In the first of a regular continuous look at the Nairobi Exchange, we review a few counters we think will see increased activity in the next week.
East Africa Cables
The company stands to
benefit from the ongoing rural electrification program and especially
as these
efforts are stepped up prior to the election. Global commodity prices
including
that of copper are still being pushed high by the insatiable demand
from Asia. However, EA Cables' quality stable of products should stand
them in
good stead with their customers, including the government in its
undersea communications
projects.
The firm's regional
expansion and its expansion into the production of fibre-optic cabling look to
boost revenue especially with KDN stepping up their nationwide cabling project.
An attractive price of 40.25 against a year's high of 110.00 makes this a good
bet.
Kengen
The national electricity
producer is now some way from its heady IPO. Still as it continues to expand it
potential for power generation it will remain a good stock to hold. Increased
demand for electricity services, especially as more homes get connected to the
national grid will add to profitability. Demand for this share looks to rise,
with the date for the second issue now a distant two years hence and the
government approving a hike in power tariffs from Ksh. 1.76 to Ksh 2.36.
Jubilee
The insurance firm is enjoying the steady growth in the
insurance industry while also diversifying its brands. Its cross-listings
across the region and a focus on an East Africa wide
expansion make it an attractive share to hold especially ahead of book closure
on the 28/6.
Access Kenya
The first IT share on the bourse, its preliminary
results show that it has been over-subscribed by about 210% . This is expected
to result in an increased demand, especially with its good management and a
rapidly growing interest in the IT industry. Trading starts 4th of June.
Sasini
Diversifying its revenue sources, Sasini now has
investments in the dairy, horticulture, tourism, forestry, tea and coffee
sectors. With a strong focus on the local market, increased production of
tea and the commissioning of a new coffee mill, the company looks like a
promising bet. It is likely to re finance its strategic plan through
mobilization of more funds. This change in long term plans has seen the firm change
its name from Sasini Tea and Coffee to Sasini Limited thus opening a window of new
opportunities. Its vigorous marketing presages a plan to open their own
coffee outlets even as the strong shilling continues to present a challenge
with regard to exports.
Mumias Sugar Company
The Western Kenya
firm is geared towards realizing its strategic plans in power generation. It hopes
to produce 34 MW of power and supply it to the national grid. Also in the
pipelines is a large sugarcane irrigation project in the Tana River area a viability study for which will start in
June. A diminished supply of sugar cane and the entry of the Kibos Sugar
Company could bring testing times for the firm who's duty-free and COMESA privileges
come to an end in January 2008.
KCB
Kenya's largest bank by some measures is expanding
regionally into Sudan and Tanzania. It has forwarded a further $5 million to its
Tanzanian operation to boost lending there and opened a new branch in Limuru. Now
trading ex-split and ex-dividend and in the middle of an aggressive advertising
campaign it has increased the products it has on offer including western union money
transfers and two new products from its Savings and Loan subsidiary. Led by the
esteemed Martin Oduor it is also installing new software worth Ksh 560
Million to enhance operations. These are likely to be beneficial in the
long run but disruptions are expected in the short run.
KPLC
Kenya's power distributor is restructuring its balance
sheet. A share split has been proposed to make its shares more affordable. Although
it recorded a 20% increase in pre tax profits it is likely to be affected by a
Ksh. 0.60 increase in the cost of power purchase from generator KenGen.
Increasing demand for power, especially with its ‘Umeme Project' in the rural
areas demand that further efforts are made to cut back on power losses.
Housing Finance
The mortgage lender has
plans to operate as a full-fledged bank, even as it seeks to become a one stop
shop for property related matters. It has recently downgraded its target for its
rights issue from Ksh. 4 billion to Ksh. 2 billion. It is however facing stiff
competition from other lenders who are offering better terms. It remains to be
seen how its response, 1st HOP-which requires minimal deposits, will be
received by the market.
National Bank
A bond, yet to be floated on the market, is to be issued to
pay back the debts owed to the bank by parastatals. This bad debt has long held
the Bank from further lending which would have boosted its interest income. However
the bank has recorded an improved performance. With this stock lagging behind
the rest of the banking sector, the government's committal to pay off the bad
debts should see it appreciate considerably.
ICDCI
With a well balanced portfolio spread across insurance,
beverages, transport and manufacturing this is one of the least exposed stocks
on the bourse. Its profitability is assured for now by the good performance of
the sectors in which it has a stake. Meanwhile, some of its holdings are seeing
important changes. Kenya Wine Agencies Ltd. is moving down market into cheaper
products and the Rift Valley Railway consortium is in court in a case regarding
employee termination procedures. Otherwise, this is still a safe bet.
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