The review period has been salient with fresh 52-week low levels hit by some of the listed counters. Centum’s profit–warning announcement (expecting a dip in profit in its earnings by more than 25% on a yearly comparison) at the tail end of 1Q21 triggered a negative momentum on the counter in the subsequent two–month period.
This resulted in the counter touching a fresh low of KES14.40. Standard Group touched a new low of KES15.55 in early May, attributed to the negative knock from its FY20 earnings release. The media company had reported a KES301.6Mn loss during the last calendar year. Limuru Tea also fell to a new low of KES340. That said, activity on this agriculture stock has been thin with only 100 shares (minimum) trading in the review period.
Bamburi Cement recorded a higher-than-expected FY20 EPS (Earnings per Share) of KES2.89. This partly enabled the stock to announce a dividend of KES3.00 to its shareholders. Nonetheless, the price reaction has been contrary, declining 7.9% following the earnings release. The news that three French banks – BNP Paribas, Société Générale and Crédit Agricole – were reversing the course of financing USD3.5Bn towards the East African Crude Oil Pipeline (EACOP) project had a negative knock on the counter.
The spotlight on highlights of the financial results released during this review period was on Britam which reported a KES9.7Bn loss before tax in FY20 (FY19: KES4.5Bn gain). The loss was attributed to KES2.3Bn fair value losses due to poor equities performance and KES2.0Bn loss relating to property impairments. This was further exacerbated by provisioning of KES5.2Bn for investment losses in Wealth Management Fund LLP. The provisioning were a result of asset-liability mismatch as a result of earlier investments in Chase Bank & Imperial Bank corporate bonds, coupled with Nakumatt commercial paper. The counter’s price action has been marked by range-bound trading levels as investors assesses the rolling out of the firm’s new strategy.
The review period was heavy with firm-specific announcements. Five names – East African Cables, Crown WPP ScanGroup, Kenya Re and Express Kenya – announced delay in the release in publication of their respective earnings. I&M Holdings announced completion of acquisition of a 90% stake in Orient Bank Limited, Uganda. Further to this announcement, the listed lender had announced both a dividend (KES2.25) and a bonus share (1 for every 1 share held). The share price declined against the backdrop of the latter’s closure date, 10th May.
The market reacted positively to Safaricom announcement of its bidding for a telecommunication license in the Federal Democratic Republic of Ethiopia. The share price touched historic high level in the review period, although we expect range-bound trading as investors await the announcement of the winner of the Ethiopia telecommunication license bid coupled with profit taking activities. In the near-term, we expect positive sentiment on the counter to continue following the release of its FY21 earnings. As is said that a rising tide lifts all the boats; we price momentum on the telco stock has bolstered the benchmark indices.