NSE weekly catch up- bear is over

NSE was up 14pts on week at close of play in April and is now up some 25% since its low January signalling bear is behind us.

Results:
This week it was the turn of the insurers. Anybody reported 2008 after Thursday will be doing so in overtime (4mnths after year end), but would in any case not incur any fines.
Kenya Re was up 85% primarily due to some overdue revaluation of its property portfolio. The revaluation is ofcourse a one-off event performed either every year or in most cases every 3 years. The performance has helped caution it from the falls in its equities portfolio. Aside from that, KenRe did grow its underwriting while keeping claims flat over 2007. DPS is 50c some 15c higher than last year. All in all, good job Mrs Mbogo. Looks well shaped for the future. Please stop restating every prior yr's numbers.
Jubilee also rolled in with a weirdly presented set of annual results. PAT is up 10% on prior year driven by higher premiums. Solid insurance company compared to Pan Africa. Strong cash flow.
Express announced PAT down some 32% on last year driven by lower sales I suspect on the back of the slowdown in the economy. The company has been showing some seriously good momentum since its takeover by the Greeks. Cashflow looks a concern as it more than doubled. Negatively. Funnily enough, no dividend was proposed.
Crown Berger reported some Ksh28m PAT for the 2008, down almost 2/3rds clearing feeling the effects of oil costs, the fuel debacle and of course of worsening economy. DPS is Ksh1.
Sasini announced excellent interim numbers with turnover up 57% allowing it to record a profit of Ksh78m compare to a loss last yr. No detail was given on its beverage shops although they seem to be doing well.
KCB became the first bank to report the highly anticipated Q1 earnings and immediately blew my predication out of the water by only managing 5% PAT growth from the dreadful Q1'08.
Announcements: CMA confirmed that 3 brokers are short of cash and therefore won't get their licences for another 3 months. This sort of asymmetrical information remains a big no-no for investors and CMA need to be bright enough to figure out that if it announces 3 unnamed brokers are short of cash, investors will be wary as the 3 brokers will fix the situation by dipping into investors' cash. Eddie Njoroge is new NSE chairman. Nice enough chap, though perhaps not the step change that NSE investors are looking to see.
Macro: Despite my disappointment about the eventual outcome of the HBC issue, looks like many have taken it positively. Medium/long-term we are still in a swamp. Govt finances are in bad shape and now affecting banks' liquidity. All about the economy.
FTSE: In good shape. Pity US bank stress tests won't be announced on Monday as they are keeping some twitchy investors out of the markets. Need to get a move on and the sooner Tim G realises the better markets will perceive him.

NSE weekly catch-up

NSE saw a mild week with index slightly down on Monday's opening. I suspect we've seen the best of this rally and may even head south for a spell. There was also opportunity to shoot itself in the foot via usual funny price plays.

Results:

CFC Stanbic disappointed (down 8.5% in PAT and won't be the last time, even the old CFC used to frustrate because its universal banking model seems to be just a cover for a weak insurance associate). Universal banking has defeated even banking giants (UBS and Citi recorded the highest credit-crunch related writedowns) and the only successful that I know of today is Barclays Plc. The reason? Varley the CEO is an ultra-cautious accountant who can handle retail banking and insurance while Bob Diamond the head of Barcap is an alpha-ib type banker. This means both businesses perform well. Equity's supposed hire of Maina Mwangi of Rencap should be seen thru this lens.

Jubilee performed credibly 9up 3% on prior yr), especially compared with volatile listed counterparty, Pan Africa.

Corporate actions, announcements and wonders:

Following Kenol's results announcement, the 10% allowed what looks like a circular trade to be carried out leading to a 33% drop in price which nobody will sell at. CMA waited a couple of days then opened the 10% rule hoping to push guys upwards. This nonsense has gone on since the Stanley Hotel days and awaits the injection of new blood into the bourse.

Equity got suspended and suspension was revoked the same day apparently because it owed CDSC Ksh47m from the Safcom IPO and other levies. CMA revoked the suspension as unprocedural. Sounds, looks and smells like the old "patel" file over again. Apparently, even though Equity has a custody licence it somehow earns more of the 2% transaction fee that the brokers. At a time like this with anaemic volumes, brokers are naturally aggrieved. Equity now has to factor in reputational and operation risks. Brokers need to look for other jobs. Its a plain vanilla bourse that shouldn't be seeing the kind of stuff investors have put up with for so long from brokers.

More changes at TC where it seems all the guys who came in with Tony Wainaina have now moved on. Group possibly took hits from the RVR-debacle and the bear in the NSE, EA Cables its prime estate had a high of Ksh104 in October 2006, but closed Ksh24 today.

More Interims

NMG's numbers are strong and bode well for the 2nd half when it should see an election uplift. Interestingly, its EAst African paper is doing very well too. Scangroup a fellow competitor for advertising had a solid first half. Scangroup tend to perform very strongly in the 2nd half as many companies will be advertising for the Xmas season and the coming year. Cash flow went into negative due to higher dividend payout and acquisition of RedSky. One thing I am not sure about is how well they are able to merge all these new companies they've been acquiring as well as grow regionally and into West Africa. The other concern is how well they will be able to keep the the account managers from RedSky.
Bamburi had a flat first half compare to last year. I am still not convinced they'll benefit (apart from scale) from their proposed merger with Portland. Construction industry will continue to be a growth industry, but they lack the agility and hunger for business that ARM have.
Express's PAT almost doubled in size and it looks as if their recovery is sustainable. The elephant in the room where they are concerned must be a rejuvenated Kenya Railway (RVR) which will be competing with them for the freight business from Mombasa to the rest of the country and to especially to UG. Jubilee had a fairly disappointing half. and i suspect that their reliance on investment income will continue to haunt them unless they can start focusing on the bread and butter insurance business. On the contrary, their rival PanAfrica had a strong half with all its insurance lines seeing strong growth, but had investment losses from associate wipe out all the gains. Perhaps they may benefit by hiving off this business?

Results Catch-up

KCB: saw 38% rise in Q1 after tax profits helped by strong loan growth (ksh16bn year on year (44%)) which drove 22% rise in interest income and 24% growth in Fees and commissions. Gratingly for those who like to see banks doing their intermediary role, KCB is driving loan growth forward without concomitant rise in loan loss provisions. KCB’s current momentum (it plans to open 10 new branches every year and expand regionally to Sudan, TZ and Ug in that order), explain the recent share spilt.
Equity: A doubling of income (both interest income and fees) led to a massive 226% rise in PAT from prior yr’s Q1 and led to questions about sustainability. The bank has now acquired a ksh6.9bn loan to help further expansion as it looks to enter the mortgage sector.
NBK: Saw Q1 PAT fall by ksh7m to ksh152m on falling net income. NBK has finally had ksh20bn of its Ksh33bn NPLs written-off by GoK. Though there will be no immediate impact, earnings will improve in the long-term as a cleaner balance sheet allows it to lend more. This will and is atracting speculators in the short-term.
KQ’s 15% drop in PAT for FY was a surprise when it shouldn't have been i.e. CEO Titus had flagged this earlier in the yr. The surprise was in the reasons for the fall (weaker dollar and fuel costs). The dollar is weaker compared to prior yr, but was only below the average rate of 72 for around 2 months of KQ's financial year. Fuel costs can be hedged to a large extent.
DTK: After tax profits doubled from year earlier with strong income on a growing loan book supported by only a slight increase in expenses . DTK is issuing a rights issue for its TZ business.
Its AKD stable mate, Jubilee also announced FY which grew by 51% on growth across all income streams. For its shareholders, there is a final dividend of ksh3.25 and 1 for 4 shares held bonus share issue to look forward to.
Finally, NIC Bank's strategy of niching the market seems to have paid-off in FY06 with PAT growing by 59%. NIC continues to innovate and its contrary strategy means it will make money at times when others may not. As with other growing medium-sized banks, NIC will need to recapitalise at some pt (possibly via a long-term loan or rights issue) as affirmed by Fitch ratings agency.

SHARE SPLITS

Following ICDCI, EA Cables, BBK and Sasini share splits, CMC holding recently announced a 10:1 split of their shares to make them affordable.

Speculations are also on KPLC, Equity, NMG and Jubilee to do a share split as their shares are highly priced.