NSE in 2007

The dos:
Buy Barclays because:
I think this share is presently under-valued against peers on price alone-PE ratio is among the lowest in the banking sector. This is partly due to the recent increase in shares
Investors will always go for it as a quality, well-managed, stable-dividend policy stock-especially important in uncertain periods such as Election time
Their move bank into the unbanked is timely given the current economic growth. Areas such as Ngong (where it’s re-opening its branch) have really grown and continue to attract solid commuting middle class.
It remains a status symbol for the aspiring middle class in Kenya

Don’t BUY because:
· The move into the unbanked combined with recent increase in loan amounts to 2m/= represents risk especially in terms of potential NPL
· If rumoured integration into ABSA doesn’t pay-off or is prolonged, the bank will loose out to upcoming banks such as Equity
HFCK-
1. I see this as a takeover candidate especially given its prime position in the Mortgage market. Expect this in the next 12-18 months, otherwise won’t happen
2. Frank Ireri, the new MD talks a good game and is young enough to want to make a mark
3. The housing market will boom if economic growth is sustained
Against this:
1. Share looks overvalued compared to banking peers (P/E of 83+ compared to KCB-36; BBK-18; DTK-29;Equity-36) i.e. investors may already have factored in the likely takeover premium
2. The economy take-off maybe premature
3. Non-performing loans may rear their ugly head
4. Ireri maybe poached by a peer bank
KenGen
· If the economy growth is sustained-this stock will mirror that performance
· The ongoing rural electrification programme means on-going market growth whether the economy grows or not
· Ongoing investments will continue to pay-off in future
· The P/E ratio at 16 is very good compared to other shares in the bourse
· Eddy Njoroge has steered the company well
· The likely addition of 19% shares means lower govt share
· Its monopoly position

Against this:
· The ongoing price saga with KPL means the stock will stay saddled with political baggage
· Govt remains the majority shareholder-always a recipe for corruption and political manipulation
· The economy growth maybe unsustainable
· The company may struggle to find alternative sources of power-or they may prove too costly
Express:
One for the future…