I&M bank releases financial results indicating a 67% gain in profits
Aug 24th
The bank released its results for the first half year with PBT going up by 67%
and PAT up by 72% despite the reduction in customer deposits by 12%.
Interest expense fell by 6.59%, even in the midst of the higher interest rates
experienced in the 2nd quarter of this year and we believe this will increase
as a result of the increasing costs of borrowing in this quarter, narrowing
the interest spread margins as higher interests are expected on deposits.
Their loan book went up by 29%.
I&M bank releases financial results indicating a 67% gain in profitsThe bank released its results for the first half year with PBT going up by 67%and PAT up by 72% despite the reduction in customer deposits by 12%.Interest expense fell by 6.59%, even in the midst of the higher interest ratesexperienced in the 2nd quarter of this year and we believe this will increaseas a result of the increasing costs of borrowing in this quarter, narrowingthe interest spread margins as higher interests are expected on deposits.Their loan book went up by 29%.
Equity analysis
Aug 24th
The stock market went down for the third day in a row with the main
indices significantly lower from yesterdays close. There was a 30%
decline in turnover which stood at KES 190.78 million from yesterday’s
KES 274.32 million. The NSE 20 share index lost 31.15 points to close the
day at 3,476.61 while the NSE All Share Index lost 0.52 points to close at
77.34. This is contrary to the previous week’s continous gains.
Foreign activity was present accounting for 33% of the NSE turnover
A volume of 8.83Mn shares changed hands, down 82% from 49.23Mn
shares traded previously. The day main movers were Equity, Bamburi,
KCB, TPS and KPLC accounting for 74% of NSE turnover.
Scangroup Ltd. gained the most with a 5.62% price rise to trade at KES
47.00 from yesterday’s KES 44.50. Sasini tea and Olympia Capital
Holdings followed with 2.31% and 2.27% price gains to trade at KES
11.05 and 4.50 from yesterday’s KES 10.80 and 4.40 previously
respectively.
Express Kenya, Kakuzi Ltd., CFC Insurance Holdings, Kenya Airways and
BAT were the biggest losers with 7.50% 4.20%, 4.07%, 3.05% and 2.83%
reduction in price respectively. KCB, MSC, CMC, Cooperative bank,
Centum, KenGen and KenolKobil had strong bids by the market close.
The stock market went down for the third day in a row with the mainindices significantly lower from yesterdays close. There was a 30%decline in turnover which stood at KES 190.78 million from yesterday’sKES 274.32 million. The NSE 20 share index lost 31.15 points to close theday at 3,476.61 while the NSE All Share Index lost 0.52 points to close at77.34. This is contrary to the previous week’s continous gains.Foreign activity was present accounting for 33% of the NSE turnoverA volume of 8.83Mn shares changed hands, down 82% from 49.23Mnshares traded previously. The day main movers were Equity, Bamburi,KCB, TPS and KPLC accounting for 74% of NSE turnover.Scangroup Ltd. gained the most with a 5.62% price rise to trade at KES47.00 from yesterday’s KES 44.50. Sasini tea and Olympia CapitalHoldings followed with 2.31% and 2.27% price gains to trade at KES11.05 and 4.50 from yesterday’s KES 10.80 and 4.40 previouslyrespectively.Express Kenya, Kakuzi Ltd., CFC Insurance Holdings, Kenya Airways andBAT were the biggest losers with 7.50% 4.20%, 4.07%, 3.05% and 2.83%reduction in price respectively. KCB, MSC, CMC, Cooperative bank,Centum, KenGen and KenolKobil had strong bids by the market close.
Bamburi’s pre‐tax Profit Climbs 22%
Aug 24th
Bamburi Cement Co. the leading cement maker in Kenya’s first‐half pretax
profit advanced 22 percent from a year earlier. Pre‐tax earnings in the six
months through June rose to 4.3 billion shillings ($47 million). Sales
increased 26 percent to 16.4 billion shillings while net income climbed 27
percent to 441.9 million shillings in the six months through June thanks to
an exchange gains on deposits.
Bamburi’s increased capacity in Uganda would help it maintain growth in
the second half. However, the second half is likely to experience macroeconomic
challenges including the high fuel costs, weak local currency and
high fuel prices.
Bamburi’s pre‐tax Profit Climbs 22%Bamburi Cement Co. the leading cement maker in Kenya’s first‐half pretaxprofit advanced 22 percent from a year earlier. Pre‐tax earnings in the sixmonths through June rose to 4.3 billion shillings ($47 million). Salesincreased 26 percent to 16.4 billion shillings while net income climbed 27percent to 441.9 million shillings in the six months through June thanks toan exchange gains on deposits.Bamburi’s increased capacity in Uganda would help it maintain growth inthe second half. However, the second half is likely to experience macroeconomicchallenges including the high fuel costs, weak local currency andhigh fuel prices.
NSE to introduce more stock indices and a bond index
Aug 24th
The Nairobi Stock Exchange expects to introduce more stock and bond
indexes next month to boost the appeal of Kenyan securities to foreign
investors. The exchange is completing preparations in partnership with a
global index provider that will help promote the product outside Kenya.
Nairobi Stock Exchange signed an agreement with FTSE International Ltd.
that may lead to the creation of exchange‐traded funds and other indexbased
products.
Tea Break Analysis of the economy in Kenya with Sokoanalyst
Aug 24th
Kenya Breweries acquisition puts a dent in profits for EABL – East African Breweries is expected to report an accounting loss next year arising from the shareholding swap with South African beer maker SABMiller, but the net impact of the multi-billion dollar transaction will be a gain on EABL’s income statement. EABL is expected to pay out Kshs 19.5 billion for acquisition of a 20% stake in Kenya Breweries, which is currently owned by SABMiller. However, EABL is also expected to receive Kshs 7.3 billion for its 20% share in Tanzanian Breweries. Tanzania Breweries’ book value is Sh2.7 billion, and EABL will sell it for approximately Sh7.3 billion. This is an indication of Kenya’s outperformance in the alcohol and beverage sector as compared to Tanzania. EABL’s cash pile of Kshs 7.9 billion is expected to help finance the acquisition without the need for external borrowing. EABL is expected to announce its full year results on Friday.
Under subscription affects scale of investments for BRITAC – As a result of the IPO which was only 60% subscribed British American Investments Company review and scale down its property development projects from a planned Kshs 2.5 billion. Kshs 1.28 billion had been earmarked for expansion of operations in the Kenyan market, including the asset management business and the launch of new funds for Kenyans in the diaspora as well as local and international investors. The company may consider using bank loans to finance other planned projects. British American will also use Kshs 750 million to offset a Commercial Bank of Africa (CBA) loan, which had a Kshs 749.3 million balance as at the end of last December. It pays an interest at CBA’s base rate less 2.5% for the loan. Foreign investors took less than 1% of the 195 million shares set aside for them in the offer while qualified institutional investors (QII) took only 38% of their 240.5 million shares allocation. The retail investor sector was the only one that was oversubscribed by 142%, applying for 276.8 million shares but being allocated 195 million. Employees and agents also took slightly more shares than they were offered. The group targeted to raise Kshs 5.58 billion for expansion locally and in the region. Expenses of the offer were Kshs 320 million.
Nakumatt’s strategic expansion plans - Kenya’s largest retailer by outlets, said it plans to enter other African markets over the next five years. Nakumatt have embarked on a feasibility study to facilitate entry into countries such as Burundi, Zambia, South Sudan, Democratic Republic of Congo, Nigeria, Botswana and Malawi. Plans are already under way to open its first store in Tanzania. The company’s turnover is estimated to hit Kshs 40 billion by the end of the year. In addition it is one of the largest employers in East and Central Africa with a total of 5500 employees. Nakumatt intends to sell a part of its equity share to private parties with time frame of about 2 year before officially listing in all of the East African markets.
Refinery signs Shs90bn deal - Kenya Petroleum Refinery Limited plans to sign a multi billion deal with a local bank in its plan to upgrade the plant. The upgrade will reduce the price for petroleum products to consumers. It plans to raise Kshs 90bn for the project, which is bound to cost more with the shilling having declined by 15% this year. The upgrade is said to enable the refinery produce more super petrol although it has been put on hold with the possibility if a possible partnership with Uganda. Investors are still choosing whether to fund the Mombasa or the Uganda one.
CCK to issue a joint 4G license in a bid to lower internet costs - The government does not plan to offer a license for 4G to individual telcos as it did with the 3G but it instead plans to offer a tender to a consortium firm which will implement and manage, setting a stage for joint ownership of data spectrum, by the end of next week. Operators who are not part of it can lease 4G connectivity at a fee which will help save millions of shillings in licensing fees. Suppliers will team up with telcos and offer expertise and equipment needed. Data segment activities will intensify due to fall in voice revenue which will be the key drivers in future.
Sources: Reuters, Bloomberg, Business Daily, Company fillings, Hidalgo Research, CBK, CNBC
Market round-up with the Sokoanalyst
Aug 24th
Rising inflation and shilling devaluation reducing disposable income and changing the face of retail shopping
Research firm Consumer Insight shows that the number of people going for bulk monthly shopping has reduced to 19% this year compared to 29% last year, making supermarkets such as Uchumi, Nakumatt and Tuskys to rely more on customer numbers to drive sales. Consumers increasingly turn to weekly instead of the once-a-month bulk purchases. At least 63% of shoppers make weekly purchases, up from 46% last year, with daily trips having reduced to 15% from 25 in the period under review. This has seen low income earners cut back on the items they consume on a monthly basis as they apportion the bulk of their income to basic items such as food and transport. This group has been the hardest hit by the rising commodity prices with their inflation at 16% last month—higher than the national average. Kenya’s emerging middle class and the best paid workers seem to be facing less pressure from the soaring food and fuel prices as their monthly inflation stood at 10.15% and 11.67% respectively. This shift in behavior is likely to impact marketing activities target at these shoppers. The supermarkets are already shifting to weekly and mid-month promotions instead of end month offers to grow sales as shopping baskets get smaller.
Local Stock market –
The Nairobi stock exchange opened the day in the green with a couple of stocks rising significantly. However with a volume of 400,000 up to 10 am the activity level is still below average although bids are growing strong in a couple of stocks including KCB and Safaricom. Sasini gained the most in the early morning trades with a 6.5% rise to trade at KES 11.50 while East African Cables lost the most with 2% down to KES 11.40. We do not expect any major change in trading within the rest of the day.
Global markets –
European stocks climbed for a third day as earnings from BHP Billiton Ltd. to WPP Plc beat estimates and speculation continued that the Federal Reserve will act to bolster the economy. Asian shares and U.S. index futures fell. BHP Billiton, the world’s largest mining company, advanced 1.2 percent and WPP, the biggest advertising company, rose 2.9 percent. Heineken NV, the third-largest brewer by volume, retreated 12 percent after saying profit is unlikely to grow this year. The benchmark Stoxx Europe 600 Index added 0.6 percent to 227.94 at 8:02 a.m. in London, bringing the gain from the two – year low reached at the end of last week to 2.2 percent. The gauge has still fallen 22 percent from this year’s peak on Feb 17 as European and U.S. economic data that trailed forecasts added to concern the global recove
MOBILE BANKING
Nov 10th
Finally Orange has come up with a mobile banking service called IKO PESA. IKO PESA addresses some of the weakness on its competitors while at the same time incorporating additional features into the product. Some of the advantages it has include
1. Enables consumers to make interbank cash transfers and manage their bank accounts using their cell phones.
2. Application for loans up to Ksh 1million and repay those loans
3. IKO PESA has higher transaction limits up to 100,000.
4. IKO PESA can be operated as an online payment gateway. It enables the user to book and buy air tickets and still pay utility bills.
5. Phonebook access technology i.e. subscribers can send money to any person on their simcard so *sigh of relief* no more sending money to the wrong number and no more calling customer care asking them to block the transaction.
Orange Kenya I applaud you. Though you took a long time to launch this service, you really thought about it. My question is will Kenyans see all these advantages and try to embrace IKO PESA or will they stick to M-pesa, Zap and Yu Cash?
Its like Safaricom had been informed of Orange Kenya’s plan because just last week it collaborated with Uchumi and Naivas supermarkets and launched a service for paying for goods and services at these shopping outlets via M-pesa. That’s an added advantage for Safaricom.
Last month Zap introduced payment of insurance premium, payment of school fees for universities and payment of Higher Education Loans Board (HELB) loans. These features are very unique and helpful and have raised the number of Zap users to 2million.
What unique features does Yu Cash have???? Who exactly is sleeping on his/her job? I do not want to point finger but im sure I have given you something to think about.
Adieu MJ…Bienvenue Bob…
Oct 27th
Michel de Montaigne - “In farewells we heat above ordinary our affections to the things we forego.”
Safaricom Ltd bids Michael Joseph, the outgoing CEO bye as an interesting era in business growth and the aspect of innovation and sustainability changes hands.
He has been heralded as being very innovative and ruthless as far as dealing with the competition and controversy has been his shadow. He has been able to make Safaricom the most profitable business in East and Central Africa.
In terms of services and products, for the last ten years or so, Safaricom has led in the Telecommunications industry with innovation that has opened up a realm never seen across the continent and the world in general. Safaricom Limited, together with its subsidiaries, provides mobile phone, fixed line wireless telecommunication, Internet, and data services in Kenya.
It offers prepay services, which include international dialing, voice mail, prepay roaming, customer care access, tariff migration, loyalty scheme, travel and roaming, and directory and information; postpay services; and data and messaging services, such as short messaging services (SMS), email, multimedia, call waiting/holding, and security 911, as well as updates for news, sports, and entertainment.
The company also provides M-PESA, a service that allows customers to transfer money using a mobile phone; premium rate services that offer recorded information or live conversation for callers; and loyalty schemes.
In addition, it offers various other services, such as voice SMS and mobile advertising; missed call alert; SIMEX, an over-the-air service that allows subscribers to replace their SIM cards; pre-paid roaming top-up; and 3G network services. Further, the company operates retail outlets that offer phones, SIM cards and information brochures, laptops, 3G enabled devices, and accessories in Thika, Meru, Eldoret, Kitale, Kisii, Kisumu, Mombasa, and Nairobi in Kenya.
Safaricom Limited provides its products and services through retail centers and distributors. It operates approximately 500 retail outlets. The company was incorporated in 1997 and is based in Nairobi, Kenya.
His exit also marks a first of sorts for the industry in terms of profile and many are asking if the new CEO, Bob Collymore would be able to fill the shoes of Michael Joseph. MJ, as he his popularly known among the many fans that he has, has cultivated a near fanatical base of loyal customers and has been the backbone of the company’s growth and he has done it so well that the rest if the competitors in the industry are way behind.
However, he departs at a critical time for Safaricom in terms of various issues facing the company not to mention its performance at the stock market and how the price of the share is going to fare. Currently its trading at Kshs.4.90 per share. Will this hold, decrease or increase? will Bob have the magic wand that MJ had? Will he be able to navigate the murky terrain of the Telcom regulations and be able to keep off Airtell assault on its voice business? this are indeed going to be interesting times for Safaricom and Bob.
Investment Foray Into Busia County.
Oct 21st
To know that you do not know is the best. To pretend to know when you do not know is disease. This seems to be the case for many professionals with the mistaken belief that now we have the new constitution, with the devolved structure, they can come and simply have all the jobs. Question is, which jobs?
The room for disappointment especially is so high that am worried for our young generation who have been duped by the system that the new laws will create jobs. In my humble opinion, the only good thing about the new laws is just the new sense of hope that it has brought . Busia County is brimming with an opportunity to reclaim is potential of being a county that can truly be a platform for wealth generation.
Busia Municipal Hall.
My reasons for saying this are because the county is strategically placed in terms of geo-economic aspect with Busia town being a key player and implementation locus for the EAC economic protocol for the 2 freedoms and 2 rights that are the baseline for the EAC integration.
It’s also hungry for growth with a lot of retail business coming in electronic gadgets, clothes, household wares and commodities. The forex trade is also very lucrative with the normal financial turnover enough to get the attention of serious banks like Eco Bank, KCB, BBK, National Bank to set up shop and heavily transact with equal turnover like Kisumu.
Infrastructure that needs to be developed.
In terms of economic activities that make this county very lucrative are; agriculture, real estate ( with many unfinished buildings), transport, retail, forex. Any keen investor would head there now to set up business, which makes me remember Warren Buffett.
Warren Buffett
Warren Buffett is without question the most successful investor of our time (and possibly of all time). His savvy deal making abilities coupled with his creative and cheerful personality allowed him to achieve success like no other.
With the new Constitution, many of us young people are expecting to get jobs from the counties, but the all time question is; what jobs? in which institution or companies? being in Busia opened my eyes to the fatal level of expectations that we have and if our hopes crush, then it’s going to be so bitter that our government is going to have a serious pandemic of misplaced youths with a vengeance to handle. Busia is a classic example of an opportunity that needs to be taken to create businesses and hence jobs for the youth.
Bad roads in Busia
Warren Buffet said,’ …….I don’t have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It’s like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GNP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don’t do that though. I don’t use very many of those claim checks. There’s nothing material I want very much. And I’m going to give virtually all of those claim checks to charity when my wife and I die…..’.
Which makes me ask, how many of us think like that? how many investors are looking forward at giving away all their life’s work? how many Kenya investors are looking at creating platforms to help others improve their livelihoods? Butete( Busia & Teso Teachers) Sacco in Busia County is a good example of a serious investor with a keen interest in creating platforms that will lead to the creation of wealth for its members and others who depend on them. I hope they will be applying the mantra of Warren Buffett.
Steve Biko.
Recent Comments