Safaricom Touches a 12-Month High of 28.5 Shillings Per Share

Safaricom rallied during the week, touching a 12-month high of 28.5 shillings per share. It, however, eased back to close the week at 26.8 shillings per share. Since the February 2015 peak, the market has lost 5.1 percent and 30.3 percent for NASI and NSE 20 respectively.

During the week, the equities market was on an upward trend with NSE 25, NASI and NSE 20 recording gains of 3.3, 3.2 and 2.8 percent respectively, taking their YTD performance to 26.3, 24.4 and 20.3 percent for NASI, NSE 25 and NSE 20 respectively.

Last week’s performance was driven by gains in select large-cap stocks such as Equity Group, Safaricom, and Kenya Commercial Bank Group, which gained 5.5 percent, 4.9 percent, and 4.3 percent respectively.

Equities turnover declined slightly by 0.4 percent to USD 33.4 million from USD 33.5 million the previous week.

Foreign investors turned net buyers with a net inflow of USD 4.7 million compared to a net outflow of USD 1.3 million recorded the previous week. Cytonn Investments, in their report, say that they expect the market to remain supported by improved investor sentiment once uncertainty dissipates, as investors take advantage of the attractive stock valuations.

The market is currently trading at a price to earnings ratio (P/E) of 13.1x, versus a historical average of 13.4x, and a dividend yield of 3.9%, compared to a historical average of 3.7%.

Cytonn notes that there still exist pockets of value in the market, with the current P/E valuation being 22.5% below the most recent peak in February 2015. The current P/E valuation of 13.1x is 35.2 percent above the most recent trough valuation of 9.7x experienced in the first week of February 2017, and 57.8 percent above the previous trough valuation of 8.3x experienced in December 2011. The charts below indicate the historical P/E and dividend yields of the market.