Why JP Morgan is recommending UBA shares to investors

US based investment
banking giant, JP Morgan, has placed UBA shares on the hot list of stocks
investors should take position on now.
 
 
The Investment Bank
says investors that buy UBA shares now have a chance of making as much as
45% return over the next 12 months.  
 
UBA’s share price
closed at N7.77 on Friday, November 15, 2013 on the Nigerian Stock Exchange
(NSE).  The Investment Bank believes that
the share price could go above N11.00 per share within the next 12 months.
 
JP Morgan’s
recommendation is in its latest analysis of Nigerian Banks.
 
“UBA offers an
attractive 45% upside potential over 12 months, among the highest in CEEMEA
banks” the JP Morgan report released October 2013, states.  CEEMEA is an acronym for Central and Eastern
Europe, Middle East and Africa.
 
 “We think UBA’s valuation, despite a strong
rally since the beginning of the year, offers an opportunity to buy into
probably the deepest valuation discount in CEEMEA banks at current levels”  JP Morgan  writes in the in-depth 39 page analysis of the performance of top
Nigerian banks.
 
 The JP Morgan report lists the rational for
the recommendation to include the fact that UBA benefits from significant
balance sheet liquidity noting that the bank’s loan to deposit ratio of 37% as
at half year 2013 was the lowest among CEEMEA banks covered by the investment
bank.
 
UBA pan-African
presence is also seen as strength in the Bank’s operations. JP Morgan notes
that UBA has the highest number of subsidiaries in Africa among the top-tier
Nigerian Banks with positions in 18 African countries outside Nigeria and
potential to drive future revenues on rising intra-Africa trade.
 
“This pan-African
presence and valuation discount increases the attractiveness of UBA as a
potential take-out story, in our view, given our understanding on larger
regional banks (e.g. South African banks) for pan-African franchises such as
UBA’s.”
 
  “UBA’s valuation is an opportunity to buy
into what may be the most attractive risk-reward in CEEMEA banks” the report
states.

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