2022 Week 45: Market Cap Trainers Summary

Equity Market

• The all-inclusive NASI share price index increased by 0.42% from 127.55 to 128.09 during the week ending November 11.
• The NSE 20 share price index decreased by 0.55% from 1675.66 to 1666.47 during the week ending November 11.
• The NSE 25 share price index decreased marginally by 0.15% from 3092.65 to 3088.01 during the week ending November 11.
• Market capitalization decreased from KES 1.987 trillion to KES 1.996 trillion in the week ended November 11.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 1.012 trillion) currently accounts for 50.70% of NSE market capitalization.
• Volume of shares traded decreased by 15.22% to close the week at 39.00 million, compared 46.00 million recorded in the previous week.
• Equity turnover increased by 9.09 percent to Kshs 1.20 billion for week ended November 11 compared to KES 1.10 billion in the preceding week. Year to date shares worth Kshs 79.73 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 November 17, the government sought to raise KES 24 billion but received bids totalling KES 49.09 billion representing a performance of 204.53% percent. Amount accepted amount to KES 38.34 billion compared to KES 39.47 billion last week.  Interest rate on 91-Day Treasury bill, 182-Day Treasury Bill and 364-Day Treasury bill was 9.173%, 9.706% and 10.186% respectively. The subscription rates across the three papers were 662.83%, 138.92% and 86.83% respectively.
• The bond market reported increased activity with bonds worth KES 12.80Bn transacted compared to KES 8.30Bn registered the previous week.

• The Central Bank of Kenya sought to raise KES 60 billion by auction of infrastructure bond IFB1/2022/014 in the month of November 2022. Bids received for the bonds amounted to KES 75.57 billion representing a 153.08% of which the CBK accepted KES 91.85 billion representing an acceptance rate of 82.28% clearly indicating the resolve of the CBK to lower government borrowing costs. The average interest rate for infrastructure bond IFB1/2022/014 in November 2022 was 13.938%.
• Carbacid Investment PLC reported a 56.04% growth in turnover to KES 1.41 billion for the period ended 31 July 2022 compared to KES 0.91 billion for period ended 31 July 2021. Profit after tax for the twelve months of the year was KES 0.71 billion which is over 69.05% higher than KES 0.42 billion during the same period previous year. Operating cash flows for the twelve months of the year was KES 0.71 billion which is over 44.90% higher than KES 0.49 billion during the same period previous year. Capital expenditure for the twelve months of the year was KES 0.18 billion which is over 38.46% higher than KES 0.13 billion during the same period previous year. Free cash flows for the twelve months of the year was KES 0.53 billion which is over 47.22% higher than KES 0.36 billion during the same period previous year. Its earnings per share increased from KES 1.63 for period ended 31 July 2021 to KES 2.78 for period ended 31 July 2022. Its book value per share increased from KES 13.69 for period ended 31 July 2021 to KES 14.87 for period ended 31 July 2022.Return on average equity for the company increased from 12.32% in 2021 to 19.45% in 2022. Given the above the justifiable valuation for each share of Carbacid is KES 14.00 per share. The company declared a final dividend per share of sh. 1.70.
• Safaricom PLC reported a 4.8% growth in turnover to KES 153.43 billion for the period ended 30 September 2022 compared to KES 146.37 billion for period ended 30 September 2021. Profit after tax for the 6 months of the year was KES 30.23 billion which was 18.40% lower than KES 37.06 billion during the same period previous year. Operating cash flows for the 6 months of the year was KES 40.48 billion which is over 28.90% lower than KES 56.92 billion during the same period previous year. Capital expenditure for the 6 months of the year was KES 37.50 billion which is over 92.60% higher than KES 19.47 billion during the same period previous year. Free cash flows for the twelve months of the year was KES 2.98 billion which is over 47.22% lower than KES 37.45 billion during the same period previous year. Its earnings per share decreased from KES 0.92 for period ended 30 September 2021 to KES 0.84 for period ended 30 September 2022. Its book value per share increased from KES 3.48 to 3.59 for period ended 30 September 2022. Return on average equity for the company decreased from 46.84% in 2022H1 to 33.06% in 2023H1. Given the above the justifiable valuation for each share of Safaricom PLC share is KES 34.00 per share.
• Property developer USIU hostel for KES 1.7 Billion. This is a clear indicator of liquidity problems experienced by the company. Therefore had to sell some fixed assets to help finance its working capital needs.
• NCBA setup a new company to run Mshwari. This is a good move as it helps it separate its financial technology business from its banking business. Plus it helps NCBA deflect regulatory head ache to only its fintech platform and not the larger banking business.
• The Capital Market Authority granted Kuza Asset Management Unit Trust Scheme license to operate four schemes: Kuza Fixed Income Fund; Kuza Money Market Fund (KES); Kuza Money Market Fund (USD) and Kuza Momentum Fund. The funds will become operational in the next 3 months after compliance with relevant regulatory procedures outlined in the CMA Act and Collective Investment Schemes Regulations of 2001.
• A Sh425 billion dam is set to be built in Kitui and Tharaka Nithi funded by UK government. It will be the second most expensive infrastructure project after the SGR railway. This among the many projects to the tune of KES 3 Trillion agreed upon by UK Prime Minister Rishi Sunak and President Ruto in the sidelines of COP27 climate summit in Egypt.
• During the week, President Ruto directed the National Treasury not to borrow domestically at rates above 10%. This is negative as the huge budget deficits; rate hikes by Fed among other Central Banks and current inflationary conditions is what has driven up rates for lending to the government.   If effected, it will force banks to lend more to the private sector due to the most likely better rates they can get there. 
• Kenya has earned KES 7 billion for three months though October. This   is a great improvement compared with KES 5.63 billion earned in the first 6 months of 2022 as per data from Horticulture Directorate of Kenya. The huge jump in avocado exports is attributable to opening up of the Chinese market for fresh avocado exports. This  is a huge boon for Kakuzi  as it is one of the firms allowed to export avocados to China and the window was open during its peak avocado harvest  season. It is important to note that the Us dollar as appreciated  by a large percentage against the Kenyan shilling.   This is favourable for Kakuzi since the payment for Kakuzi’s avocado exports are in US dollars. Kakuzi plc has no dollar denominated debt which could reduce earnings.                                                                                                             

LOCAL MARKET SUMMARY FOR WEEK ENDED 11 NOVEMBER 2022