bw these banks. For our investments sake, I just hope this merger will not be prolonged further or follow the same direction of previous arrangements bw Ecobank and others like FBN. Such developments demoralised upcoming investors in the stock market. Hoping for the best in the current situation.

[Jaytee]

Does anybody has information on Sterling Bank? I bought 2000 units at about N9.40 sometimes last year (about September 2007) to be precise. Today, the price is N7.28. Have they declare any bonus or dividend within that period or what?

[Babs_O]

Sterling bank has not declared any bonus or dividend since the beginning of last year to date. They have not released their 2007 results either (their end year is 30-Sep).

[Lollypop]

From The Guardian - Wednesday, March 05, 2008

Ecobank, Sterling Bank merger talks on course
By Ade Ogidan, Business Editor

THE planned merger of Ecobank Nigeria Plc and Sterling Bank Plc may soon be consummated, going by the mileage already covered by the two financial institutions in the mega deal.
Already, the two banks have concluded due diligence and valuation reports on each other, while negotiations on the merger itself is expected to have commenced, ahead of presentations to their respective shareholders.
Specifically, Ecobank has employed Ernst and Young firm of Chartered Accountants to conduct the due diligence on Sterling Bank, while the latter has mandated Akintola Delloitte to conduct a similar test on Ecobank.
Also, in respect of valuation, Afrinvest Consultants got the mandate of Sterling Bank to scrutinise the books of Ecobank, while the regional financial institution, under the umbrella of Ecobank Transnational Incorporated (ETI), employed IBTC Chartered Bank to peruse the claims of Sterling Bank.
The eventual merger of the two banks would reduce the number of financial institutions in the country to 23, sign-posting second significant event in the post consolidation era. IBTC Chartered Bank Plc and Stanbic Bank Limited recorded the first merger under the second phase of the consolidation exercise.
Ecobank has of recent become the beautiful bride for mergers, after the earlier "marriage" plan with First Bank Plc failed.
The pan-African Bank, courtesy of ETI, has the irresistible attribute of a continental coverage, with presence in 23 African countries. Besides, its enviable corporate governance record has endeared it to other financial institutions wishing to adopt a combination strategy for growth, against the organic alternative.
On its part, Sterling Bank boasts of solid pedigree in investment banking - Sterling Capital, ranking among the top three in their business portfolio.
The bank also operates SBG Insurance Brokers; Sterling Registrars Limited; Sterling Asset Management and Trustees Limited, and Safeguard Savings and Loan Limited.
Sterling Bank's Group Managing Director, Mr. Yemi Adeola, explained to reporters in Lagos yesterday that the merger with Ecobank was not a do-or-die affair.
"We have looked into the books of both banks and observed that a merger by the two has attractive synergy features. We have decided to adopt the combination strategy against organic growth option to frogleap the fortunes of the two banks in a very progressive manner.
"However, in the event of the merger not being consummated, we would be left with no other option than go to the market for recapitalisation." Adeola pointed out that Sterling Capital had already taken 23 companies successfully to the market in the last two years. "So, the issue of capacity in recapitalising on our own is not a challenge that we cannot cope effectively with. As at yesterday, Sterling Bank traded at N7.28 per share and 12.3 million units valued at N89.3 million changed hands. Also Ecobank Nigeria Plc traded at N7.95 per share, as 1.135 million shares valued at N9.02 million changed hands in 82 deals.
As at Monday, the per earnings ratio of Ecobank Nigeria stood at 28.39 while earnings per share was 0.28. Its last dividend was paid on June 1, 2007 when the bank paid nine kobo per share. Its share price has remained stagnant at N7.95 per share since the beginning of the year due to technical suspension.
Sterling Bank's per earnings ratio stood at 36.40 as at Monday, while earnings per share stood at 0.20 and its last dividend of 10 kobo per share was paid on December 13, 2004.

[tonidol]

Is it a good time to jump into Sterling Bank on a medium term basis? What are the implications for me in the following scenarios:

1. If merger plans with Ecobank suceeds?
2. If merger talks with Ecobank fails?
3. If Sterling comes to the public to raise funds alone later in the year?
4. If merger suceeds, will they come to the market to raise money again?
5. If merger suceeds, how will the share prices of both firms be harmonised

Gurus help o!!!

[riskreturn]

Originally Posted by tonidol

Is it a good time to jump into Sterling Bank on a medium term basis? What are the implications for me in the following scenarios:

1. If merger plans with Ecobank suceeds?
2. If merger talks with Ecobank fails?
3. If Sterling comes to the public to raise funds alone later in the year?
4. If merger suceeds, will they come to the market to raise money again?
5. If merger suceeds, how will the share prices of both firms be harmonised

Gurus help o!!!

Independent of whether they will or will not go to the market to raise funds or whether they will or will not merge, it is not advisable to go near ANY of the stocks that were placed on technical suspension before the stock prices started the recent free fall. This is because those that have experienced substantial fall in price are now cheaper to buy.

[tonidol]

Originally Posted by riskreturn

Independent of whether they will or will not go to the market to raise funds or whether they will or will not merge, it is not advisable to go near ANY of the stocks that were placed on technical suspension before the stock prices started the recent free fall. This is because those that have experienced substantial fall in price are now cheaper to buy.

Which ones can l buy on medium term basis please?

[riskreturn]

Originally Posted by tonidol

Which ones can l buy on medium term basis please?

Virtually any combination of banking stocks that are not presently on technical suspension, although I would prefer (on the basis of closing market prices today) Skye Bank, Access Bank, Bank PHB, Diamond Bank, FCMB, and Oceanic in descending order of preference - that may change tomorrow, depending on market price configuration then.

[riskreturn]

It has now been announced that the merger talks with Ecobank have been discontinued (courtesy: today's This Day: THISDAY ONLINE)

[olusolakemmy]

Originally Posted by riskreturn

It has now been announced that the merger talks with Ecobank have been discontinued (courtesy: today's This Day: THISDAY ONLINE)

yeah, thanks for the info, i click thisday from the link you posted and i got the detail

[Babs_O]

Good News the merger with Ecobank is no more. Since the Sterling group has raised money for lots of other organizations it's time they go for their xx billion public offer after giving a good 2007 report. Only its difficult to get sterling to buy on the floor right now, this is time to load more as the price should easily rise to N12 after suspension.

[riskreturn]

Originally Posted by Babs_O

Good News the merger with Ecobank is no more. Since the Sterling group has raised money for lots of other organizations it's time they go for their xx billion public offer after giving a good 2007 report. Only its difficult to get sterling to buy on the floor right now, this is time to load more as the price should easily rise to N12 after suspension.

Please share with us the reasons why you think the price will rise to N12 if the technical suspension is lifted. I find your view very interesting and I am eager and curious to know the rationale.

[El-Kayode]

considering the flop of the merger talk btw these banks, when is the TS expected to be lifted?

BusinessDay... the voice of business - Sterling, Ecobank merger fails, to grow separately

[chidianosike]

Originally Posted by riskreturn

Please share with us the reasons why you think the price will rise to N12 if the technical suspension is lifted. I find your view very interesting and I am eager and curious to know the rationale.

riskreturn i think it would be purely based on sentiments. since sterling is still relatively 'penny'..investors will go for it, it may be on 'bid' for a couple of days while shareholders are likely to hold and refuse to sell because they expect a rally.., that way, demand outstrips supply and the price will face north. 12 naira may not be too hard to reach in dis circumstance..

[Babs_O]

@riskreturn, A couple of reasons/speculations should push it up.

1. PAT may be really good, bringing the PE below 20. The same way Access PE improved sharply prior to last PO.
2. Since they ought to raise new capital to catch up with other banks it pays for the price to go up somehow so that the PO can be sold at a discount of N 8-10. This may play out naturally by fund managers wanting a big stake buying the stock now than during the IPO. Buying it now means they will get what they buy and when ever the bank raises the PO they will benefit from the growth that comes with new cash injection. After new cash injection price to book drops and PE drops once the injected cash is deployed into use. Thus for a fund manager it becomes attractive to buy.
3. As less people sell initially the price move up fast and then more slowly till it reaches a resisitance based on the results they release shortly.

My speculative thoughts.

[riskreturn]

Originally Posted by Babs_O

@riskreturn, A couple of reasons/speculations should push it up.

1. PAT may be really good, bringing the PE below 20. The same way Access PE improved sharply prior to last PO.
2. Since they ought to raise new capital to catch up with other banks it pays for the price to go up somehow so that the PO can be sold at a discount of N 8-10. This may play out naturally by fund managers wanting a big stake buying the stock now than during the IPO. Buying it now means they will get what they buy and when ever the bank raises the PO they will benefit from the growth that comes with new cash injection. After new cash injection price to book drops and PE drops once the injected cash is deployed into use. Thus for a fund manager it becomes attractive to buy.
3. As less people sell initially the price move up fast and then more slowly till it reaches a resisitance based on the results they release shortly.

My speculative thoughts.

We are all seem to have agreed that the fundamentals available in the public domain do not justify the existing technical suspension price OF 7.28 Naira (with a trailing P/E of 37.66 times). The only added information I have gathered are the probable favourable sentiments in support of even a higher price, as well as corporate decision to manipulate the price to still a higher level in preparation for a PO. To bring its forward end-June 2008 P/E to about 10 times and below we anticipate at today's closing prices for a number of stocks like Skye Bank, FCMB, Access Bank, Bank PHB and even First Inland Bank and a few others (before reckoning with dilution of their shares with public offers), it has to record about 300% profit growth in its financial year ending 30 June 2008, over the earlier corresponding year - which may be an unlikely feat. Also, to raise funds from the capital market, its forward end-Deccember 2008 P/E ratio should be around 10 times or, at most, around 12 times (i.e., after including new shares to be issued!), given the current market situation or even moderately improved market conditions that are likely to prevail while going to the market later in the year. Its projected profit would then have to grow several multiples (not less than 5 times) of end-June 2007 one to justify an offer price of about 7.28 Naira. This means the scope for manipulation of price to a higher level would be limited than thought - hardly feasible to justify manipulation to 12 Naira, as the technical suspension price. Anyway, going to the market to raise funds would not be advisable now, given what can be described as the prevailing market crash, particularly as regard banking stocks. the waiting period also seems to be uncertain, as no ones knows the duration of this market crash situation.

In summary, anyone who risks buying the stock now in anticipation of price gain after lifting of technical suspension should be ready to take exit after 2 or 3 days rally following lifting of technical suspension. Thereafter, investors are likely to start dumping the stock, driving the price to much lower than the technical suspension price of 7.28 Naira. But one can even suggest that the safest thing is not to speculate by buying the stock and those that are already holding it should try to take exit before the technical suspension is lifted.

However, the conclusion above has to be moderated by the fact that the bank can release very surprising quarterly results before the technical suspension is lifted, which may boost the price of the stock. This has happened in the case of Afribank earlier in the week when its Facts