In the realm of Kenya’s financial markets, the trading session today presented a mixed bag of results, continuing a trend observed over the past four sessions.
The Nairobi All Share Index (NASI) saw a modest gain of 0.2%, while both the N10 and NSE 25 indices experienced slight declines of 0.2% each. The NSE 20 index notably fell by 0.6%, marking a significant movement in the day’s trading.
A key highlight of the session was the noticeable increase in equity turnover, which surged by 41.1% to reach USD 1.1 million. This uptick in turnover was largely driven by foreign investors, who significantly upped their market participation to 64.2%, a notable increase from the 40.6% recorded in the previous session.
Focusing on individual counters, the Equity Group emerged as the day’s most active, accounting for 46.8% of the total activity, yet its share price remained unchanged at KES 36.00. Safaricom trailed closely, contributing 44.1% to the day’s turnover. The telecom giant’s shares rose by 0.7% to KES 14.00, buoyed by a build-up of support levels at KES 13.90 over the past three sessions.
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Other notable movements included StanChart, which gained 2.5% to KES 161.25, and KCB Group, dropping by 1.6% to KES 21.15. I&M Holdings maintained its price at KES 17.50. Surprisingly, Kenya Power became a top mover with a turnover of KES 1.1 million, despite its shares falling by 4.3% to KES 1.35, marking it as the worst performer among the top movers. On a brighter note, NBV emerged as the day’s top gainer, soaring by 9.3% to KES 2.36, while Car and General experienced the largest drop, declining by 9.1% to KES 25.00.
In terms of foreign net flows, the market witnessed a shift with foreign investors turning net buyers, contributing net inflows of USD 84.4K. Safaricom led the buying spree, while I&M Holdings was at the forefront of the selling activity.
Amidst these market dynamics, Umeme, a key player in the energy sector, made headlines by issuing a profit warning for the financial year ending December 31, 2023. This warning, in compliance with the Capital Markets (Securities) (Public Offers, Listing, and Disclosures) Regulations, anticipates a decline of more than 25% in its profit before tax.
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The expected drop in earnings is attributed to an increased amortization charge, aligning the amortization of its non-current assets with the remaining duration of its electricity distribution concession, in accordance with IFRS standards. This adjustment comes as the natural term of the concession nears its end in March 2025, coinciding with the Ugandan government’s plans to establish its own power distribution entity, Uganda National Electricity Co.
For the six months ended June 30, 2023, Umeme reported a profit of Ushs 13.2 billion, a significant decrease from Ushs 64.4 billion in the corresponding period in 2022, largely due to a Ushs 210 billion amortization charge.
Despite this, the company’s topline grew by 19.9% year-over-year, indicating potential growth in electricity demand, new customer connections, reduced energy losses, and robust cash collection. Excluding the amortization factor, Umeme’s management anticipates higher operating profits in 2023 compared to 2022, with the dividend policy remaining steady.
In conclusion, today’s trading session in Kenya’s financial markets was a complex interplay of mixed index performances, rising turnovers, and significant corporate developments, particularly Umeme’s profit warning, which is poised to have lasting implications in the energy sector.
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