JP Morgan Research Report - Nigerian Banks

[newton]

FYI

Just got this, quite voluminous and detailed.

[hispy99]

Originally Posted by newton

FYI

Just got this, quite voluminous and detailed.

thank you sir!

[nwoyearoh]

Originally Posted by newton

FYI

Just got this, quite voluminous and detailed.

Quite a ton of valuable valuation information to enable wise investment.
God bless you!

[solainvest]

Originally Posted by newton

FYI

Just got this, quite voluminous and detailed.

Excellent piece. Many thanks!

It gives a reality check on the sector no matter what really happens on ground.

[billions]

Originally Posted by newton

FYI

Just got this, quite voluminous and detailed.

nice info but i dont c why dey r so cool wth gtb.

its certainly a well managed bank.

[billions]

...is JP Morgan d foreign partner of GTBank?

[newton]

Originally Posted by billions

...is JP Morgan d foreign partner of GTBank?

Nope, its Morgan Stanley. JPMorgan is the foreign partner to Zenith bank in this regard.

[threecrown]

Originally Posted by billions

nice info but i dont c why dey r so cool wth gtb.

its certainly a well managed bank.

GTB seems to conduct her affairs in a quiet manner but yet with significant impact and respect.

[nwoyearoh]

Originally Posted by threecrown

GTB seems to conduct her affairs in a quiet manner but yet with significant impact and respect.

Yep; but the quiteness is killing some of us!
Wish GTB could make some noise to assist in the market exurberance that (sometimes) pushes the stock price northwards.

[billions]

Originally Posted by nwoyearoh

Yep; but the quiteness is killing some of us!
Wish GTB could make some noise to assist in the market exurberance that (sometimes) pushes the stock price northwards.

true talk.

[Taipan]

Been browsing through the report. So far, there are a number of things I've noticed:
1. It admits that the Nigerian banking industry is pretty insulated from the worldwide banking system. Of course, this is bound to change with the recent wave of expansion outside the country's borders.
2. It confirms something which I feel has been obvious for some time; that the Nigerian stock market is generally overvalued. According to JPM, the average PE for South African banks which are less risky is 6.5. Yet, no company on the NSE sells for anything near that.
3. Believes that the banks are not as stable as they purport to be and that the quality of assets are generally poorer than reported.
4. Has negative share-price appreciation outlook for most of the Top 7 even at its most optimistic valuation methods.
5. Accepts that the short-term outlook for Nigerian banks is probably positive both in the stock market (as Nigerians might not react to the same values JPM holds sacrosanct) and in terms of growth potential. However, they wouldnt stake their money on it.
...
What surprises me so far is how much their analysis contrasts with that of Nigerian companies. It gives me the impression that our analysts have either been terribly amateurish, influenced by the banks, just responding to the herd effect, or just simply dubious. On the other hand, JPM might not really understand the issues on ground here. Whatever the case, the contrast is too sharp and considering that it's coming from such a reputable organisation, I believe it needs serious looking into.
Please as we all go through it, lets share our opinions no matter how little. Who knows, you might just save someone's nest egg!

[Babs_O]

Originally Posted by Taipan

Been browsing through the report. So far, there are a number of things I've noticed:
1. It admits that the Nigerian banking industry is pretty insulated from the worldwide banking system. Of course, this is bound to change with the recent wave of expansion outside the country's borders.
2. It confirms something which I feel has been obvious for some time; that the Nigerian stock market is generally overvalued. According to JPM, the average PE for South African banks which are less risky is 6.5. Yet, no company on the NSE sells for anything near that.
3. Believes that the banks are not as stable as they purport to be and that the quality of assets are generally poorer than reported.
4. Has negative share-price appreciation outlook for most of the Top 7 even at its most optimistic valuation methods.
5. Accepts that the short-term outlook for Nigerian banks is probably positive both in the stock market (as Nigerians might not react to the same values JPM holds sacrosanct) and in terms of growth potential. However, they wouldnt stake their money on it.
...
What surprises me so far is how much their analysis contrasts with that of Nigerian companies. It gives me the impression that our analysts have either been terribly amateurish, influenced by the banks, just responding to the herd effect, or just simply dubious. On the other hand, JPM might not really understand the issues on ground here. Whatever the case, the contrast is too sharp and considering that it's coming from such a reputable organisation, I believe it needs serious looking into.
Please as we all go through it, lets share our opinions no matter how little. Who knows, you might just save someone's nest egg!

Real food for thought. With the summer months coming are we going to see further corrections on banking stocks ?

[newton]

@Taipan

In my view i think that our local analyst in valuing companies neglect certain factos like th underlying risk (which they lack skills to quantify), div yield (which is key 4 long term investors like JP n co) and market volatility.

In reviewing the report the inefficiencies of our market analyst, fsdh, ibtc, arm vetiva and coi jump at u

[Taipan]

Originally Posted by newton

@Taipan

In my view i think that our local analyst in valuing companies neglect certain factos like th underlying risk (which they lack skills to quantify), div yield (which is key 4 long term investors like JP n co) and market volatility.

In reviewing the report the inefficiencies of our market analyst, fsdh, ibtc, arm vetiva and coi jump at u

Yes, I agree with you. But I also feel that the effect of the mother companies, that is the banks, to the analysts also play an important part. For example, I doubt if IBTC stockbrokers - or whatever they call themselves - would give negative reports on IBTC. Even if things are really bad, the worst - or best - they'll do is to give a neutral report. And then, to give a semblance of neutrality, they'll be forced to give similar reports about other banks too.
I've been following such reports, especially recommendations, for quite a while and one thing that has struck me has been the docility of them all. Not one of them would dare publish the kind of report JPM just released. (So for those who depend on these reports to make decisions, I would really advice caution until we begin to see a real separation of the analyst and the analyte.)

[billions]

Originally Posted by Taipan

Been browsing through the report. So far, there are a number of things I've noticed:
1. It admits that the Nigerian banking industry is pretty insulated from the worldwide banking system. Of course, this is bound to change with the recent wave of expansion outside the country's borders.
2. It confirms something which I feel has been obvious for some time; that the Nigerian stock market is generally overvalued. According to JPM, the average PE for South African banks which are less risky is 6.5. Yet, no company on the NSE sells for anything near that.3. Believes that the banks are not as stable as they purport to be and that the quality of assets are generally poorer than reported.
4. Has negative share-price appreciation outlook for most of the Top 7 even at its most optimistic valuation methods.
5. Accepts that the short-term outlook for Nigerian banks is probably positive both in the stock market (as Nigerians might not react to the same values JPM holds sacrosanct) and in terms of growth potential. However, they wouldnt stake their money on it.
...
What surprises me so far is how much their analysis contrasts with that of Nigerian companies. It gives me the impression that our analysts have either been terribly amateurish, influenced by the banks, just responding to the herd effect, or just simply dubious. On the other hand, JPM might not really understand the issues on ground here. Whatever the case, the contrast is too sharp and considering that it's coming from such a reputable organisation, I believe it needs serious looking into.
Please as we all go through it, lets share our opinions no matter how little. Who knows, you might just save someone's nest egg!

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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