The tale of two Children’s Day in the life of UBA shares

PHILLIP ISAKPA In London, UK

There is an interesting tale to be told about two Children’s Day periods in the lives of both the United Bank of Africa (UBA) Plc and its millions of shareholders in Nigeria and across the world. It is an instructive tale, especially for those who make certain decisions on the basis of anniversaries, holidays and any special occasion that has a significant date attached to it. It so happens that Business a.m., picking up on a hint put out somewhat in the form of an infographic expression by analysts at Lead Capital, decided to follow the money.

Here, we actually mean following the trail of UBA shares between two significant periods in the lives of the bank and its shareholders and of their own children, their nephews and nieces, who are children and are eligible to participate in a children’s day celebration. This is especially significant because UBA has a number of children-friendly products such as UBA Kiddies Starter, UBA Kiddies Plus and UBA Kiddies Prestige all of which are savings accounts designed for little children aged 0 to 12 years; there are also teen accounts for teenage children. The bank also runs the UBA Kiddies and Teens healthcare plan which offers categorised benefits, depending on which of the kiddies accounts they have; and it is heavily involved in some children-promoting activities in the country.

We are now in July, but the month of May was especially auspicious for children in Nigeria, because on May 27, 2024, the drums were brought out to celebrate their day. For those who are active in the capital market and own shares in UBA, if they also took interest in taking decisions on special days like Children’s day, here’s something that would have given them so much joy if a decision to buy UBA shares had been tied to last year’s children’s day.

Analysts in a number of investment houses in the country are talking about what we at Business a.m. have chosen to call a tale of two Children’s Day. The tale begins around the time of the 2023 Children’s Day celebration, which fell on Saturday, thereby making the last day for any decision to buy or sell UBA shares in connection with the celebration to be Friday 26, May 2023. This is where it gets interesting for those who bought the shares as gifts for their children, nieces, and nephews last year. On that day, the shares traded at N9.30 and some 59.41 million units were bought and sold. This came to N552. 513 million; that’s over half a billion naira.

Analysts say that if people, who bought on that day as gifts just for the purpose of Children’s Day and kept the shares without trading them on, at this year’s Children’s day, the price of the stock had gone up to N20.65, a capital appreciation in one year of 136 percent. The 59.41 million shares traded on Children’s Day 2023, bought for N552.513 million became N1.23 billion on Children’s Day 2024.

The journey to this position is an interesting one, given the fundamental drivers of the share price growth in just one year. These drivers include what investors and analysts described as “demonstration of resilience, strong investor sentiment, impressive earnings scorecard, and high dividend payouts.”

Following the close of trading on Friday 26 May 2023, the last market day before the year’s Children’s Day, when UBA’s shares traded at N9.30 per share, a number of highpoints can be noticed in the next twelve months leading to the next Children’s Day of 2024. For investors or those looking to make money from stocks betting on particular stocks and using occasions such as birthdays, anniversaries, independence days, tracking across a one year period might just be a great idea. But this does not remove the fact that you still have to check out the fundamentals behind a company that could drive its stock one way or the other.

In the one year journey making up this tale of two Children’s Day in the life of UBA shares, we identified 31 significant moments involving the stock’s price movements and traded volume, which we believe can help discerning investors who choose this simple investment approach to get a deep dive picking stocks for occasions. We will present 16 of these pivotal moments presently.

There were three significant price and volume rises in UBA stock immediately after the Children’s Day of 2023. These were on the 14th of June, when the price rose to N11.95, now up from N9.30 that it closed on 26th May, a day before the celebration. The volume traded was also significant as it stood at 230 million units. On the 3rd of July, the share traded at N13.45 and the traded volume was also high at 160.67 million shares. A 10 kobo rise in the shares to N13.55 per share saw a large interest that led to 961.50 million units being traded on the day.

For the rest of 2023 heading to the next Children’s day of 2024, we observed six other significant activities by way of price and volume of the stock traded. On September 14th and 18th share price had reached N16.40 and N17.85, respectively, just as volumes traded were heavy at 301.03 million on the 14th and 109.47 million on the 18th.

There were price rises on October 30th to N19.85 per share during which 51.26 million shares were traded; another price rise to N21 on November 1 was observed with a significant volume traded of 163.56 million. Two price rises in December at N22 and N26 per share with big traded volumes of 74.57 million and 45.98 million occurred on 6th and 21st respectively to close the year.

Investors who had bought UBA stock around Children’s Day 2023 and were looking forward to a windfall by Children’s Day 2024 would have by the close of December 2023 been salivating because the outlook was already looking good. Some who would have panicked and sold by this time, would still have made a killing buying at N9.30 and selling at N25.65 (which was the closing price on the last trading day of the year, December 29th). Those who continued to hold on to the stock towards May 27, 2024, were not disappointed.

Our significant trajectories of price and volume traded rises in this analysis produced seven with the first observed on January 9th when price went to N32.6 per share and volume traded was 117.71 million units. The price rose again on 16th of that month to N33.95 per share and units traded was 32.24 million. There was a significant price drop on the 29th of February to N22.55 but volume traded was heavy at 93.71 million. It then went back up to N28 per share with traded volume at 65.49 million on April 2nd. By this time, we observed some steam beginning to go out as a price drop to N26.3 per share but with a significant volume traded of 148.88 million took place on April 12th. Two significant trading days leading up to 2024 Children’s Day in the month of May, were picked for their traded volumes. These were on May 7th when price was N26 per share but traded volume was high at 103.23 million, and May 10th, when price was N26.40 per share and traded volume was also high at 90.12 million. From this point the share price began to drop before it closed at N20.3 per share on Children’s Day 2024; but still at a significant profit if you bought it at N9.30 per share the last day of trading before Children’s Day 2023.

One investment house reporting in June on a 52-weeks development on the stock wrote as follows:

“Over the past 12 months, UBA’s share price has surged to a 52-week high of N34 per share, up from N9.20 in the same period in 2023. As of May 2023, the year-to-date return on UBA shares stood at +12.05%, driven by the bank’s commendable audited 2022 financials. These financials were significantly boosted by interest income and fees from commission-based business lines, leading to a 286.3% growth in earnings over the past year and a strong market capitalisation.

“Following the Central Bank of Nigeria’s (CBN) revaluation exercise and foreign exchange harmonisation in June 2023, investors have strategically positioned themselves in UBA, anticipating impressive foreign exchange revaluation gains for the half-year and FY-2023 accounts. The bank’s valuation metrics indicate a positive upside for the stock. In 2024, UBA shares reached a new 52-week high of N34 due to strong stock repricing by discerning investors. UBA’s price-to-earnings (P/E) ratio of 1.11x is lower than the industry average of 1.2x and significantly lower than the NGX average of 7.3x. Additionally, the stock offers a dividend yield of over 12%.

“Despite a general pessimism towards the Nigerian banking industry, where investors expect long-term growth rates to be lower than historical levels, UBA’s strong fundamentals and attractive valuation metrics continue to drive bullish sentiment. The bank’s robust financial performance and strategic positioning suggest potential for further growth, making it a compelling investment opportunity in the current market.”

This observation lends itself to many stocks across the Nigerian Exchange and it takes discernment to be able to actually see it. It also involves applying wisdom and picking stocks that can lead you to achieving the specific financial targets that you set for yourself. There are fundamentals to be considered which would mean taking a serious look at the company whose stock you are picking to achieve your financial targets, whether you are picking such stocks as gifts for someone else tied to specific occasions or simply for yourself.