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September 25, 2018

NSE rallies from an eight-year low

Financial analyst Aly-Khan Satchu
Financial analyst Aly-Khan Satchu

Kenyan economic growth is expected to slip to 5.7 per cent in 2017 from about 5.9 per cent in 2016, the Central Bank said on Tuesday. The CBK left interest rates unchanged on Monday. The Shilling is steady just below 104.

''We are not reckless in minimizing the volatility of the exchange rate, we are on both sides, it's a zero sum game," CBK Governor tweeted.

The Nairobi All Share snapped a losing streak which had seen the index slump -9.06 per cent in 2017 through this morning and fall every session in January except  January 13 through January 16. The All Share rebounded +0.799 per cent.

The Nairobi NSE20 Index which was -12.45 per cent in 2017 through this morning, and at more than eight year lows firmed 4.63 points to close at 2794.27. Equity turnover was 406.706 million. The Nairobi Securities Exchange is in fact in a disequilibrium. Those who have a 12-month time horizon should make out like bandits.

 Safaricom rallied +0.82 per cent to close at 18.50 and traded 5.451 million shares. Safaricom has rebounded +3.064 per cent since closing at a 2017 low of Sh17.95 last week.

Uchumi reported its delayed full-year earnings through June 2016. Uchumi reported a full-year loss of Sh2.836 billion which represented a +17.088 per cent improvement versus the previous year. Uchumi said: ''Performance was impacted by the closure of non-performing branches in Uganda, Tanzania and Kenya and supply chain challenges,'' adding the ''search for a strategic investor is ongoing''.

KPMG Kenya issued a disclaimer of opinion ''on the group financial statements due to lack of audit evidence on foreign subsidiaries up to the date of loss of control and a qualified opinion on company financial statements with regard to lack of audit evidence on property and equipment's opening balances''. Full-year turnover slumped -50.387 per cent as Uchumi scaled back. You have thought that there still is a big opportunity in supermarket retailing. Uchumi retreated -3.38 per cent.

Kenya Airways issued a Q3 2016 October-December 2016 update, which confirmed a +4.8 per cent uptick in passenger numbers and a four per cent increase in cabin factor to 72 per cent. Kenya Airways eased -1.05 per cent.

TPS Serena rebounded +7.61 per cent to close at Sh20.50 and traded 46,600 shares. TPS Serena is back to unchanged for 2017 and probably got a fillip from the passenger numbers released by Kenya Airways today.

KCB Group ticked -1.08 per cent lower to close at Sh23.00 and traded 1.947 million shares. KCB has retreated -20.00 per cent in 2017 and is badly oversold. I expect KCB to positively surprise shareholders with a handsome dividend, and at Sh23.00 it is now time for investors to step up.

Equity Bank rallied +3.191 per cent to close at Sh24.25 and was trading shares as high as Sh25.50 +8.51 per cent at the finish line. Trading was thin with just 25,800 shares traded.

EABL rallied +1.818 per cent to close at Sh224.00 and traded 569,100 shares. EABL reported half-year earnings on Friday last week where EABL reported a -6.286 per cent decline in half-year net revenue and a -31.291 per cent decline in half-year earnings per share largely because of a non-repeat of an extraordinary gain taken in the previous full year. EABL is +2.28 per cent since releasing its earnings.

BAT surged +4.912 per cent to close at Sh897.00 and traded 37,800 shares.

Eveready East Africa reported a full year loss after tax of 206.505 million not far off the previous full year loss of Sh201.509 million. Eveready saw full year sales sink -50.799% to Sh553.311 million and skipped a full year dividend. The company said it ''experienced a challenging out of stock situation occasioned by lack of supplies from our global supplier,'' closed its operations in Uganda and is set to ''sell the Nakuru property in order to clear the debt and provide sufficient working capital to support the distribution business'' I would argue it is time to consider exiting the battery business and returning the surplus [land sales] to shareholders. Eveready closed unchanged at Sh2.35 and is unchanged in 2017.

Crown Berger traded 300 shares all at 45.00 +7.14%.

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