2022 Week 41: Market Cap Trainers Summary

Equity Market

• The all-inclusive NASI share price index increased by 2.83% from 126.32 to 129.90 during the week ending October 14.
• The NSE 20 share price index increased by 1.40% from 1676.77 to 1700.22 during the week ending October 14.
• The NSE 25 share price index increased marginally by 3.01% from 3034.74 to 3125.96 during the week ending October 14.
• Market capitalization increased from KES 1.968 trillion to KES 2.024 trillion in the week ended October 14.This was in line with NASI index that tracks the performance of the whole market. It is worthy to note that Safaricom Plc market capitalization (Ksh 1.024 trillion) currently accounts for 50.59% of NSE market capitalization.
• Volume of shares traded decreased by 45.54% to close the week at 55.00 million, compared 101.00 million recorded in the previous week.
• Equity turnover decreased by 52.80 percent to Kshs 1.18 billion for week ended October 14 compared to KES 2.50 billion in the preceding week. Year to date shares worth Kshs 75.21 billion have been traded in the Nairobi Securities Exchange. It’s worthy to note that the NSE Plc makes 0.24% of equity turnover as equity trading fees which accounts for over 58% of its total income.

CORPORATE ANNOUNCEMENTS AND KEY EVENTS FOR THE LAST WEEK AND CURRENT WEEK

• In the Treasury bills auction of October 13, the government sought to raise KES 24 billion but received bids totalling KES 28.02 billion representing a performance of 116.74% percent. Amount accepted amount to KES 27.01 billion compared to KES 19.06 billion last week.  Interest rate on 91-Day Treasury bill, 182-Day Treasury Bill and 364-Day Treasury bill was 9.058%, 9.656% and 9.910% respectively. The subscription rates across the three papers were 253.80%, 139.46% and 39.19% respectively.
• The bond market reported increased activity with bonds worth KES 14.00Bn transacted compared to KES 13.60Bn registered the previous week.

• The National Treasury plans to raise KES 60 Billion from auction of two reopened bonds FXD1/2017/10-(4.9 years) and FXD1/2020/15-(12.3 years) and a new bond FXD1/2022/25-(25.0 years) in October 2022 in two tranches. The reopened bonds FXD1/2017/10-(4.9 years) and FXD1/2020/15-(12.3 years) are currently paying interest of 12.966% and 12.756% respectively while for new bond interest will be market determined. The Period of sale for bond FXD1/2017/10 AND FXD1/2020/15 is from 21 September 2022 to 04 October 2022. The Period of sale for bond FXD1/2022/25 is from 21 September 2022 to 18 October 2022.
• President Ruto made a visit to the Nairobi Securities Exchange which marked a significant departure from predecessor who never visited the Nairobi Securities Exchange for the 10 years in power. President Ruto announced that the government will most likely list six to ten state corporations within the next 12 months through initial public offers. We have had a listing drought in the NSE for last 6 years with the last successful IPO of Stanlib Fahari Reit conducted in 2015. The express confidence exhibited by President Ruto in the NSE heralds a new era in our stock market with most blue chip counters at rock bottom prices which increases the probability of making good cash moving forward. President Ruto urged the Kenyan private sector to also list at least 5 companies in the NSE.
• Some of the companies lined up for privatization by the Privatization Commission  include: KenGen (GOK 70%); Kenya Pipeline Company (GOK 100%); Kenya Ports Authority Eldoret Container Terminal (GOK 100%); Kenya Ports Authority Outsourcing of Stevedoring Services (GOK 100%); Kenya Ports Authority Development of Berths No.11-14 (GOK 100%); Chemelil Sugar Company ADC:96.21% and DBK:1.42%; South Nyanza Sugar Company Limited-GOK: 98.8%,ICDC:0.7% and IDB: 0.3%); Nzoia Sugar Company -GOK: 97.93%,IDB Capital Limited:0.94%).
• Credit Bank and Bio Foods have received approval to list shares in the NSE. Credit Bank has already received the necessary board of directors approval for listing by introduction in the NSE.
• A law firm that has been defending Keroche Industries is now seeking to have the company liquidated over a debt of KES 233.7M.
• Ncba plans to spin its M-Shwari into a standalone company. The separation will enable its financial technology business to come up with personalised and feature rich banking services to its customers. We opine that this will help it from a regulatory point view due to the increasing focus by the Central Bank of Kenya on digital lenders.
• Airtel Kenya limited officially received the green light by the Central Bank of Kenya to separate its mobile money business to an independent   company Airtel Money Kenya Limited. This has been the goal of the CBK to have mobile money operations ring faced from other services offered by telcos like Airtel for increasing governance over mobile money business unit; resilience and improved service delivery to customers. Safaricom PLC is set to separate its mobile money unit and lending business from its telco related services by or before end of January 2022. Analysts are of the view that the Central Bank of Kenya regulation of telcos’ money market operations is a prelude to elimination of daily maximum transfer cap of KES 300,000 in place for mobile money wallets.
• East African Breweries parent company Diageo Plc which listed in the London Stock Exchange and New York Stock Exchange through its local subsidiary Diageo Kenya that owns 50.03% (395,608,434 shares) of EABL plans to increase its ownership to 65% (514,003,331 shares) in line with its shareholding in other subsidiaries it owns in African Continent. It wants to buy 118,394,897 shares at a price of KES 192 each by 30 January 2023 if CMA approves it. The tender price of KES 192 is at an implied total enterprise value to unadjusted EBIDTA multiple of 5.7 for period ended 30 June 2022. Its at an implied  price to earnings ratio multiple  of 12.8 for the financial year ended 30 June 2022.Lastly its a premium of 31.4% to the past 30 trading days value weighted price. People should take advantage of the offer even at the current elevated price of KES 166 per share.
• In new oil prices announced by EPRA that takes effect for period 15 October 2022 to 14 November 2022: Petrol to cost Ksh 178.30 a decrease of Ksh 1 per litre. Meanwhile, diesel will cost KES 163 down from KES 165 while Kerosene will retail at KES 146.94 in contrast with KES 147.94 previously.
• Yusuf Omari has been appointed as ABSA Bank Kenya Interim Chief Executive Officer and Managing Director effective 1 November,2022. He is currently the Chief Financial Officer.
• Foreign Remittance flows in September 2022 totalled USD 318.00 million compared to USD 309.80 million in September 2021, a 2.60 percent increase. The cumulative inflows for the 12 months to September 2022 totalled USD 4,001 million compared to USD 3,530 million in the same period in 2021, an increase of 13.3 percent. The strong remittance inflows continue to support the current account and the stability of the exchange rate. The US remains the largest source of remittances into Kenya, accounting for 59 percent in September 2022 compared to 58 percent in August 2022.
• The economy recorded strong performance in the second quarter of 2022 supported by the non-agricultural sectors. It grew by 5.2 percent, supported by strong activity in financial and insurance, transportation and storage, wholesale and retail trade, real estate and construction sectors. However, performance of agricultural sector remained subdued due to unfavourable weather conditions.
• During the week, the National Treasury gazetted KES 465.20Bn as the total cash raised for the first quarter ended 30 September 2022 slightly below a target of KES 517.98Bn for the first quarter of the government fiscal year. Total spending amounted to KES 617.29Bn equivalent to 76.70% of the prorated estimates of  KES 886.15Bn.

LOCAL MARKET SUMMARY FOR WEEK ENDED 14 OCTOBER 2022