Kenya | NSE

We revise our BUY recommendation on EABL from a target price of KES 188.20 to KES 205.21 offering a potential upside of 17.4% on the current price of KES 174.75. Our upward valuation is informed by foreseen improvement in the brewers’ earnings on the back of continued recovery in the economy as the government effects measures to boost economic growth. Our view is further informed by the counters fall in price following the bear run at the bourse on investor jitters due to the pandemic, with the price expected to recover in tandem with re-entry of investors in the market.

We anticipate a rally in banks’ prices as investors take profit taking positions on counters that they feel will pay a dividend ahead of the release of FY20 earnings.
We continue to monitor the KES 1.2B or KES 63.50 per share buyout of BOC Gases by Carbacid ahead of a 30-day offer period that expires on April 6, 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.

In 2020, economic growth was negatively affected by the COVID-19 pandemic. The global economy is now emerging from the disruptions triggered by the pandemic and 2021 growth is expected to come in at 4.0%. In Kenya, economic growth is also expected to pick up, however, a number of measures taken by the government to curb the spread of the virus are likely to amplify macro-economic risks. Despite these risks, opportunities still exist for investors.

We issue a BUY recommendation on most counters in the insurance sector with an upside potential of 76.9% on the current p/b multiple of 0.68x against a 5-year historical average of 1.21x.

No, that’s not a typo. The theme is just what it is, ‘Navigating the Now Normal’. The COVID-19 shock upended the world last year with far-reaching consequences; an earthquake of a magnitude 9 comes closer. While the rollout of the vaccines this year are meant to be a shotinthe arm (no pun intended) to global economies, we are alive to the fact that the pandemic’s scars will still linger longer. Not only has COVID-19 exposed the domestic economy’s soft spots, but the spillover effect has weighed heavily on investment opportunities. This year’s Playbook navigates this ‘now normal’ in-vestment landscape.

Homeboyz Entertainment Plc (“HEL”) has listed in the GEMS segment of the NSE. We valued the company using DCF and EV/EBITDA and obtained a fair value of KES 4.29. The company’s value has been negatively affected by government restrictions during the COVID-19 pandemic.