10 January 2014

Kenya: Safaricom Continues to Rise, Closes At 11.70

The Nairobi all share rallied 0.883% to close at 141.59 and is now +3.615% in 2014 in what has been a very powerful and muscular start to the year.

The Nairobi all share is 0.693% below an all time closing high set on November 28 last year.

The Nairobi NSE index rallied 33.42 points to close at 5044.35 and above the key 5,000 level for the second consecutive occasion this year.

Volumes increased sharply at the bourse traded 835.733m versus 450.645m as buyers looked to pin down supply.

Safaricom set a record closing high for the third consecutive session and is +8.333% in 2014 and has underpinned the all share's sprint out of the gates in 2014.

ARM set a record for the second consecutive session.

Commercial and Services:

Safaricom rallied 3.083% to close at 11.70 and set another record closing high. Safaricom traded shares at a session high of 11.95 +5.29% and that is the highest price reached ever. Safaricom saw good trading action with 24.759m shares worth 289.81m traded. Safaricom is now +8.333% in 2014 and a key catalyst for the real strong start seen in the Nairobi all share in 2014. I have a price target of 13.50 and expect it to be reached coincident with the release of the full year earnings.

ScanGroup was the biggest winner at the securities exchange and rallied 7.69% to close at 56.00. ScanGroup had gotten brutally oversold in December and has snapped back +17.391% in 2014.

Uchumi closed unchanged at 20.00 and traded 2.736m shares (which represents more than 1% of its shares) worth 54.738m. Uchumi has seen price congestion at this level for a while now as investors jockey for position ahead of the rights issue. I have a 25+ price target after the rights issue is completed.

Kenya Airways firmed 1.49% to close at 13.60 and traded shares at a session high of 14.00 +4.48%. Kenya Airways traded 157,200 shares and demand outweighed supply by a factor of 212 versus 97 signalling further upside traction near term.

Car and General rebounded 6.25% to close at 29.75 and traded 2,000 shares.


Kenya Commercial Bank firmed +0.52% to close at 48.50 and traded 2.359m shares worth 114.829m. KCB is +9.604% since December 23. Kenya Commercial Bank trades on a trailing PE of 11.800 and investors appear to have the measure of the situation in South Sudan, where KCB has a 42% banking market share. Kenya Commercial Bank sits 3% below an all time closing high of 50.00 reached on a number of occasions in 2013.

Equity Bank eased 0.73% to close at 34.00 and traded 2.456m shares worth 83.918m. Equity Bank has rebounded +10.569% in 2014.

Kenya Re closed unchanged at 16.00 and on strong volume of 3.852m shares (0.7475% of its shares) worth 61.638m. Kenya Re trades on a trailing PE of 4.00 and a steep discount to its peers.

BRITAM EA firmed 0.94% following on yesterdays gain of 3.25% and closed at 16.05 and traded 1.694m shares.

Industrial and Allied:

ARM Cement rallied a further +3.174% to close at 97.50 and has set a record closing high for the second time in 2014. ARM traded 249,900 shares and is +8.93% in 2014.

East African Portland Cement where the government and board differences spilled out into the open in December retreated 4.8% to close at 58.50 and traded 8,200 shares.

EABL closed unchanged at 299.00 EABL was oversold in December and has further room to rebound towards the 325.00 price area.

BOC Kenya which tends to be a below the radar counter traded 8,800 shares all at 133.00 +5.56%.

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