NSE | AIB Axys May 2023 Stock Picks

April'23 Review

• FY’22 Earnings Season – During the month, we had earnings releases from Nation Media, Sanlam, Jubilee, Total, Sameer, Crown, TPS East Africa and Bamburi. Nation Media’s FY’22 results were a (35.41%) decline in PAT to KES 0.32Bn driven by lower turnover resulting from a decrease in consumer spending. Sanlam FY’22 net earnings decreased by (11.08%) to KES 8.21Bn driven by poor performance in general business in the wake of difficult macro economic conditions. Jubilee FY’22 net earnings decreased by (5.95%) to KES 20.65Bn driven by lower premiums. Total FY’22 results were a (10.76%) decline in PAT to KES 2.44Bn resulting from higher cost of sales and higher taxes. TPS FY’22 results were a 159.41% increase in PAT to KES 9.38Bn after an increase in sales. Bamburi FY’22 results were a (86.88%) decline in PAT to KES 0.18Bn attributed to a decline in turnover impacted by the slowdown in cement demand. Others that released but without dividend payments were; Eveready, WPP Scangroup, Flame Tree Group, Standard Group, Home Afrika and East African Cables.

• CEO Appointments – During the month, we observed a top-level change at KCB with the appointment of Annastacia Kimtai as the Managing Director of KCB Bank Kenya in a move that has separated the Group’s operations from the Kenyan Banking subsidiary in compliance with regulations established by the CBK. Additionally, Bamburi Cement announced top level changes with replacements for the CEO and CFO positions.

• Inflation Marginally Decreases Contrary to Expectations - The headline inflation for the month of April marginally decreased to 7.90% from 9.20% in March on the back of increased agricultural production following the onset of the short rains. Food inflation decreased to 10.10% from 13.40% in March, and housing utilities and transport indices increased marginally to 9.60% and 9.80% y/y respectively. Non-Food-Non-Fuel (Core Inflation) decreased to 4.10% from 4.40% in March. The CPI increased 50bps to 131.83 from 131.18 in March 2023. We expect headline inflation to remain under pressure and above the CBK’s upper target at least until the end of Q2’23.

• Shilling Continued Losing Streak against USD - Kenya shilling continued to depreciate further against the USD to close at KES 135.91 versus KES 132.33 at the end of March. We observed a slower decline in the month of April (-2.70%) compared to March (-4.32%). We expect the shilling to remain under pressure due to the increased dollar demand from importers on the back of prevailing high global commodity prices, reduced dollar inflows and dollar strength against frontier currencies.

• Eveready East Africa share acquisition – During the month, InvestAfrica-FZCO and East Africa Batteries entered a sale of shares agreement by means of a private transaction for the acquisition of 73,425,029 Eveready East Africa ordinary shares. At the completion of the transaction, InvestAfrica will hold 35% of Eveready East Africa issued shares. Following the conclusion of the transaction, InvestAfrica intends to provide management and technical support to Eveready.

 


What does May hold ?

• May MPC meeting – The next meeting of the Monetary Policy Committee (MPC) will be held in May 2023. We expect the committee to consider the impact of the previous hikes as well as the prevailing macro factors.

• FY’22 Earnings Season- In the month of May, we await the release of FY’23 results for Safaricom. We expect positive results from the Telco mainly from operations in Ethiopia and Mpesa Revenue and we recommend to local investors to take advantage of the current share price decline.

• Listed Companies AGM- In the month of May, several listed companies will be holding their AGM’s where we anticipate continued use of virtual meetings. Some of the listed companies that will hold their AGM’s include Co- operative Bank (COOP), Standard Chartered (SCBK), Stanbic (SBIC), Umeme (UMME) , Bank of Kigali (BKG) and Liberty Holdings (LBTY).

• Q1’23 Banking Results – We expect the release of Q1’23 results from the banking sector where we anticipate a strong performance driven by increase in Interest income and Non-Funded Income ( impact from return of bank to mobile charges). We anticipate an increase in NPLs largely attributable to trade and manufacturing sectors.

 

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AIB-AXYS Africa Ltd is the fusion of two established companies; AIB Capital Limited and Apex Africa Capital Limited, both with over 25 years of experience in the Securities market. With the solid reputation and experience of the professional teams, we leverage talent and networks to better service businesses and investors looking to capitalize on the African growth story, and its vibrant financial sector.
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