The Star (Nairobi)

4 December 2012

Kenya: EABL Minimum Price Objective Is 260.00 Before Year End

The Nairobi All Share closed 0.15 points lower at 92.05. The Nairobi All Share is +35.30795% in 2012. The All Share has however retreated every session since the 26th of November when it closed at a 17 month high.

The Nairobi NSE20 closed 20.43 points lower at 4063.09. The Nairobi NSE20 is +26.7706% in 2012 and has retreated 2.589% since closing at a 20 month high on 21st November. EABL was the most actively traded share.

In commercial and services

Safaricom traded 2nd at the exchange and firmed 1% to close at 5.05 with 17.557m shares worth 89.134m changing hands. Safaricom sits 2.8864% below its 25 month closing high of 5.20 from 26th November.

ScanGroup firmed 0.76% to close at 66.00 and traded 196,600 shares worth 12.975m. ScanGroup is +60.722% on a total return basis in 2012 and now sits less than 1% off an all time high.

ScanGroup trades on a trailing PE of 25.888. Scangroup is clearly WPP's Africa vehicle and has recently spread its wings to West Africa.

Among Banks

Standard Chartered Bank traded 3rd. StanChart closed unchanged at 236.00 and traded 154,400 shares worth 36.563m. Volumes have ticked higher of late as some investors supply their Rights Issue shares into the market.

StanChart is +58.333% on a total return basis in 2012, sits 1.255% below a 19 month closing high of 239.00 from November 21st and is 17.48% below an all time high from 5th August 2010.

Standard Chartered trades on a trailing PE of 11.949 and accelerated Q3 2012 PAT +66.622%, which makes the implied forward PE compelling. I expect fresh all time highs ahead of or coincident with the release of FY earnings next year.

Kenya Commercial Bank traded 5th and eased 0.9% to close at 27.50 and is +74.183% on a total return basis in 2012, has corrected 9.0909% off a 53 month closing high achieved 14th through 20th November. Equity Bank eased 1.08% to close at 23.00 and traded 522,400 shares worth 12.113m.

In Industrial and Allied

EABL was the most actively traded share at the NSE and eased 0.4% off a record closing high to close at 246.00 and traded 681,400 shares worth 167.624m.

EABL traded 40.47% of the total volume traded at the exchange during the session. EABL is +47.965% on a total return basis in 2012 and has been setting a succession of all time highs in 2012.

EABL has outperformed Diageo which is +32.59% in 2012 by 1,537 basis points as international investors [in particular] have reached for African exposure.

The merits of African exposure were a little counterintuitively shown in SABMiller's full year results where Africa was a standout and in EABL's full year results where outstanding growth was seen across its product range.

The flagship Tusker brand grew 17%, Guinness +23%, Serengeti Beer +49% Senator +53% and Johnnie Walker an eye popping +74%. This kind of growth trajectory is hard to find anywhere in the world.

My minimum price objective is 260.00 before year end and I think the intensity of the love affair will gain more intensity through 2013. EABL trades on a Trailing PE of 18.276.

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