The StableBarclays ↑ Bralirwa (Rwanda) ↑ Diamond Trust Bank ↓ East African Breweries (EABL) ↑ Equity Bank ↔ Kenya Airways ↓ Kenya Commercial Bank (KCB) ↑ Kenya Oil Company (Kenol) ↑ Safaricom ↑ Scangroup ↑ Stanbic (Uganda) ↓
Review
The portfolio, excluding new shares, is up 11% since May 2012 while the Nairobi Shares Exchange main index is up 6% over the same period.
Best Performer: Kenol (up 23% in 3 months), Bralirwa 14%)
Worst Performer: Diamond Trust (down 8% in 3 months), Kenya Airways (after the rights issue that yielded
Increase: Took up all of the Diamond Trust Bank rights
Decrease: none
Unexpected gains/losses: Kenol suspension was listed, Bonus share of Stanbic Uganda bonus was issued (4 new for every existing share)
Looking Forward to more listings like the one announced today from Umeme – a monopoly electricity distributor from Uganda that is 100% owned by Actis, and which plans to have an IPO in Uganda and Kenya later this year.
The shares market seems to have bottomed out and share prices have surprisingly, for an election year, began to go back up after a long downward period.
The Stable Barclays ↑ Bralirwa (Rwanda) ↑ Britak ↑ Diamond Trust Bank ↑ East African Breweries (EABL) ↑ Kenya Airways ↓ Kenya Commercial Bank (KCB) ↑ Kenya Oil Company (Kenol) ↑ Safaricom ↑ Scangroup ↑ Stanbic (Uganda) ↓ Uchumi ↑
Review
The portfolio, excluding new shares, is up 12% since February 2012 while the Nairobi Shares Exchange main index is up 14% over the same period.
Best Performer: Uchumi (up 109% in 3 months), Britak (33%) Scangroup, EABL, KCB, Kenol (all +20%)
Worst Performer: Kenya Airways (down 20% in 3 months), Stanbic Uganda (due to exchange rate)
In: None
Out: None
Increase: Took up some, but not all of the Kenya Airways (KQ) rights
Decrease: none
Unexpected gains/losses: A buyout at Kenol of the majority shareholders was announced, but the future for minority shareholders is unclear with the (under-valued) shares now suspended from trading. More Kenol deal analysis by Coldtusker.
Events/Outlook:
Equity Bank’s James Mwangi lamented that more foreigners and hedge funds now see the under-valued shares of the bank and are buying (now own 43% of the bank) more than local investors.
A fight between the directors of the Tuskys super market chain exposed the rapid growth of this unlisted company, whose turnover and profit of Kshs 20 billion was almost twice that of listed Uchumi, but whose profit of Kshs 245 million was about half of Uchumi’s.
With the high cost of bank funding (loan rates are still at +18%), Standard Chartered, East African Breweries and Total have all borrowed from their foreign parent companies for local investment and capital commitment.
Looking Forward to:
– Payment of the Barclays special dividend to go a long with final dividends from KCB, Scangroup and others. But it’s hard to keep track of dividend payments and bonus issues since the Nairobi Stock Exchange stopped sharing their daily free price lists.
Cautiously investing in Government bonds. Got a CDS account with the Central Bank of Kenya for bond trading, but with so many doing it now (it takes three weeks to get an application approved), it’s time may have passed.
Results of the Kenya Airways rights issue (May 30)
New listings from CIC Insurance, and Longhorn Publishers, but UAP have pushed back their back their plans till around 2013 and indecisive Family Bank has again postponed a listing decision.
The Stable Barclays Bank Bralirwa Breweries (Rwanda) ↑ Diamond Trust Bank ↑ East African Breweries (EABL) ↑ Kenya Airways ↓ Kenya Commercial Bank (KCB) ↑ Kenya Oil Company (Kenol) ↓ Scangroup ↔ Stanbic (Uganda) ↑ Uchumi Supermarkets ↔
Review: – Best performer: Bralirwa 11% (this Q), then East African Breweries 10% – Worst performer: Kenol (-4%) – In: Barclays – Out: Safaricom – Increase: Kenya Airways – Decrease: None – Performance: The Portfolio is down 1% in the last three months while the NSE 20 Share Index is down 7% – Uchumi, which is out of receivership, has finally got the green light from the CMA to re-list at the Nairobi Stock Exchange, though the date and conditions of re-listing have not been specified. – Safaricom’s 2010 results which will be released on May 18, are widely expected to show a drop in revenue and profit owing to the price wars in the mobile sector. – Kenol resumed its battle the Ministry of Energy after a quiet period as motorists grappled with an unexpected shortage of petrol (This inspired an innovative site called Find Fuel . The Kenol AGM was live streamed and can be found on YouTube.
– Stanbic Uganda had reduced profits owing to bad loans combined with staff & IT expense increases.
Events & Outlook: Looking forward to – Dividend payments from Diamond Trust, KCB, Scangroup, Stanbic (Uganda), Kenol – Bonus shares from Diamond Trust (1:5), Scangroup (1:5), and Stanbic Uganda (1:1) – New share listings: There’s been no word yet from Transcentury and Britak. During the quarter, CFC-Stanbic spun off their insurance arm – CFC Insurance which is now listed on the stock exchange, and will soon to be joined at the NSE by CIC Insurance.
– Why list?: The newspapers, this week had advertisements from the Capital Markets Authority (CMA) highlighting tax and other benefits of listing shares or raising capital in Kenya. These include;
Newly listed companies will enjoy reduced corporates taxes if; (i) They list 20% of their shares, they will pay 27% income tax for the next three (3) years on profits (while other corporates pay 30%). (ii) List 30% and pay 25% tax for next 5 years on profits. (iii) List 40% and pay 20% tax for next 5 years on profits.
Tax exemptions; – A tax amnesty on omitted past income – Dividend taxes paid to venture capital firms – Income to employee share option programs (ESOP’s) – Interest income on long term infrastructure bonds
Also all East African nationals are treated as ‘locals’, not foreign investors in allocation of IPO shares and get (lower) withholding tax on their dividends. These and other tax deductible expenses including payments for credit-rating, listing & issuance costs, and some exemptions from stamp duty, can be found at the CMA site.
The Stable Bralirwa (Rwanda) ↑ Diamond Trust Bank ↑ East African Breweries (EABL) Kenya Airways ↓ Kenya Commercial Bank (KCB) ↑ Kenya Oil Company (Kenol) ↓ Safaricom ↓ Scangroup ↓ Stanbic (Uganda) ↑ Uchumi ↔
Review: – Best performer: Bralirwa up 31% since their 2010 IPO – Worst performer: Scangroup (down 14%), then EABL – In: Bralirwa – Out: None – Increase None – Decrease: None – Unexpected gains/losses: – Uchumi shares have not been re-listed despite the company’s exit from receivership a year ago
Events & Outlook: – Performance: The Portfolio is down 3% in the last three months while the NSE Index is down 6% -Bralirwa Rwanda was a good buy as the Rwanda (virtual monopoly) beer company listed shares that were open to all East African nationals and many retail shareholders got full allocation (still waiting for a similar offer from Tanzania); However in Kenya EABL faces challenges from the so-called Mututho Law which appears to have curtailed sales of alcohol through reduced hours. – Safaricom seem to be weathering the storm from Airtel Kenya and their battle has extended to political and regulatory circles. Airtel added only 2 million more customers in all Africa compared to a year ago (Dec ’09) – Kenol has gone quiet since the Kenya Government instituted price controls around the country and despite popular expectations, prices have steadily risen in the two months since the program started.
Looking forward to: – February brought news that Transcentury and Britak – British American insurance plan to list at the stock exchange this year. Britak, Kenya’s 4th largest insurance company looks more likely – it had a 2009 pre-tax profit of Kshs 500 million and assets of 15 billion ($185 million). Transcentury shares trade at an OTC market run by Dyer & Blair – and (this week) are at Kshs 35 per share compared to Kshs 48 in 2010 according to the East African.
CIC Insurance, CFC Life and Family Bank are silent, while government linked companies like New KCC, Consolidated Bank, and National bank, are also likely to go through more political hoops before they reach the market.
– Also on offer this month is a 30 year savings bond from the Central Bank of Kenya to promote savings in the country. It pays 12% per year and targets to raise Kshs 18 billion ($221 million) with a minimum investment of Kshs 50,000 ($615), and closes on. Exactly two years ago, there was a similar push for an infrastructure bond offered by the Kenya Government to raise 18.5 billion ($231 million) by offering investors 12.5% returns over 12 years.
The Stable Diamond Trust ↑ Kenya Airways ↑ KCB ↑ Safaricom ↑ Scangroup ↑ Stanbic (Uganda) ↔ Uchumi ↔ Trades: None In: None Out: None Increase/decrease: None Best performer Kenya Airways up 106%, then Safaricom 38% Worst Stanbic UG, no change (actually was up 5 UGX per share, but the Uganda shilling is weaker) Unexpected Gains/Losses: None Performance: Portfolio is up 11% while NSE index is up 17% in three months – thanks largely to Safaricom which is ¼ of the index. Events – Uchumi may resume trading at the Nairobi Stock Exchange after four years of suspension now that shareholders have approved restructuring of remaining debt in consultation with the banks who put the chain under receivership. – Unlisted investments are tricky to track and problematic to measure or exit.
