NSE Weekly catch up

NSE stayed flat this week as other markets motored forward. Mainly I suspect that Kenyans are not feeling the bourse like prior years. Cash I think is there, but we all need to see a more convincing political and economic forecast. Stock investment is about hope.

FY Results:

Eagads a coffee and tea grower, saw a vast improvement in turnover but also benefited from Ksh20m gain from revaluation to record profit for the year. The cash flow statement looks peculiar to say the least with cash from operations somehow going down by Ksh12m. No dps.

Kenya Orchards, reported a Ksh7m loss for '08 on the back of a Ksh10m operating loss whose detail is not given and 26% decline in turnover. Cash from operations was massively in the red presumably relating to the operating loss issue but overall cash was positive. No dps for the year.

Q1 Results:

KCB opened the Q1 show with a 3% PAT growth on prior yr. I have switched my remaining stake in KCB to AK on the back of results which were a puzzle. Like the fact that annual reports will be emailed to shareholders in future though.

Finally, HFCK is showing the potential one suspected it had. PAT grew by 1.5 times on prior year driven by massive growth in loans. I suspect Kenyans are switching from NSE to real estate in a big way and HFCK has really aligned itself to take advantage of this. Still not sure how Equity intends to help HFCK leverage on its brand and network but this has to be the way forward. HFCK has been very innovative in terms of products and distribution. One of the products out there is its Makao project management which I'd recommend to NRKs.

Rumours:

AK is a takeover target.

Macro:

Its either the supplementary budget got in the way of UK's serious imbibing time or the fruit never falls too far from the tree. Excellent work by MARS though.

FTSE & other markets:

Turned green for the first time this yr yesterday. Risk appetite is back. Dudes are unhappy gettting 1-2% savings rate. Plus depression, swine flu et al have all been overhyped so that when reality hits, there is relief. And this is the result.

Great leakage work by Tim Geithner on the stress tests. The numbers were no different from those reported by FT almost two weeks ago.

TPS: One of the stocks of 2008?

Did you know that TPS' shareprice has outperformed NMG over the last three years? Of the Aga Khan shares, only Jubilee has done better.  So why do I think it will be a stock to watch for 2008:

1. It should start seeing the benefits of its regional approach with tremendous improvements in its Zanzibar, Ug and lately Rwanda businesses
2. Tourism in Kenya is up 36% on year-to-date compared to last year. And projected to explode in the next 5 years (1m to 5m tourists-read Fintrade's article on the same)
3. The Serena offering in Kenya is increasingly targetting the growing middle class in Kenya with weekend excursions; 2/3 day fairly-well priced offers to go see game at Maasai Mara et al
4. A lot of administration has now been streamlined-its possible to now reserve your stay online. This has led to cost cuts.
5. TPS are projecting to double PBT for the year (based on their first half performance) and probably the same for 2008.
6. TPS is of course the only hospitality/tourism stock at the NSE. Despite a 1 for 5 bonus issue in June, the share price is today back to its pre-bonus issue price.
   
7. Interestingly, TPS are offering all their shareholders a 12.5% discount for any bookings this year.

In other stock news, Equity announced its Q3 numbers (with 98% yoy growth, although slightly down on Q2). As did EA Cable (they had a 24% increase yoy, but are getting stung by aluminium prices). Its good to see the effort they are putting into diversifying their revenue from Kenya -its  a good political hedge. It also a bit of a shock to see Kenya Orchard (they produce some very yummy strawberry jam)  announce their results. They do need a decent accountant however.

Standard Group, Limuru Tea company, Kenya Orchards

Standard Group is Kenya's (and therefore East Africa's) 2nd largest media group. Apart from succesfully diversifying its portfolio to include KTN, Standard also runs a publishing and distribution arm PDS. The company was upgraded to the MIMS on Tuesday the 14th of Feb, making its share a more marketable one. http://www.eastandard.net/hm_news/news.php?articleid=1143964838. Perfomance-wise, the FY06 saw profit before tax more than double due to higher revenue generation. Instead of offering dividend, Standard has offered shareholders a bonus share for every 8 held. The following article gives more informaion on the unaudited financials. http://www.nairobist.com/pblog/index.php?d=16&m=11&y=06. For this FY, the group can expect to benefit from increased newspaper circulation and TV audience due to the elections. It should also be able to generate higher advertising revenue from the same. As an investment, it will be in play until the bonus issue is announced, but will long-term continue to suffer in the shadow of the much larger and expansive Nation Media Group.

Kenya Orchards- Are manufacturers of those popular fruit jams such as mermalaide, strawberry et al as well as juices. Shares in this company have been suspended since May'06.

Limuru Tea-Is 54%-owned by Unilever Tea who act as its mafucturer and sales agent. Was affected by the drought in 2005 as were other Tea companies. Their detailed trading history shows a sharp decrease in shares traded to date which makes it a non suitable company for our consideration for investment.