As The Week Comes To An End, What Should Markets Expect?

The week comes to an end with the market still focused on the medium term as well as interest uptick in the infrastructure bonds (IFBs) according to stats from Genghis Capital.

Turnover on Thursday closed at 2 billion shillings driven by trading on the medium term and IFBs. Rates on the IFBs have risen an average of 20bps over the past month as market speculation builds up that the regulator will be issuing an IFB before the end of the year.

The shilling gained some ground yesterday to close at 101.78 shillings. The regulator intervened in the market, mopping 5 billion shillings via a 3-day repo at a weighted average rate of 7.9 percent, a rise in the repo rate.

Corporate News

Safaricom Plc 1H19 financials recorded an impressive 21.5 percent on a year-to-year growth in EPS to 0.79 shillings from 0.65 shillings recorded in 1H18. This is on the back of a 7.4 percent on a year-to-year rise in total revenue to 122.84 billion shillings mainly driven by growth in Service revenue which grew 7.70 percent to 118.21 billion shillings.

Fixed service revenue (+21.0 percent), M-Pesa revenue (+18.20 percent) and mobile data revenue (+10.80 percent) were the main drivers of growth while messaging revenue eased a marginal 1.20 percent.

The firm is bullish on both P2P and new business segments under M-Pesa. EBITDA edged up 14.50 percent y/y to 62.12 billion shillings despite the 6.50% y/y uptick in other expenses to 25.79 billion shillings.

Profit Before Tax increased by 21.50 percent y/y to 45.96 billion shillings. For the trading on Friday, market analysts expect market activity to be vibrant on the back of solid Safaricom’s 1H19 financial results which might attract investors.

They also expect the two main banking counters; KCB and Equity to continue driving market activity with persistent selling pressure likely to push prices lower.