Kenya | NSE

EABL announced a 123.70% y/y increase in net earnings to KES 15.57Bn on the back of economic recovery following the lifting of gathering restrictions which increase sales volumes. Additionally, EPS bettered our expectations by growing 171.23% to KES 15.00 on the back of the highest profits in 6 years. The positive results saw a return to dividend payment with a final dividend of KES 7.25 ( Including an interim dividend of KES 3.75) taking the total dividend to KES 11.00.

During the month of June, we continued to see a decline in NSE’s major indicative indices with the NASI and NSE-20 declining 3.32% and 4.10%, respectively. Foreign investors remained as net sellers with the selling position increasing 23.43% to KES 5.19Bn taking the total YTD foreign net selling position to KES 12.16Bn. We also observed a rally towards the end of the month as local investors provided much needed support, which we suspect was driven by end of quarter portfolio realignments. However, foreign investors remained as net sellers threatening any share price rally momentum that was building.

In light of recent reports of cooking oil refineries running short of dollars to cover their imports, we decided to look at events shaping the global cooking oil industry. Kenya is Africa’s second-largest importer of crude palm oil after Egypt with the majority of the supply coming from Malaysia and Indonesia, 53.33% and 35.03% respectively in 2021. Vegetable oil is a highly imported commodity by most countries and as such is susceptible to global trading shocks.

On Wednesday 8th June 2022, Centum Investment Company Plc announced that it has entered into a binding agreement with Access Bank Plc regarding a proposed purchase by Access Bank of Centum’s entire equity stake in Sidian Bank Limited. Access Bank is a wholly owned subsidiary of Nigeria’s largest lender, Access Holdings Plc. Currently, Centum holds 83.41% of the issued shares of Sidian, directly in its own name ( 2.25% ownership of 98,99 shares) and indirectly through its wholly owned subsidiary, Bakki Holdco Limited (81.16% ownership of 3,564,388 shares). The transaction value is estimated at a total sum of KES 4.30Bn, where we expect might vary as the deal moves to later stages.

Stock market poor performance intensified with the Market Capitalization declining 14.30% in May due to the ongoing foreign investor selloff that continues to persist as foreign investors flee to invest in ‘safer’ havens backed by the increased target range for interest rate by the FED from 0.00% to 0.50% to the new target range of 0.75% to 1.00%. The NSE 20 and the NASI recorded downward m/m trends of -6.60% and -13.60%, contributing to the market weakness.

Safaricom Group Plc announced its FY’22 results, reporting a -1.72% decline in Profit After Tax to KES 67.50Bn from KES 33.06Bn, this was the second year running of reducing PAT. The decline, in bottom line, was mainly powered by a faster increase in Direct Costs (+14.31% y/y), Operating Expenses (+19.90% y/y ) and Income Tax Expense (+39.10% y/y) compared to a slower growth in Total Revenue (+12.90% y/y). Additionally, the EPS fell below our expectations by recording a 1.75% growth to KES 1.74 from KES 1.71(below our KES 2.22 expectation) driven by adjustments for Ethiopian operations.