4

Daily Market Note

Bloomberg: GNCP <GO>

www.genghis-capital.com

th

4 November 2014

Equities
Resounding 31% Leap in Profit After Tax For Safaricom...2011
The NSE 20 share index declined by 41.65 points to 5,151 points from 5,193 points as the NASI tapered 0.29% for the day to
158.59 points. Market capitalization fell in tandem with NASI, regressing by 0.29 to Kes 2.239Tn from the weeks open of Kes
2.246Tn. Equity turnover retreated heavily by 26.41% to Kes 615Mn worth of traded volumes for the day fanned by heavy
trading on East African Breweries Ltd (NSE: EABL) accounting for 30.26% of the days traded value. Safaricom Ltd (NSE:
SCOM) announced a resounding 31% leap in net earnings for its 1H15 earnings update. All revenue drivers were up with voice
and non-voice revenue spanning by 6.4% and 26.6% respectively. M-pesa revenues surged by 24.7% to Kes 15.6Bn as the
money transfer platform recorded buoyant 10.8% increase in 30 day active customer base to 12.8Mn. The mobile juggernaut
remained tight-lipped on any retaliatory plans to counter Equity Banks (NSE: EQTY) equitel thin-film SIM card roll-out.
However with the recent close kinship with Kenya Commercial Bank (NSE: KCB) it remains hotly speculated that the greenduo are likely to incorporate Near Field Communication (NFC) technology in the near term.
Foreign and local investor participation balanced during Tuesdays trading with foreigners accounting for 51.21% of total
turnover against 48.78% local participation. Foreign buys outweighed supply resulting in net inflows worth Kes. 44.51Mn;
compared to Kes. 70.13Mn recorded yesterday.

Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the
stock market.Warren Buffett
The highlights of the days trading activity are listed below:

Index
NASI
NSE 20 Share

Most Actively Traded Counters

Equity
East African Breweries Ltd Ord 2.00
Uchumi Supermarket Ltd Ord 5.00
Safaricom Ltd Ord 0.05
Equity Bank Ltd Ord 0.50
Kenya Commercial Bank Ltd Ord 1.00
Gaining Stocks
Equity
Umeme Ltd Ord 0.50
Express Kenya Ltd Ord 5.00 AIMS
Pan Africa Insurance Holdings Ltd Ord 5.00
Kakuzi Ltd Ord.5.00
Nairobi Securities Exchange Ltd Ord 4.00

Value Traded
186,014,400.00
95,324,000.00
50,687,340.00
46,920,475.00
40,858,650.00

Price (KES)
22.00
6.50
122.00
215.00
22.00

% Change
10.00%
6.56%
5.17%
4.88%
3.53%

Price (KES)
140.00
131.00
5.45
38.50
3.60

% Change
-9.68%
-9.66%
-9.17%
-7.23%
-5.26%

Today
158.59
5151.46

% change
-0.29%
-0.80%

Foreign investor participation marginally rose to

51.21% of the NSE turnover from 44.69% on Monday.

Foreign demand for stocks outweighed selloffs

recording net inflows valued at Kes.44.51Mn, a 35.56% drop compared to Mondays inflows of
Kes.70.13Mn.

East African Breweries Limited (NSE: EABL) was the

days highest traded stock, recording a turnover of
Kes.111.37Mn to account for 18.11% of total market
activity and 35.36% of foreign activity. Uchumi
Supermarkets Limited (NSE: UCHM) followed with a
turnover of Kes.79.69Mn representing 12.96% of total
market activity and 25.30% of foreign activity.

Uchumi Supermarkets Limited (NSE: UCHM) posted

the days highest outflows of Kes.15.69Mn as
investors exited in anticipation of a further
devaluation in the counters stock price while East
African Breweries Limited (NSE: EABL) recorded
highest the net inflows of Kes.74.98Mn.

Losing Stocks
Equity
Kapchorua Tea Co. Ltd Ord Ord 5.00 AIMS
B.O.C Kenya Ltd Ord 5.00
Olympia Capital Holdings Ltd Ord 5.00
Unga Group Ltd Ord 5.00
Eveready East Africa Ltd Ord.1.00

Previous
159.05
5193.11

Daily Market Note

`
Market Cap. (Kes.Bn)
Equity T/O: (Kes.Mn)
Local/Foreign Equity T/O: (%)
Advance;Decline Ratio

Previous
2,245.63
835.25
55;45
13;28
Source: NSE & Genghis Capital Estimate

Today
2,239.20
614.66
49;51
14;28

% Change
-0.29%
-26.41%

Daily Foreign Investor Activity (KES)

4-Nov

3-Nov

-5000000

45000000

Net Inflows (Outflows)

Foreign Sales

95000000
Foreign Buys

The total index managed minute upward movement of 0.20% with five segments advancing, six
segments declining while the telecommunications & technology segment remained unchanged.

The investment services segment took pole position up 3.53% spurred by the Nairobi Securities
Exchange Ltd (NSE: NSE) which rose 3.43% to Kes.22.00 with an intraday high of 22.75 as 223,00 shares
changed hands.

The Investment segment was the worst performer dropping 3.24%. Olympia Capital Holdings Limited
(NSE: OCH) extended downward spiral weighed down the segment after shedding 9.17% to a Vwap of
Kes.5.45, intraday low of Kes.5.40 with 78,300 shares traded.

Table 5: Daily Segmental Price Performance Analysis

Sector
Constituents
INVESTMENT SERVICES
1
GROWTH ENTERPRISE MARKET SEGMENT (GEMS)
1
ENERGY & PETROLEUM
7
AUTOMOBILES & ACCESSORIES
4
COMMERCIAL AND SERVICES
9
TELECOMMUNICATION & TECHNOLOGY
1
CONSTRUCTION & ALLIED
5
INSURANCE
6
BANKING
12
AGRICULTURAL
7
MANUFACTURING & ALLIED
9
INVESTMENT
3
65

Gain/ -Loss
3.53%
1.25%
1.01%
0.51%
0.42%
0.00%
-0.26%
-0.35%
-0.36%
-0.84%
-2.71%
-3.24%
0.20%

Daily Market Note

Trading Ideas:
The table below shows the performance of selected stocks that Genghis Capital recommended in 2014.
Table 6: Equity Picks (Fig in KES)

Company
Centum Investment Co Ltd Ord 0.50
Safaricom Ltd Ord 0.05
E.A.Cables Ltd Ord 0.50
ARM Cement Ltd Ord 1.00
Kenya Power & Lighting Co Ltd Ord 2.50
Unga Group Ltd Ord 5.00
Bamburi Cement Ltd Ord 5.00
The Co-operative Bank of Kenya Ltd Ord 1.00
Kenya Re Insurance Corporation Ltd Ord 2.50
KenGen Co. Ltd Ord. 2.50
Jubilee Holdings Ltd Ord 5.00
CFC Stanbic of Kenya Holdings Ltd ord.5.00
Housing Finance Co.Kenya Ltd Ord 5.00
Total Kenya Ltd Ord 5.00
Scangroup Ltd Ord 1.00
Portfolio Return

Price at
Recommendation
48.00
9.90
15.75
53.00
14.50
37.50
168.00
16.40
10.05
11.70
163.00
82.00
25.50
17.05
60.00

12 Month Target
Price
66.00
13.50
18.50
98.00
21.48
65.32
185.00
24.00
28.60
15.40
475.00
150.00
49.00
30.00
53.81

Current Price
61.50
12.20
15.80
89.50
16.50
38.50
153.00
21.00
17.00
9.90
436.00
124.00
43.50
26.25
42.75

Upside Potential Return to Date

7.32%
28.13%
10.66%
23.23%
17.09%
0.32%
9.50%
68.87%
30.18%
13.79%
69.66%
2.67%
20.92%
-8.93%
14.29%
28.05%
68.24%
69.15%
55.56%
-15.38%
8.94%
167.48%
20.97%
51.22%
12.64%
70.59%
14.29%
53.96%
25.87%
-28.75%
34.96%

Recommendation
HOLD
HOLD
BUY
HOLD
BUY
BUY
BUY
HOLD
BUY
BUY
HOLD
BUY
HOLD
HOLD
BUY

Source: Genghis Capital Ltd

Trend Analysis:
The graphs below capture the short term (intermediate) trend of the main indices (NSEASI & NASI) against equity turnover. For a
trend to be confirmed, both indices must concur. Equity Turnover tends to increase in the direction of the prevailing trend.
Breaking of the trend line indicates that a change in the trend is likely to occur.

NSE ASI Intermediate Trend

165

100,000,000

160

80,000,000

155

60,000,000

150

40,000,000

145

20,000,000

140

Jun-14

Jul-14
NSEASI

Aug-14
Equity Turnover

Graph 1: Both indices have broken the trend line indicative that a downward trend is likely to prevail in the short term. Increase in
equity turnover as prices spiral downwards signal increased sell offs.

Daily Market Note

Currency:
KES Near 3-Year Lows

Performance: The Kenyan Shilling (KES) hovered near three-year lows against the dollar (USD) on Tuesday
weighed down by a security incident in the coastal region where suspected separatists attacked army posts.
The USD/KES exchange rate which is currently trading above the 89.50 level is likely to result in CBK
intervention through liquidity mop-ups or by selling dollars into the money market to prop up the Shilling. The
only gain of 0.06% was posted against the Indian Rupee (INR), however this is temporary as falls in the INR have
been capped after continued strong foreign inflows helped send domestic shares to consecutive record highs.
Table 8: Currency Rate

3rd Oct 2014

Currency Pair
USD/KES

89.52

89.65

GBP/KES

143.30

143.43

EUR/KES

111.96

112.20

ZAR/KES

8.11

8.12

KES/UGX

30.22

30.05

KES/TZS

19.10

19.07

1.46

1.46

INR/KES
Source: Bloomberg 4.00pm E.A.T, Genghis Est.

4th Nov 2014

Technical Analysis and Outlook: The graph below depicts the Bollinger band study of the EURKES pair. The
indicator shows volatility of the pair of the currencies. It is an analysis tool that indicates the volatility between
two currency pairs.

Source: Bloomberg

Daily Market Note

Genghis Index:

Table 9: Genghis Index Performance

Genghis Large-Cap Index
Indicator
Previous
Price Index Performance (%)
-0.02%
Market Capitalization (Kes.Bn)
1,833.73
No. of Shares Traded (000)
16,460
P/E Ratio
14.24

Indicator
Price Index Performance (%)
Market Capitalization (Kes.Bn)
No. of Shares Traded (000)
P/E Ratio

Genghis Mid-Cap Index

Previous
-0.74%
283.110
8,295
11.35

Genghis Small-Cap Index

Indicator
Previous
Price Index Performance
-1.79%
Market Capitalization (Kes.Bn)
76.006
No. of Shares Traded (000)
195
P/E Ratio
121.23

Large-Cap Index
Current
-0.65%
1,826.58
12,457
14.24

% Change

Current
-0.80%
279.697
13,346
11.35

% Change

Today
-0.89%
76.740
345
121.23

% Change

The Large Cap rescinded by 0.65% as market

capitalisation shrank to Kes 1.827Tn. Volume of traded
shares eased by 24.32% to 12.46Mn from the previous
volume of 16.46Mn.

NIC Bank Ltd (NSE: NIC) lifted the large cap index,
spanning 0.78% to Kes 65.00 ahead of the lenders
3Q14 earnings announcement anticipated later this
month.

Mumias Sugar Co Ltd (NSE: MSC) regressed by 2.94%

to Kes 1.65 as the counter was spurned by news over
alleged misappropriation of funds and corruption by
its top tier management team.

-0.39%
-24.32%

-1.21%
60.89%

0.97%
76.84%

Source: Genghis Capital

Mid-Cap Index

The Mid Cap index shed 0.8% as market capitalization

declined by 1.21% to Kes 279.7Bn

Pan Africa Insurance Holdings Ltd (NSE: PAFR) was

up 5.17% for the day to a Vwap of Kes 122.0 following
its corporate announcement of a planned acquisition
of Gateway Insurance; diversifying the life insurer
into general business. We opine that additional
premiums generated from the consolidated business
would lever income churned from PAFRs
investment holdings which stood at Kes 1.02Bn as at
1H14 contributing 25% of total Income.

BOC Kenya Ltd (NSE: BOC) weighed on the index;

down 9.66% to Kes 131.00 on the back of a small but
significant weighted volume of 100 shares.

Error! Not a valid link.

Small-Cap Index

The Small Cap Index contracted by 0.89% as market

capitalisation spanned by 0.97% to Kes 77Bn from Kes
76Bn.

Express Kenya Ltd (NSE:XPRS) lifted the index, up

6.56% to Kes 6.50.

Daily Market Note

Total
Shares Outstanding
40,000,000,000
790,774,356
3,702,777,020
2,984,227,692
5,431,536,000
309,159,514
362,959,275
4,889,316,295
188,542,286
100,000,000
495,275,000
2,198,361,456
220,100,096
597,282,563
395,321,638
1,951,467,045
1,530,000,000
1,496,469,035

VWAP
12.20
286.00
49.25
54.50
16.90
332.00
153.00
21.00
297.00
981.00
89.50
9.90
264.00
65.00
124.00
16.50
1.65
9.30

GENGHIS MID CAP MARKET SEGMENT

Scangroup Ltd Ord 1.00
British-American Investments Co.(Kenya) Ltd Ord 0.10
KenolKobil Ltd Ord 0.05
Jubilee Holdings Ltd Ord 5.00
CIC Insurance Group Ltd ord.1.00
Centum Investment Co Ltd Ord 0.50
Kenya Re Insurance Corporation Ltd Ord 2.50
Trans-Century Ltd Ord 0.50 AIMS
TPS Eastern Africa Ltd Ord 1.00
National Bank of Kenya Ltd Ord 5.00
Uchumi Supermarket Ltd Ord 5.00
Housing Finance Co.Kenya Ltd Ord 5.00
Liberty Kenya Holdings Ltd Ord. 1.00
Pan Africa Insurance Holdings Ltd Ord 5.00
E.A.Portland Cement Co. Ltd Ord 5.00
Carbacid Investments Ltd Ord 1.00
E.A.Cables Ltd Ord 0.50
Sasini Ltd Ord 1.00
Standard Group Ltd Ord 5.00
Total Kenya Ltd Ord 5.00
B.O.C Kenya Ltd Ord 5.00

378,865,102
1,938,415,838
1,471,761,200
59,895,000
2,615,538,528
665,441,775
699,949,068
280,284,476
182,174,108
280,000,000
265,424,636
235,750,000
1,030,540,728
96,000,000
90,000,000
254,851,988
253,125,000
228,055,500
81,731,808
175,028,706
19,525,446

42.75
25.50
8.90
436.00
9.75
61.50
17.00
19.85
38.75
26.00
8.00
43.50
22.75
122.00
64.00
23.00
15.80
13.65
39.25
26.25
131.00

GENGHIS SMALL CAP MARKET SEGMENT

I&M Holdings Ltd Ord 1.00
Williamson Tea Kenya Ltd Ord 5.00 AIMS
Kakuzi Ltd Ord.5.00
Sameer Africa Ltd Ord 5.00
Rea Vipingo Plantations Ltd Ord 5.00
Crown Paints Kenya Ltd Ord 5.00
Unga Group Ltd Ord 5.00
Car & General (K) Ltd Ord 5.00
The Limuru Tea Co. Ltd Ord 20.00 AIMS
Eveready East Africa Ltd Ord.1.00
Longhorn Kenya Ltd Ord 1.00 AIMS
Kapchorua Tea Co. Ltd Ord Ord 5.00 AIMS
Eaagads Ltd Ord 1.25 AIMS
Marshalls (E.A.) Ltd Ord 5.00
Olympia Capital Holdings Ltd Ord 5.00
Express Kenya Ltd Ord 5.00 AIMS
Kenya Orchards Ltd Ord 5.00 AIMS

392,362,039
8,756,320
19,599,999
278,342,393
60,000,000
23,727,000
75,708,873
40,103,308
1,200,000
210,000,000
58,500,000
3,912,000
32,157,000
14,393,106
40,000,000
35,403,790
12,868,124

128.00
280.00
215.00
6.60
27.50
123.00
38.50
55.00
1,020.00
3.60
27.50
140.00
40.25
9.10
5.45
6.50
180.00

GENGHIS LARGE CAP MARKET SEGMENT

Safaricom Ltd Ord 0.05
East African Breweries Ltd Ord 2.00
Equity Bank Ltd Ord 0.50
Kenya Commercial Bank Ltd Ord 1.00
Barclays Bank of Kenya Ltd Ord 0.50
Standard Chartered Bank Kenya Ltd Ord 5.00
Bamburi Cement Ltd Ord 5.00
The Co-operative Bank of Kenya Ltd Ord 1.00
Nation Media Group Ltd Ord. 2.50
British American Tobacco Kenya Ltd Ord 10.00
ARM Cement Ltd Ord 1.00
KenGen Co. Ltd Ord. 2.50
Diamond Trust Bank Kenya Ltd Ord 4.00
NIC Bank Ltd Ord 5.00
CFC Stanbic of Kenya Holdings Ltd ord.5.00
Kenya Power & Lighting Co Ltd Ord 2.50
Mumias Sugar Co. Ltd Ord 2.00
Kenya Airways Ltd Ord 5.00

Mkt Cap.
Kshs Mn.
488,000
226,161
182,362
162,640
91,793
102,641
55,533
102,676
55,997
98,100
44,327
21,764
58,106
38,823
49,020
32,199
2,525
13,917
1,826,584

4,154,700
650,400
952,700
749,700
1,199,700
2,900
1,300
1,204,700
700
300
406,900
274,600
84,000
160,400
39,500
1,009,500
1,471,700
92,800
12,456,500

0.00%
0.00%
-1.50%
-0.91%
0.60%
-0.30%
-1.29%
-1.18%
0.68%
0.00%
0.00%
-1.00%
-0.38%
0.78%
-0.80%
-2.37%
-2.94%
-1.06%
-0.65%

0.57
8.21
3.59
4.18
1.40
29.42
9.55
1.86
13.40
37.24
2.74
1.29
21.61
6.12
12.97
3.31
(1.77)
(2.25)
8.52

0.47
5.50
1.50
2.00
0.70
14.50
11.00
0.50
10.00
37.00
0.60
0.40
2.10
1.00
2.15
0.50
0.00
0.00
5.00

21.32
34.10
14.07
13.04
12.00
11.42
16.44
11.42
22.24
27.82
32.12
7.75
12.45
10.38
9.56
5.12
(0.96)
(4.04)
14.24

Dividend
Yield - %
3.87%
1.96%
2.97%
3.67%
4.17%
4.32%
7.01%
2.35%
3.36%
3.57%
0.68%
4.00%
0.78%
1.57%
1.73%
2.95%
0.00%
0.00%
2.72%

16,196
49,430
13,099
26,114
25,502
40,925
11,899
5,564
7,059
7,280
2,123
10,255
23,445
11,712
5,760
5,862
3,999
3,113
3,208
4,595
2,558
279,697

65,200
545,900
149,400
3,300
333,100
72,000
35,800
6,000
3,800
20,100
11,915,500
21,300
54,000
13,400
100
11,700
65,600
3,600
5,100
21,200
100
13,346,200

-0.58%
-3.77%
-0.56%
-0.23%
-2.50%
-0.81%
0.29%
0.25%
0.00%
0.00%
0.00%
-2.25%
-1.09%
5.17%
0.00%
-2.13%
0.00%
0.00%
0.00%
0.96%
-9.66%
-0.80%

2.70
0.00
0.38
38.00
0.67
4.54
4.29
1.06
3.45
2.32
1.45
4.30
2.15
13.05
(4.30)
1.93
1.37
0.54
2.41
2.08
10.38
4.42

0.40
0.00
0.10
7.00
0.10
0.00
0.60
0.40
1.35
0.33
0.30
1.75
1.00
4.50
0.00
0.30
1.00
0.25
0.50
0.60
5.20
1.22

15.83
0.00
23.82
11.89
14.93
13.88
3.96
18.82
11.30
11.31
5.86
10.47
10.70
8.97
(14.88)
11.92
11.90
25.00
16.39
12.26
13.97
11.35

0.94%
0.00%
1.10%
1.55%
1.00%
0.00%
3.53%
2.01%
3.46%
1.26%
3.53%
3.89%
4.35%
3.85%
0.00%
1.30%
6.13%
1.85%
1.27%
2.35%
3.59%
2.55%

50,222
2,452
4,214
1,837
1,650
2,918
2,915
2,206
1,224
756
1,609
548
1,294
131
218
230
2,316
76,740

10,000
0
100
800
0
2,100
6,000
0
0
16,800
230,200
200
0
400
78,300
100
200
345,200

1.59%
0.00%
4.88%
3.12%
0.00%
0.00%
-7.23%
0.00%
0.00%
-5.26%
-1.79%
-9.68%
0.00%
-1.09%
-9.17%
6.56%
2.86%
-0.89%

11.75
81.36
8.42
1.44
7.37
9.01
3.65
7.48
23.80
0.22
1.62
32.21
(1.30)
(11.90)
0.38
0.01
0.15
10.33

1.90
7.00
3.75
0.30
0.00
1.75
0.75
0.80
7.50
0.00
2.00
5.00
0.00
0.00
0.00
0.00
0.00
1.81

10.72
3.44
25.53
4.51
3.73
13.87
11.44
8.02
42.86
17.95
16.36
4.81
(30.00)
(0.77)
16.71
645.00
1,266.67
121.23

1.51%
2.50%
1.74%
4.62%
0.00%
1.40%
1.80%
1.33%
0.74%
0.00%
7.55%
3.23%
0.00%
0.00%
0.00%
0.00%
0.00%
1.55%

Total Shares Traded Price Change

EPS

DPS

P/E

Daily Market Note

Disclaimer: The content provided on this document is provided as general information and does not constitute advice or recommendation by Genghis
Capital Ltd and should not be relied upon for investment decisions or any other matter and that this document does not constitute a distribution
recommending the purchase or sale of any security or portfolio. Please note that past performance is no indication of future results. The ideas expressed in
the document are solely the opinions of the author at the time of publication and are subject to change without notice. Although the author has made
every effort to provide accurate information at the date of publication all information available in this report is provided without any express or implied
warranty of any kind as to its correctness. You should consult your own independent financial adviser to obtain professional advice before exercising any
decisions based on the information present in this document. Any action that you take as a result of this information, analysis, or advertisement is
ultimately your responsibility.

Genghis Capital Ltd, Delta Corner PWC Building , Westlands, Nairobi.

Tel: +254 20 2774760 Fax: +254 20 246334