During the month, Sasini released its FY21 results with the net income surging to KES 573Mn compared to KES 12Mn that was recorded the previous year. The increase was mainly driven by higher sales especially for coffee, reduced cost and a weaker shilling which boosted the margins of their exports. Additionally, EABL released its HY22 results indicating a significantly improved performance with the profit after tax up by 130.43% y/y to KES 54.9Bn.The positive results were attributed to reopening of the economy and lifting of the gathering restrictions that contributed to increased alcohol consumption. Additionally, we observed an equal momentum growth across all markets led by mainstream spirits.
Car and General announced a dividend payout of KES 3.20 and a one for one bonus share which is to be credited on 8th April 2022 subject to approval. This was after it posted strong FY21 results which saw its net income increase to KES 887Mn compared to KES 274Mn, recorded the previous year.
During the month we observed four companies issue a profit warning. The companies include; Kakuzi, Limuru Tea, Sanlam and Liberty which was an indication of lagging effects of the pandemic on the particular sectors.
The MPC held its first meeting of the year, during the month, and retained the CBR at 7.00% for the twelfth time. The committee noted a faster growth in imports(25.4%) than exports(11.1%) fueled by increased cost of oil imports as compared to reduced earnings in key exports such as tea. We expect the MPC to maintain the current benchmark rate at least until the second half of the year before a marginal hike later in the year.
Inflation in January dropped to 5.39% from 5.73% in December. The decrease was mainly attributed to 0.75% decline in housing utilities due to a reduction in prices of electricity during the month. However, food inflation increased by 1.07% m/m due to reduced agricultural production that drove prices of food items such as maize flour up.
KRA announced a 105.12% revenue over performance for 1H of FY2021/22 collecting revenues of KES 976.66Bn against a target of KES 929.13Bn. This is attributable to enhanced revenue collection measures, increased use of alternative dispute resolution measures and technological enhancement. We expect the exchequer to be more persistent in enforcing revenue collection. However, the authority has a lot on their hands as the government is still aggressively borrowing to fund fiscal deficit.
What does February hold for us ?
We expect investors to continue taking positions in the banking sector in anticipation of good FY21 results which are likely to see a return to dividend payments.