Zenith Bank

[obinnaD]

Originally Posted by Geeman

Specnomics,
The confusion I have here is how 1 shr of last week became 5 this week. I hope you are not assuming that 4 shares will be given for everyone 1 share held. I think the reverse is the case. For every 4 shares held, 1 will be given as bonus.
Correct me if I am wrong.

Geeman, you are correct.

In the case of first bank, you get a new share for every six you held ( hence 1 for 6).

[Stockbear]

My own deduction is that the Zenith Bank shrholders, and First Banks' as well, are laughing all the way to the Bank. You owned 1 shr at N68 last week now you own 5 Shares at N260 (i.e. 5 x N52), if my assumptions are wrong pls correct me.

I would also like to understand how bonus/dividend issues are calculated to arrive at the markdown price. I remember sometime ago C kenneths' worked on a formula, which was being compared with one Avocado's model.

So let's say for example, I own 10,000 units of Zenith bought at N15 per share. The value would be N150,000 (let's ignore buy fees for now). Now at a 1 for 4 bonus, I should own additional shares of 2,500. Is this correct?

So how do you go about adjusting the price after the dividend payment?

[c kenneths]

As I think (because all of us are learning in this forum) I always look at the price of the stock at the day it will be marked down, then;

I will subtract the amount of money paid as dividend from the current price.

I will also minus a quarter of the price of the stock (since it was 1 for 4 declared in this case).

That is how I arrive at the marked down price.

Example; Zenith bank was selling for around 68.97 when it was marked down,

So, 68.97 minus 1 naira dividend = 67.97

Then 67.97 divided by 4 will give you 16.99 for one part of four.

I then minus 16.99 from 67.97 = 50.98, that will form the new price.

My assistant is telling me here that the 1 naira dividend is subtracted after the division and not before and I say, however way it’s done (we all get the general idea)

Reason for the subtractions, some additional units were added to the existing # of shares of the bank, thereby making it lose a quarter of its value by dilution, so the NSE will subtract that added value to reflect the new situation.

It adds to what Specnomics said once in this forum, that bonus has no real positive meaning to the investor since what they give with one hand, they take with another.

But the Nigerian crowds are still swayed by bonuses.

Any other better explanation is welcome

[inforc-man]

plse Specnomic Dont you know that is annoying to look for money in the pocket of a person who is also looking for his own money? it will look asif you are playing.
What do i mean? It is very hard for investor to spend their own personal money lets alone to lend someone. It is not impossile but it will be a news in stock market.
If you may pay with much interest many people will grant you but remember the cost.

[c kenneths]

@ Inforc-man, Specnomics is not asking an individual to lend him money so he could invest. He was asking for a finance house, they are the only authorised firms that lend money.

[Bim]

Check this out guys, what do you think?

Source: News -- Zenith Bank set to raise N250bn capital base

[richestowealth]

This is nonesense. Didn't they just raised last year or year before? Unless the market changes, I'm avoiding this barrage of POs after POs .

[Ehis]

Oh yes! This may not be nonsense after all. The plan to increase their capital base may not be unconnected to the quest for global positioning. As I postede in my earlier article,the best option left for the banks are to follow the suite of Atedo Peterside,mergers and acquisitions.
I am also of the opinion that zenith new offer will be a GDR as the investing public may not fully subscribe the offer if done locally.
All so other banks are lined up to come and raise fund the second time after the consolidation and so NSE need to be fair to them too. Afribank, Bank PHB,and Wema bank are lined up in these order to access fund from the public b4 Dec 2007.
Lets watch abd see what is going to happen.
The heat has just begun!
Will histroy that happened in Europe repeat itself in Nigeria?
What makes the Biggest banks in the world to be a product of mergers and acquisitions?
JP Morgan Chases, HSBC,Chase Manhattan and the rest.
This is very thrilling.

[oseitutu]

This news is good news, but we did anticipate and expect it on this forum. I know I made mention of it in several Zenith Bank posts towards end of July and early in August. It is going to be interesting. One thing I noticed is that Zenith Bank has been avoiding merging possibly because of savings of potential costs of integration with another bank. However, they soon have to abandon that view and merge. I wonder who they will take.... Could it be Union Bank? I more strongly think Diamond bank, but it may take a couple of years to come through.
Let us see how the new funds drive will go sha.

[c kenneths]

I knew it will come to this stage, and pls lets not say the offer of 250 bil will not be fully subscribed in Nigeria, go check out FBN, getting about 500 bil from their last offer, this will only depress the secondary market more, creating a cheaper market for value hunters.

Make una begin save o.

[Ehis]

If zenith is going into a merger, I wouldn't for now know who the bride will be but something seems to be locking somewhere. I was once told that Tony Elumelu once told UBN MD that his bank may be acquired and the MD told him that the bank is too big to be acquired by a smaller bank but Tony replied saying "It is not about a small bank acquiring a big bank but its about a faster one overtaking a slower one". I heard this in 2005. But today, looking at what is happening in the banking industry, what can we make out of it?
Some bank are busy preparing for the future while others seems to be docile or not keen about fund raising. the point now is clear, the race has begun, faster ones definitely will overtake slower ones.
This is gonna be the 3rd offer from zenith while some are already at one!
Last rumour we heard was the proposed talk btw Diamond and Firsinland which the mgmnt od Diamond refuted.
Are there more things going behind the screen?
Where are Diamond,FCMB,SKYE and Sterling banks?
Let us all save for this windfall that is coming b4 it is too late

[Soweto]

Originally Posted by Ehis

If zenith is going into a merger, I wouldn't for now know who the bride will be but something seems to be locking somewhere. I was once told that Tony Elumelu once told UBN MD that his bank may be acquired and the MD told him that the bank is too big to be acquired by a smaller bank but Tony replied saying "It is not about a small bank acquiring a big bank but its about a faster one overtaking a slower one". I heard this in 2005. But today, looking at what is happening in the banking industry, what can we make out of it?
Some bank are busy preparing for the future while others seems to be docile or not keen about fund raising. the point now is clear, the race has begun, faster ones definitely will overtake slower ones.
This is gonna be the 3rd offer from zenith while some are already at one!
Last rumour we heard was the proposed talk btw Diamond and Firsinland which the mgmnt od Diamond refuted.
Are there more things going behind the screen?
Where are Diamond,FCMB,SKYE and Sterling banks?
Let us all save for this windfall that is coming b4 it is too late

Zenith,UBA,UBN,FBN,GTBetc might be targets for private equity dealers. especially GTB, So many documentaries on CNBC africa about that bank. It all started like a rumour with aquisition of ABSA by Barclays bank, but it actually materialized fater than we expected. I wouldnt be surprise if what u are suspecting is thru.

[easimoni]

I can't seem to use the link to find the original story. While I don't dobut the veracity of the article, I'm still stunned. 3 POs by one bank since 2004? A PO every 18 months? Don't you smell Jim's ego from a mile away? I can hear his thoughts: "Ordinary GTBank can raise N96B and Big Elephant is raking in N500B. Now small boy Aigboje and whoever is the Afribank MD will now claim to have larger funds than me. Tufiakpa! Let's go see Ndidi"

All these banks will not be able to translate all this money into earnings quick enough. As soon as Wema's results are out, I'm kissing the banks goodbye until this time next year. Did anyone say Insurance? Yeah Baby! Yeah!

[d-wade]

Originally Posted by easimoni

I can't seem to use the link to find the original story. While I don't dobut the veracity of the article, I'm still stunned.

try this one
News -- Zenith Bank set to raise N250bn capital base

[comuna-amadi]

What a news! I sense greed. But if all these monies from PO's could be transformed to more profits and Money in investors pocket, then fine. But i doubt that has been the case till recently when a bonus was issue after how long?. I even had to sell my shares to go somewhere more active and promising. All the same it may be a good offer but i'm not sure of very good petronage.

[Soweto]

Originally Posted by comuna-amadi

What a news! I sense greed. But if all these monies from PO's could be transformed to more profits and Money in investors pocket, then fine. But i doubt that has been the case till recently when a bonus was issue after how long?. I even had to sell my shares to go somewhere more active and promising. All the same it may be a good offer but i'm not sure of very good petronage.

Greed is part of the game even we, investors are also greedy. It is bad when it is 2much like when it controls us,but if we control it then it is cool. Same as banks and money chasers(laugh). Now What i think might be on the mainframe.
These banks need money to meet up with their unforseen demands. i have mentioned it before that they are yet to realized their full potentials. You know Niga is more of a Cash country. Only 1% out every Im car or property owners bought thru credit. I think this is going to change very soon. What you are seeing now might be the last POs b4 the battle begings,some one has mentioned this b4,the next phase would be mergers and aquisition among the big banks and the small ones might not survive it unless they agree to the terms of the big players. i stiil think banks offer good value on the long run,if you got money,accumulate more. There is growing interest in that economy of ours by oversee players. Once this players enter Nija fully,those shares will skyrocket because one of the pillars of every sucessful economy is their Financial sectors.

NB: Zenith PO might be oversubscribed.(personal Opinion)

[SpecNomics]

Thanks for the correction fellows, having done my back of envelope calculation the holders of Zenith shares have thesame position they had prior to bonus issue, in line with c Ks calculation.

@ inforc-man, I do not intend borrowing money from anyone, what I asked for was if stock lending services are offered by brokers, finance houses or fund managers in Nigeria. I asked this because this the only way I know about, without derivative products, that one can profit from a falling stock. So Please guys ask your brokers if they offer such services and let us know.

Let us not digress, ObinnaDs initial question is yet to be anwsered i.e.

Folks,

The following Banks were marked down today following their recently declared bonus shares:

Zenith Bank (new price: N52)
First Bank (New price: N41.57)
Afribank (New price: N30.49).

What y'all think about these stocks viz buying or selling now?

ObinnaD, its one week now since these corporate actions took place, writing with regards to FBN and ZB alone, and the pressure has been on declining prices; with FBN breaking the N40 price it traded at prior to the recent Secondary Offering, trading as low as N38.51 on friday. One can say the downward pressure would continue. We should watch the space for a support price.

Re Zenith also witnessing downward pressure, closing the week 52kobo lower at N47.98 and selling for as low as N46.08. I am also thinking the space should be watched for the support price.

[c kenneths]

I noticed that the share price of both FBN and ZBN are still dropping after the recent bonuse, those that sold before the bonuses are better off now.

Some good lessons for Nigerians who will prefare bonuses as against any other considerations.

[Antons697]

Does any one know why the price of Zenith is crashing? I am really amazed at the way the thing is droping every day!

[dj4wealth]

Bonus isuue.