Kenya | NSE

We anticipate a rally at the bourse as investors are likely to take profit on counters that have announced a dividend payment after which prices are expected to come off. We continue to monitor the KES 1.2B or KES 63.50 per share buyout of BOC Gases by Carbacid that has been marred by valuation issues with BOC accusing Carbacid of undervaluing its share with an independent advisory opinion pricing BOC at a higher price of KES 91.76 a share. BOC Kenya has frozen the proposed takeover of the company pending guidance from the Capital Markets Authority (CMA) following the filing of an appeal with the Capital Markets Tribunal (CMT).

I&M Holdings’ FY20 net earnings plummeted 21.7% y/y to KES 8.1B, fueled by a 288.5% swell in loan loss provisions and a 7.1% y/y rise in operating expenses. We recommend a BUY on I&M Holdings with a target price of KES 57.20 offering a potential upside of 30. 0% on the current price of KES 44. 00. T o the delight of shareholders, the group announced a Bonus share issue of 1:1 with book closure slated for 10th May 2021 and declared a KES 2.25 dividend per share with book closure slated for 15th April 2021 and payment date on 20th May 2021.

NCBA Group’s FY20 net earnings plummeted 41.7% y/y to KES 4.6B on the back of a 227.0% y/y surge in loan loss provisions to KES 20.4B. The Group announced a KES 1.50 dividend per share translating to a dividend yield of 7.8% on the current price of KES 12.80 with book closure slated for 20th April 2021. We maintain a BUY recommendation on NCBA with a target price of KES 30.29 offering a potential upside of 31.1% on the current price.

Equity Group’s FY20 PAT fell 11.6% y/y to KES 19.8B driven by a 402.2% y/y surge in loan loss provisions to KES 26.2B and a 18.1% y/y growth in operating expenses to KES 46.0B. For the second year in a row, in a bid to improve the group’s capital buffers, the board of directors do not recommend payment of a dividend.

Co-operative Bank’s FY20 net earnings plummeted 24.4% y/y to KES 10.8B driven by a 219.5% y/y surge in loan loss provisions to KES 8.1B and a 23.9% y/y uptick in operating expenses. The Group announced a KES 1.00 dividend per share translating to a dividend yield of 7.8% on the current price of KES 12.80 with book closure slated for 31st March 2021 and payment date on 14th April 2021.

KCB Group’s FY20 PAT declined 22.1% y/y to KES 19.6B below our expectation of a 9.8% y/y decline in net earnings. The drop was driven by a 209.5% y/y surge in loan loss provisions to KES 27.5B coupled with a 11.6% y/y uptick in operating expenses to KES 43.2B. The group announced a first and final dividend of KES 1.00 (dividend yield of 2.5%).