Apex Africa Capital Ltd

Weekly Market Note-Week15 2012

George — Mon, 16 Apr 2012 08:49:50 +0000

It was a holiday-shortened week but overall equity valuations surged above 1%w/w on the back of heavy volumes, further signalling sustained strength in the secondary Bull Run over the past few days. The Benchmark NSE-20 Share index returned a 1.64%w/w perfomance, helped up by Uchumi, KPLC, KenolKobil and Equity. Investor sentiments remained positive during the week with our Advance-Decline ‘AD Line’, the measure of sentiments, surging to 2.91 up from 1.26 in the previous week. Foreign books during the week remained quite visible especially on EABL, KCB and Equity, posting a 45% participation rate on average terms compared to 41% in the previous week’s close. Our segmental analysis shows that on a week-on-week basis, the highly traded banking segment, led by Equity Bank, returned a 1.52%w/w perfomance on average terms. Foreign books continued to stretch their positions on both KCB and Equity with both returning 2.15% and 2.84% performances respectively. The Commercial and Services segment continued to equally dominate activity with Uchumi, Scangroup and Kenya Airways leading the pack; the segment posted 2.71%w/w return on average terms. The Energy segment topped NSE’s price perfomance after returning 3.48%w/w gain, led by Total and KenGen; additionally, the segment benefitted from the upcoming fuel price adjustments.

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Fixed Income: CBK wants back your cash!

George — Mon, 16 Apr 2012 08:48:23 +0000

In the past week, key money market liquidity indices retreated on a week-on-week basis; average interbank rate hovered at the 11% ceiling compared to the 19% levels in the previous week. However, the Central Bank through its Open market Operations ‘OMO’ sterilized the excess liquidity, mopping upto Kshs.28bn at a ceiling of 15.50% via the repo market. In the secondary market, sell-buy backs hovered close to the ‘threshold’ after accounting for 45% of the week’s total traded volume. Trades were largely spread out with no particular paper dominating the market; however, both the 1-year and 10-year papers delivered strong volumes. In the week’s Treasury bill sales, prime rates continued their downdraft but stayed above inflation. The Central Bank had offered for sale Treasury bills worth Kshs.7bn and received bids worth Kshs.8.7bn, a 124% perfomance rate; the bank accepted Kshs.7.2bn worth of bids. The weighted average rate of accepted bids on both the 91-day and 182-day Treasury bills receded to 16.078% and 16.737% respectively.

George — Tue, 03 Apr 2012 05:34:19 +0000

Scangroup FY2011 Results release – 18 April 2012

Weekly Market Note-Week13 2012

George — Mon, 02 Apr 2012 09:35:30 +0000

This week investors bid goodbye to Q1 2012 with the benchmark NSE 20-share index returning 4.79% perfomance rate for the quarter, a stark comparison of the -13.53% it posted in a similar quarter of 2011. For the week, the index returned a 1.63%w/w perfomance at 3,366.89 points. Activity levels remained high with total equity turnover hovering above our Kshs.1bn turnover to close the week at Kshs.1.45bn. We think that there has been a general ‘feel good factor’ on equities and specifically this week, the market was further buoyed by inspiring March CPI numbers (March inflation retreated to 15.61%y/y). During the week, the banking segment continued to drive market volumes with both KCB and Equity Bank leading the segment’s activity board; both stocks returned 32.44% and 14.93% performances respectively in Q1. Outside the banking segment, EABL led NSE’s activity charts after moving a total of 1.88mln shares during the week valued at Kshs.381.55mln. The stock posted 15.43% perfomance in Q1. Uchumi continued its resurgence to top NSE’s price perfomance charts after returning 17.31%w/w at Kshs.12.20; the stock returned an impressive 62.67% perfomance in Q1.

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Bonds: CBK playing hard ball

George — Mon, 12 Mar 2012 09:35:12 +0000

The bond market remained active over the past week with a total of Kshs.10.77bn worth of bonds traded. Liquidity remained tight during the week with interbank rates hovering at 24%. However, despite the tight liquidity, sell-buy backs remained below ‘threshold’ and signalling that the market is still comfortable with the prevailing liquidity levels; sell-buy back transactions constituted only 37% of the week’s turnover on average terms. The Central Bank’s decision to re-open the 1-year bond for the second time this year further throws the secondary market off course. Traders will be disappointed for a lack of highly tradable papers and we consequently see robust activity on both the recently issued Infrastructure bond ‘IFB5’ and the 2-year bonds. The former moved Kshs.3.71bn worth of trades while the later traded Kshs.2bn during the week. During the week, supply levels on the IFB5 remained strong with traded yields receding to 13.50%; we noted a wide bid/offer spread on the paper with offers coming in to as low as 13% while bids stuck at 14.50% levels. If the week’s supply levels sustain for the coming days ahead, then yields could recede to sub-13% levels; however, we foresee a situation where traders would prefer to hold onto their positions in a typical ‘wait-and-see’ scenario. Meanwhile in the primary auctions during the week, yields continued their downward trends. The weighted average rate of accepted bids on the 91-day fell below 18% after the Central bank accepted bids worth Kshs.3.19bn at 17.983%. The weighted average rate of accepted bids on both the 182-day and 364-day T-Bills fell to 18.377% and 17.035% respectively.

Equity Bank’s Q4 EPS up 19%q/q, tops our forecasts

George — Mon, 12 Mar 2012 09:32:59 +0000

Equity Bank’s operations for the 3-Month period to 31^st December earned Kshs.0.82 per share, a 18.66%q/q; 51.18%y/y growth; this topped our Q4 forecast of Kshs.0.56 per share. For the period, total core funded income grew 10.32%q/q at Kshs.5.79bn, driven by a 27.65%q/q growth in interest income from loans and advances. This, however, was largely in line with our forecast of Kshs.5.50bn. For the full year 2011, total funded income grew 40.39%y/y at Kshs.19.34bn against our full year forecast of Kshs.19.05bn. And despite high interest rate environment in the quarter that saw interbank rates soar above 30%, the bank’s funding costs retreated substantially with total interest expense receding 51.43%q/q at Kshs.677mln in the quarter; but on a YoY basis, cost of funds rose 19.21%y/y during the period. On the full year 2011 scale, total funding costs surged 51.16%y/y at Kshs.3.12bn and reflecting the impacts of the high interest rate regime especially in the second half of the year. During the quarter, the bank’s total non-funded income retreated by 10.10%q/q at Kshs.3.11bn, trailing our forecast of Kshs.4bn for the quarter. For the full year, total non funded income portfolio grew by a modest 19.24%y/y at Kshs.12.45bn against our FY2011 forecast of Kshs.13.43bn. Profit before tax for the quarter, grew 17.17%q/q at Kshs.3.74bn against our Kshs.2.98bn forecast; for the full year, the number grew to Kshs.12.83bn (up 41.89%y/y) against our forecast of Kshs.12.07bn. The company recommended a final dividend of Kshs.1.00 per share.

Weekly Market Note-Week10 2012

George — Mon, 12 Mar 2012 09:32:27 +0000

Equities: What’s next after results?

The benchmark NSE 20-Share index returned an impressive 2.18%w/w perfomance to close the week at 3,401.60 points while the high activity levels further confirmed a second consecutive week of secondary bull run on equities. Activity on banks remained robust contributing about 45.44% of the week’s turnover followed closely by the Manufacturing segment. Our Advance-Decline “AD” Line, the measure of investor sentiment, continued its impressive perfomance after rising 16% to close the week at 2.25. Foreign books remained modest during the week after posting a participation rate of 34.13% on average terms during the week compared to 33.97% in the previous week. Our segmental analysis shows that the Commercial and Services segment, led by Uchumi and Standard Group, posted the highest perfomance at 8.29%w/w on average basis. However, there are increasingly more pullback signals on the banking segment; this after the segment posted 0.49%w/w perfomance compared to 3.74%w/w returned in the previous week. The energy segment returned 4.18%w/w perfomance on average terms, propped up by KenolKobil and Kenya Power.

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George — Mon, 05 Mar 2012 11:40:19 +0000

CFC Stanbic Holdings FY results release – 8 March 2012

Bonds: CPI numbers looking good!

George — Mon, 05 Mar 2012 11:32:38 +0000

Liquidity in the money markets remained tight over the past week off the back of payments for Treasury Bills and Bonds. Banks borrowed Kshs.9.76bn from the Central Bank’s discount window in a bid to starve off illiquidity. In the secondary market, the infrastructure bond ‘IFB 5’ remained hugely popular with yields on the paper hovering to as low as 14.30%. There was an equally strong demand for the paper at 14.50% and the paper consequently traded Kshs.2.26bn against total bond turnover of Kshs.9.26bn during the week. Despite the illiquidity, buy-sell back transactions remained modest with a 44% perfomance rate on average terms reflecting a changing risk preference structures in the market. Trades on the 2-year paper remained elusive and specifically traders continued to shun the FXD 4/11/2 that has largely been eclipsed by the IFB 5. However, FXD 1/2011/2 traded Kshs.1.4bn. Meanwhile in the primary auctions during the week, prime rates continued to edge down. The Central bank offered for sale Bills worth Kshs.7bn and received total bids worth Kshs.12bn out of which it accepted Kshs.9.7bn worth of bids. The weighted average rate of accepted bids on both the 91-day and 182-day T-Bills receded by 40.7bps and 49bs, respectively, to 18.745% and 18.757%. The bond market will be buoyed by the very inspiring February Consumer Price Index ‘CPI’ numbers; overall inflation for the month receded by 162bps to 16.70%y/y.

Weekly Market Note – Week9 2012

George — Mon, 05 Mar 2012 11:27:48 +0000

The market continued to assign generous valuations to equities during the week with banking stocks being net beneficiaries. The benchmark NSE 20-share index returned an impressive 2.49%w/w perfomance to close at 3,329.16 points. Our Advance-Decline ‘AD’ Line, the measure of investor sentiments, rose 45%w/w to close the week at 1.94. The banking segment continued to drive market activity with trading on bank stocks accounting for about 63% of week’s turnover. Consequently, the segment returned an imposing 3.74%w/w perfomance on average terms, up from 1.50%w/w recorded in the previous week. The construction segment returned 6%w/w perfomance led by Bamburi which posted a strong post-results perfomance after recording 18.46%w/w gain to close at Kshs.154. Kenya Power dragged down the Energy sector after plummeting 18%w/w principally due to its ex-books closure status; the stock closed its books on Tuesday for its bonus shares which begin trading towards the end of March.

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