28 November 2012

Kenya: Safaricom Shares Trade At Sh5 After MTR Cut

The Nairobi all Share corrected 1.12 points lower to close at 92.78. The Nairobi NSE20 index corrected 24.89 points to close at 4139.02. Equity turnover was 560.182m and dominated by Safaricom which traded 68.48% of the total volume at the Exchange.

In Commercial and Services:

Safaricom was the most actively traded share at the Securities Exchange and retreated 3.85% off a 25-month closing high to close at 5.00 and traded 76.767m shares worth 383.626m, which was 68.48% of the total turnover at the Securities Exchange yesterday.

Safaricom traded session lows of 4.85 -6.73% and the reason is the cut in the mobile termination rate from 1.44 shillings per minute from 2.21 shillings, backdating it to July 1 this year. [Set aside the backdating issue which is egregious and drains the Bonafides of the regulator and increases Kenya Business Risk].

Recall that at the FY mark voice revenues totalled 68.96b and represented 64.448% of total revenues. At the H1 earnings release Safaricom announced that voice revenues increased +18.84% to 37.422b and represented 63.3005% of total revenues.

Now clearly the majority of calls are Safaricom to Safaricom but this [back dated] adjustment is material. This announcement detracted from what I consider the 'Next Big Thing' for Safaricom which is the launch of the mobile bank account M-Shwari.

I wrote on Friday that, 'If I were BobCollymore and looking for my next big thing it would be something a high velocity, small denomination credit facility piggy backing on M-Pesa' and M-Shwari is exactly that. This is a revolutionary product and with '15.2m; 9.7m of whom actively use M-PESA at least once every 30 days,' Safaricom has enormous scale at the get-go.

Safaricom is +76.949% on a total return basis in 2012. Car and General firmed 4.166% to close at 25.00 and traded 400 shares. Among Banks

Kenya Commercial Bank retreated 4.2% to close at 28.50 and traded light volume of 246,700 shares worth 7.075m. Standard Chartered Bank's recent rights issue shares traded for the first time on the Securities Exchange yesterday.

Standard Chartered eased 0.82% to close at 234.00 and traded 132,800 shares worth 31.162m which ranked it the third most active share at the Exchange yesterday.

Equity Bank firmed 1.05% to close at 24.00 and traded 1.546m shares worth 37.461m. COOP Bank improved 0.41% to close at 12.20 and traded 1.497m shares worth 18.314m. COOP Bank is +23.592% on a total return basis in 2012, trades on a trailing PE of 7.973 and accelerated Q3 2012 PAT +35.617%.

Barclays Bank eased 2.00% to close at 14.70 and traded 468,300 shares. Barclays Bank trades on a trailing PE of 9.891 and reported a Q3 2012 net profit +2.2%. NIC Bank closed unchanged at 40.75 which is a 59 Month Closing High and is +107.07% on a total return basis in 2012. NIC Bank accelerated Q3 2012 net income +35.59%.

In Industrial and Allied:

EABL was low ticked 0.826% off a record closing high to close at 240.00 and traded 9,100 shares. KenolKobil firmed 1.0135% to close at 14.95 and traded 438,400 shares.

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