JP Morgan Research Report - Nigerian Banks

[Yusuf]

Originally Posted by billions

The historical pe ratio of quoted companies in America is between 15 and 25.

Jp Morgan should go to America and see if they will be able to see good growth stocks with a pe ratio of 6.5 to buy.

If they say south african companies hv pe ratio of 6.5.It becomes important that we know the rate at which such companies are growing their profit.

I prefer a growth stock with pe rato of 25 growing profit at 100% to a reduntant stock with pe ratio of 6.5 growing profit at 10%.If a stock is cheap,it is cheap for a reason.

Pe ratios cannot be compared without considering the rate of profit growth.
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I totally agree with you. My mentor told me that any stock that is growing profit with good going concern and with PE of not more than 20 is worth investing in. So, what are we saying about our comparism with SA and other countries that have PE of less than 10.

The question is:

How is their economy in relation to the opportunities that can be tapped by the companies to maximise their shareholder's interest?

Are they growing profit geometrically quarterly and yearly?

Are they paying dividend and bonuses to their shareholders yearly?

Is there any prospect that they will continue to do so in the nearest future?

If the answers to these questions are in affirmative, then, the future is bright.

We will definitely get there when our PE will be comparable with all those countries but with good earnings.

The aim of any investor is to maximise his investment, which is what we are having in Nigeria. If they know all these before now, why are they (foreigners) rushing to invest in Nigeria and Ghana and not South Africa?

Please get me right, the report is an eye opener to some salient things we may not have thought about in the past, but we should try to domesticate it and see if most of those hypothesis really work in our own environment.

God Bless Nigeria!!

[XXCASH]

Originally Posted by billions

The historical pe ratio of quoted companies in America is between 15 and 25.

Jp Morgan should go to America and see if they will be able to see good growth stocks with a pe ratio of 6.5 to buy.

If they say south african companies hv pe ratio of 6.5.It becomes important that we know the rate at which such companies are growing their profit.

I prefer a growth stock with pe rato of 25 growing profit at 100% to a reduntant stock with pe ratio of 6.5 growing profit at 10%.If a stock is cheap,it is cheap for a reason.

Pe ratios cannot be compared without considering the rate of profit growth.

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Well said, JP morgan should go and sleep

[Michael]

Originally Posted by billions

The historical pe ratio of quoted companies in America is between 15 and 25.

Jp Morgan should go to America and see if they will be able to see good growth stocks with a pe ratio of 6.5 to buy.

If they say south african companies hv pe ratio of 6.5.It becomes important that we know the rate at which such companies are growing their profit.

I prefer a growth stock with pe rato of 25 growing profit at 100% to a reduntant stock with pe ratio of 6.5 growing profit at 10%.If a stock is cheap,it is cheap for a reason.

Pe ratios cannot be compared without considering the rate of profit growth.
__________________

Billions you hit the nail on the head. If JP Morgan felt the prices of Nigerian Banks were too high for it to stake its money in, then they shouldn't. Nobody asked them for a report, neither have we heard at any time that such reports come free. That people sat down and crafted that report says something good about Nigerian banks -Even foreign Investors want to buy them. The CBN has shielded in theory our big 5. Will there be need to shield something that is not desired? I do not think so.
If Our Analyst and their analysis were as unreliable as this report may imply, How long would it take for that to become readily apparent?

Someone should ask JP Morgan to do a report on "Why Nigerians Love Bonuses" (sorry, i meant splits). Then at least we will know that they have some understanding of the Nigerian Market.

[zainabusman]

Originally Posted by Michael

Billions you hit the nail on the head. If JP Morgan felt the prices of Nigerian Banks were too high for it to stake its money in, then they shouldn't. Nobody asked them for a report, neither have we heard at any time that such reports come free. That people sat down and crafted that report says something good about Nigerian banks -Even foreign Investors want to buy them. The CBN has shielded in theory our big 5. Will there be need to shield something that is not desired? I do not think so.
If Our Analyst and their analysis were as unreliable as this report may imply, How long would it take for that to become readily apparent?

Someone should ask JP Morgan to do a report on "Why Nigerians Love Bonuses" (sorry, i meant splits). Then at least we will know that they have some understanding of the Nigerian Market.

I dont think the report was meant for the public. It was probably meant for JP clients. As u know with the internet people can easily share information. Just like we get IBTC, Lead etc reports on this site courtesy of members.

Unfortunately, the bank stocks started taking a dive after the report.

[billions]

[quote=zainabusman;20634]I dont think the report was meant for the public. It was probably meant for JP clients. As u know with the internet people can easily share information. Just like we get IBTC, Lead etc reports on this site courtesy of members.

Unfortunately, the bank stocks started taking a dive after the report.[/QUOTE]




There is need for an in-depth investigation of the reasons behind d falling prices of Nigerian stocks.

If foreign investors truly control 40% of the total NSE market capitalisation then they can manipulate prices thru massive selling of stocks with the aim of buying back at a reduced price.

JP Morgan cannot tell me that growth stocks dont have a high PE ratio in America.What seems to be a high PE ratio can actually be low when a company is growing very fast:

The PE ratio of Genentech was more than 200 in Nov,1985 before it advanced 300% in 5 months(after d company produced the 1st oral contraceptive pill in America).

Nigerian banks are growing very fast and i refuse to accept that a bank with a PE ratio of 25 growing profit at 150% is overvalued.

If they think that our local analysts are fools...they need to think again!

[Michael]

Originally Posted by zainabusman

I dont think the report was meant for the public. It was probably meant for JP clients. As u know with the internet people can easily share information. Just like we get IBTC, Lead etc reports on this site courtesy of members.

Unfortunately, the bank stocks started taking a dive after the report.

Where have i been? I didn't even know JP Morgan operated in Nigeria. It seems we will need to be more careful now.