Kenya | NSE

Safaricom is expected to release the FY’22 results on 12th may 2022, where we foresee PAT and EPS growing 29.48% y/y to KES 88.92Bn and KES 2.22, respectively. Bottomline growth will be powered by uptick in service revenue (+15.29% y/y) on the back of a recovery in M-pesa revenues (+24.46% y/y to KES 102.86Bn) coupled with an expected slower growth in total operating costs (+12.81% y/y). However, we maintain our expectation of a continued pressure on voice ARPU (-2.00% to KES 252.57) and SMS ARPU (-11.54% y/y to KES 46.66) due to customers preferring other communication channels.

Safaricom’s (SCOM) is expected to release it’s fully year results for the year ended March 2022 on 12th May. We expect positive performance from the Telco mainly from M-PESA revenues as a result of it’s dominance in the mobile money market. Mobile data and Fibre to the Home (FTTH) are likely to drive up Data revenue. Additionally, we expect an increase in capital expenditure and borrowings mainly attributable to the heavy investments in the Ethiopian venture.

During Q1’23, economic recovery remained challenged with downsides from 2022 creating spill-over effects that further dampened macro factors leading to a slower global growth, rising domestic interest rates and more geopolitical tensions. Global increase in the price of commodities has exacerbated the local inflation and has continued hurting the local currency. Reduced dollar inflows and higher import bill have contributed to further weakening of the shilling against the dollar creating a challenging business environment. Central Bank has continued to tighten its monetary stance to anchor inflationary pressures in an attempt to drive improvement in business activity. Going forward, we expect the economic growth to remain subdued due to persistent inflationary pressures, high commodity prices, global shocks and a heightened risk of debt distress.

A majority of companies released their FY’21 Results, with the Banking sector posting an overall improved performance and a return to dividend payment, on the back of reduced loan loss provisioning and increased operational efficiency pointing towards economic recovery from the pandemic. However, activity on the majority of counters remained muted despite dividend announcements.

Jubilee Holding’s FY’21 earnings per share (EPS) shot up 79.58% y/y to KES 89.88 from KES 50.06 recorded in FY’20. Profit after tax also grew 67.06% y/y to KES 6.83Bn, attributed to a 19.37% y/y growth in total income to KES 39.53Bn despite a 16.69% y/y growth in claims and a 2.30% y/y growth in total expenses and commissions. Investment income registered a 41.02% growth to KES. 15.93bn which we partly attribute to higher yields from fixed income (government papers), capital gains and dividends from equity instruments.

I & M Holdings FY’21 EPS increased 0.82% y/y, on an adjusted basis following the bonus issue in 2021, to KES 4.92 higher than our expectations. PAT increased 2.51% y/y to KES 8.62Bn driven by a 22.18% y/y increase in Total operating income to KES 19.86Bn supported by income from government papers. However, the gain in income was weighed down by a 40.79% y/y rise in Operating expenses to KES 17.75Bn on the back of increased provisioning. Customer deposits grew 12.97% (lower than our forecast of +20.07% y/y) to KES 296.75Bn while the loan book grew 12.40% to KES 210.62Bn (lower than our forecast of +22.03% y/y).