25 January 2013

Uganda: Stanbic Dominates Bourse, Demand Up On Umeme Counter

THE Stanbic Bank share price has resurged once more, gaining 25% as demand for the bank's stock continues to outweigh supply.

Demand for 8,327,476 shares at the sh20 per share price has remained unmatched by outstanding supply of 1,093,755 shares at the new sh25 per share price, causing a stale mate on the counter.

Analysts have predicted weaker end of year financial results for the banking industry for the year 2012 after a profit warning was placed by dfcu Bank at the end of 2012.

"There was less growth in loans in 2012 due to the high lending rates. We expect lower growth in the banking industry with the exception of Stanbic Bank, which has access to liquidity from its mother bank in South Africa and has higher non-interest income," said Arthur Nsiko, a broker with African Alliance securities.

"There was high growth in the year 2011. However, the base effect may shrink banking growth in 2012. dfcu Bank already placed a profit warning and smaller banks may not record any profit," he added.

Non-performing loans had gone up to 4.9% at the end of 2012, from 2.4% the previous year, denting profit margins.

Demand on the Umeme counter has remained healthy. By the close of business on Tuesday, an outstanding offer of 658,221 was outmatched by demand for 3,035,400 shares at the sh275 per share level.

Nsiko says the Umeme share price is likely to trade between a sh295 - sh300 range in coming weeks after the company tested the levels in previous weeks.

"The current sh275 level is an under valuation. Due to the bonus shares that shareholders enjoyed at the Initial Public Offer, they effectively paid sh250 for each share, at the moment there is high retail demand.

"We expect the share price to resume the sh295-sh300 in coming weeks. Analysis shows that the company is barely selling above 100,000 shares in each session due to retail investors," Nsiko explained.

He said supply has picked up on the dfcu counter at sh1,300 per share level against demand at the sh1,000 per share level to make way for another stalemate.

Supply of 277,848 shares on the New Vision counter and supply of 532,713 shares on the Uganda Clays counter were left hanging with zero demand, while demand for 255 shares presumably by a retail investor found zero supply at the sh1,000 price.

By close of business, there was turnover of sh94.7m on the Stanbic counter and sh17.8m on the Umeme counter, while the All-share index went up to 1335.41, from 1334.43.

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