Flame Tree Acquisition Rattles Stock Price

Marked gains were registered in today’s trading as the NSE-20 share index advanced 0.53% to close at 4216.83 points while the NASI followed a similar trajectory nudging upwards by 0.37% to close at 145.64 points. Equity turnover bucked the trend declining by 78.79% to close at 476.07Mn whilst the market capitalization gained 0.37% to KES 2.046Tn buoyed by price gains in majority of the large and mid-cap counters . Market breadth, an unbiased measure of the market performance, indicated that the market conditions had improved marginally; with the number of stocks that advanced, 25, outweighing the number of stocks that declined, 17.

Flame Tree Group (NSE: FGTH) announced its intention to acquire four brands from Beauty Plus Trading East Africa, subject to approval from the Competition Authority. The plastic manufacturer recently acquired four food and snack brands from Chirac Kenya in the month of March 2015. The acquisition provided an established platform for growth in the food space which is in line with their strategy of creating a diversified FMCG business model.

The acquisition comes in the wake of the Group reporting a 43.13% surge in revenues to KES 1.11 billion while their profits before tax tapered 9.86% to KES 76.17 billion, dampened by increased selling and distribution costs and administration costs. We believe the acquisitions are important steps in bolstering its growing footprint in both the food and hair care cosmetic segment across the region thus growth in revenues is highly anticipated. The stock posted a 7.69% rise buoyed by the material news which spurred investors’ positive sentiments thrusting the stock price to KES 7.00.

Equity Market Highlights

Kenya Commercial Bank Ltd (NSE: KCB) was the most active stock for the day accounting for 21.96% of the total value traded as investors dominated the selling front. Kenya Airways Ltd (NSE: KQ) closed second accounting for 20.79% of the days traded value.

Kapchorua Tea Co. Ltd (NSE: KAPC) curved in as the top gainer of the day spanning 9.60% to KES 217.00. Flame Tree Group Holdings Ltd (NSE: FTGH) gained 7.69% to close at KES 7.00. Umeme Ltd (NSE: UMME) lead the losers pack, slumping by 8.85% to KES 17.50. Atlas Development & Support Services Ltd (NSE: ADSS) rescinded by 7.22% to KES 4.50 closing in as the day’s second top loser. .