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Satchu's Rich Wrap-Up
 
 
Friday 14th of May 2010
 
Morning
Africa

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0930-1500 KENYA TIME
Normal Board - The Whole shebang
Prompt Board Next day settlement
Expert Board All you need re an Individual stock.

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Macro Thoughts

Euro 1.1760 Objective now.
Gold headed to 1400.

Home Thoughts

One Of my Older Daughters tells me

'he is just so Hot.'

I say Who, Who thinks he is Hot?

She says 'I do.'

Now what?

read more


Thai army moves against red shirts AlJazeera
Law & Politics

Al Jazeera's Aela Callan, in Bangkok, said: "The major general was
speaking to a group of journalists as he was shot within the
barricades. He was actually shot several times and is in hospital,
said to be in a coma and fighting for life.

Conclusions

I admit it is very delicate. But Abhisit has to strike because as each
day passes Power drains from him. Against that, if he is not decisive
it could trigger a Spiralling. A Catch 22.

read more


Volcker Sees Risk Greece to Cause ‘Disintegration’ of Euro Area Bloomberg
World Of Finance

“You have the great problem of a potential disintegration of the
euro,” Volcker, 82, said in a speech in London yesterday. “The
essential element of discipline in economic policy and in fiscal
policy that was hoped for” has “so far not been rewarded in some
countries.”

Soaring bond yields on concern that Greece’s fiscal crisis would
spread threatened to shut Spain and Portugal out of debt markets and
sparked a weekend of talks with euro-region finance ministers and
central bankers.

While the resulting 750 billion-euro ($940 billion) financial aid
package has calmed bond markets, the euro has continued its slide
against the dollar, breaking through the 14- month low reached last
week before European leaders unveiled the bailout plan. The euro slid
as much as 0.8 percent to $1.2518 at 4:45 p.m. in New York, the lowest
level since March 5, 2009.

The extra yield that investors demand to hold 10-year Spanish bonds
over German bunds, Europe’s benchmark, has narrowed to 99 basis points
from 164 basis points on May 7. Spreads on Portuguese debt have fallen
by more than half to 163 points.

Europe has so far been well-served by the euro, Volcker said. “If you
didn’t have that common currency in Europe, they would have bigger
problems than they have now.”

read more


Currency Markets at a Glance WSJ
World Currencies

Euro 1.2555 I look for 1.1760
Pound 1.4633 Trades Heavy Trading Sell stop above 1.50
Dollar Index 85.28
Higher Beta
Aussie 0.8965
Real 1.7734
Rand 7.4565

Conclusions

"It's a trillion-dollar bet laid by the EU and IMF and looks in danger
of failing in the short term," said Dean Popplewell, chief currency
strategist at Oanda. "The bigger issues people are concerned about are
the potential social tensions and unrest that these austerity plans by
governments will cause. People are divesting out of euros."

read more


World Equity Markets At a glance
World Currencies

The Dow Industrials fell 113.96 points, or 1.05% to 10782.95.

read more


Indonesian Agrees to Buy Bel-Air Mansion for $50 Million WSJ
RealEstate, Housing & Construction

An Indonesian buyer is in contract to buy a 48,000-square-foot mansion
in Los Angeles' Bel-Air neighborhood for around $50 million. If the
deal closes, it would set what brokers believe to be a new record for
the biggest residential real-estate sale in the U.S. to date this
year. The 10-bedroom, 14-bathroom mansion, most recently listed for
$72 million and originally listed for $85 million, sits on 2.2 acres.
It has a ballroom seating more than 200, a music room and a 20-car
motor court. There's a pond for swans, seven fountains, a Turkish
hammam and a columned movie theater with a mural on the ceiling. The
seller is Los Angeles developer Mohamed Hadid, who constructed
Ritz-Carlton hotels in the 1980s and now builds massive homes in L.A.,
Mexico and elsewhere. Mr. Hadid has said he spent $59 million to build
the home for his own use.

read more


Commodity Markets at a Glance WSJ
Commodities

Oil Futures Settle at $74.40; Three-Month Low. Crude-oil futures
tumbled to a three-month low Thursday in volatile trading amid
persistent concerns over swelling inventories at a key U.S. storage
hub.With prices still range-bound, traders are focusing on the
difference between the benchmark futures contract, for June delivery
of light, sweet crude oil, and the July contract.June crude settled
1.7% lower at $74.40 a barrel on the New York Mercantile Exchange.
July crude ended down 1.5% at $78.99 a barrel. The difference in price
between these contracts, known as the "spread," is wider than usual.

read more



Crude 1 month chart INO July 2010 Contract 78.49 Last
Minerals, Oil & Energy

Contract High Date    2008-03-06 Contract High    98.87
Contract Low Date    2009-02-18 Contract Low    51.44

read more



Copper May 2010 This sell off has directly hit the Zambia Kwacha INO
Commodities

Contract High Date    2010-04-06 Contract High    3.6355
Contract Low Date    2009-04-20 Contract Low    2.1

read more



South Africa All share Index Bloomberg Visual +1.355% 2010
World Of Finance

Value28,041.85    
Change-136.380     
% Change-0.484

Conclusions

SA Rates were unchanged at 6.50 Repo. The SARB has since December 2008
reduced the repo rate by a cumulative 550 basis points to a
three-decade low, the last 50 basis point reduction in March taking
the market by surprise.

read more


Egypt EGX30 Index Bloomberg Visual +11.42% 2010
Emerging Markets

Value6,917.13    
Change80.650     
% Change1.180

read more


Nigeria All share Index Bloomberg Visual +33.898% 2010
Africa

Value27,887.04    
Change63.860     
% Change0.230

Conclusions

28029 is the 2010 high and we are currently 0.005% from that level.
Remains resolutely in a Bullish Extension and one of my Top 3 Picks in
SSA [Ghana and Tunisia].

read more


Libya crash survivor 'doing well' Aljazeera
Tourism, Travel & Transport

A 9-year-old Dutch boy who was the sole survivor from a plane crash in
Libya has been reported to be in stable condition.

read more


Fela show takes Broadway by storm BBC
Misc.

A  musical about Nigeria's most famous musician Fela Kuti is proving to
be a surprising hit on Broadway, despite the lack of big stars or hit
songs.

read more


Draft law: Fraud squad called in Nation
Law & Politics

A team of detectives from the Serious Crimes Unit and Cyber Crime Unit
has been set up to investigate how illegal changes were sneaked into
the proposed constitution. The latest development came as it emerged
that more than five top officials in charge of various government
departments responsible for the document were under scrutiny.

read more


Nairobi All share Index Bloomberg Visual +25.954% 2010
N.S.E General

Value73.25    
Change0.260     
% Change0.356

Conclusions

This is a closing High for 2010. and 21 month Highs.

read more


Kenya 182-day T-bill yield falls again Reuters
Kenyan Bills & Bonds - Short Term

The cut-off interest rate on Kenya's 182-day Treasury bill fell to
4.599 percent at auction on Thursday from 4.950 at the previous sale,
continuing the downward trend seen in Treasury bill yields this year.

The Central Bank of Kenya said it accepted bids worth 5.9 billion
shillings ($75.73 million). It had offered a total of 6 billion
shillings of bills and received offers worth 7.7 billion.

Conclusions

The System is self evidently awash with Cash.

read more


Why Access Kenya’s AGM was suspended Business Daily
N.S.E Equities - Commercial & Services

A vicious boardroom battle over the pricing of AccessKenya’s metro
fibre optic network caused the postponement of the firm’s annual
general meeting, the Business Daily has established.The meeting, which
was initially fixed for May 4, was moved to August 31 in what the
company attributed to a logistical hiccup.It has now emerged that fear
of an audit report showing lapses in the procurement of the inland
cable leaking to shareholders and an extension of the board room
fights to the AGM floor was behind postponement of the shareholders’
meet. Documents seen by the Business Daily indicate that AccessKenya’s
board split over the manner in which the company planned and procured
suppliers for the inland optic fibre network, prompting them to order
for a special audit by Deloitte.

Differences over the outcome of that audit and how the company should
deal with it has since led to the resignation of three directors.

Eddy Njoroge, the managing director of KenGen was the first to leave
the board on March 26 citing ‘ethical reasons’. [This is the Chairman
of the Nairobi Stock Exchange]

Documents seen by Business Daily show that the resignations were
linked to a “lack of transparency in financial matters and weak
management practices” relating to the handling of fibre optic deal.

The 150 kilometre inland cable is estimated to have cost the firm
Sh450 million, having been revised downwards from the initial
quotation of Sh624 million.

High costing of the project and fear that the firm may have lost Sh200
million in the deal prompted the board to appoint Ruji Engineers – an
engineering firm - and Deloitte to conduct an independent audit of the
transaction. Both advised that the fibre deal was suspect.

People familiar with the matter said things came to a head when Mr
Ngaruiya demanded the resignation of four directors and forwarded the
two audits reports to Capital Market Authority (CMA) in March.

That move forced the regulator to fire a stern letter to AccessKenya
demanding an explanation on the matter within seven days.

The list of four directors on the spot included Michael Somen, the
chairman, Jonathan Somen (managing director), David Somen (executive
director) and Michael Turner, a private equity manager.

“The Deloitte report refuted any allegations of impropriety and/or
loss but at the same time stated that the process of commissioning the
fibre project could have been better handled and that certain board
processes could be improved,” said Mr Somen in a statement on
Thursday.

“Unfortunately, internal disputes have continued within the board
since that time up to the recent departures of certain board members.”

On Thursday, the firm shares stood at Sh18.25 having dropped 19 per
cent in the past three months, making it the worst performing share in
the market at a time when the tide has been lifting nearly all boats.

“It was the ugliest board meetings I have ever sat in,” said a
director. “There were concerns that Access was committing close to
half a billion on the 150 kilometre project yet Jamii Telkom had done
200 kilometers with Sh300 million,” said a lawyer close to one of the
former directors.

The report by Ruji—which indicated that the firm had lost more than
Sh200 million on the project—was dismissed by the board late last year
on grounds that the firm had no capacity to carry out the audit.

But the Deloitte report—which was handed to the firm in February—is
what underlined the falling out as it indicated that the project was
done “informally.”

The heavy investments also hit its churn with the firm returning a
negative cashflow of Sh98 million, down from a positive cashflow
position of Sh109 million at the end of the previous year.

This position has sparked rumours that the firm would find it
difficult to settle its declared dividends whose payment date have now
been pushed to September from this month.

But the firm in an email to our earlier story rubbished this position.

“AccessKenya has absolutely no cash flow crisis. On the contrary, we
have significant cash available for our operations,” said an email
sent by its spokesperson Nancy Imunde on Wednesday.

read more


Access Kenya share price data from www.rich.co.ke
N.S.E Equities - Commercial & Services

Par Value:                  1/-
Closing Price:          17.40
Total Shares Issued:          206,331,216
Market Capitalization:        3,590M
EPS:            0.76
PE:                22.895

read more


Zain sends pricing war signals ahead of Bharti’s entry Business Daily
Information & Communication Technology

“Tariffs in Kenya are mostly driven by cross network charges due to
market dynamics. For every 10 calls made from our network, eight go to
the competition. It is for this reason that we have worked to lower
that rate,” said Mr Meza.

read more


Why Africans are dying for a drink The Independent
Misc.

An illegal drinking den in Korogocho slum in Nairobi

In the half-light of the Grogon drinking den closed curtains can't
hide the fact that morning has broken. Slumped in an old sofa in the
corner, Alfred and Michael have joined the early shift of drinkers. In
voices slowed to a slur they offer a lesson in the economics of
illicit alcohol consumption.

"A Guinness is 120 shillings," says Alfred, his bloodshot eyes wide at
the incredible profligacy of a bottle of stout costing £1. "A half
glass of kumi-kumi is 10 shillings," he declares. "And it's 40 per
cent," Michael adds approvingly. Their point made, both men take a
long draught of the illegally brewed kumi-kumi, or chang'aa, the name
literally means "kill me quick".

John cooks his own brew in a converted oil barrel and insists it's so
pure he calls it "Kenyan Smirnoff". But it takes up to five days to
make, and others don't want to wait that long.

Down by the river, a breezeblock outhouse is used as a clandestine
store for one of the larger batches. A mix of fecal water, rats and
cockroaches spiked with formaldehyde from a nearby mortuary – it's
known to locals as "Hustle". Another brew, "Jet 5", takes its name
from its magic ingredient: stolen jet fuel.

Korogocho is just one of an estimated 200 slums in which some 2.5
million of Nairobi's 4 million inhabitants live. More than 60 per cent
of the people are confined to just 5 per cent of the city. As Nairobi
lives, so it drinks. While the comparatively affluent knock back
highly taxed bottled beers, the poor turn to cheap and potent
moonshine.

Kenya is not alone in its habits. The World Health Organisation
believes that more than half of the alcohol consumed in sub-Saharan
Africa is illegal. In Nigeria, the local specials include palm wines
such as "crazy man in the bottle"; in Botswana there is fermented
tho-tho-tho (the dizzy spell), in Zimbabwe the nightcap is "Scud"; and
in DR Congo there's the plaintive kasiki (I regret).

Dr Justin Willis, a history professor at Durham University and the
author of several works on alcohol in East Africa, warns that there is
no "silver bullet" that will make the problem go away. "To drive out
the illegal market the legal alcohol will have to be very, very
cheap," he says. "Providing very large amounts of cheap alcohol will
create its own problems."

The Shilling is at 78.10.

read more


Biggest Tea Grower Plans ’War Chest’ for Acquisitions Bloomberg
Commodities

McLeod Russel India Ltd., the world’s biggest tea plantation company,
plans to use the rising prices of the beverage to build a “war chest”
of as much as $250 million to acquire companies.The company, based in
Kolkata, may buy tea companies in India and Africa as it targets a 50
percent increase in production to 150 million kilograms in three to
four years, said Aditya Khaitan, managing director, of McLeod Russel.

McLeod plans to “wait for the tea cycle to turn and wait for people to
exit plantations,” Khaitan said in an interview at his office today.
“There is no way for us to grow organically.”

Rising prices helped the 141-year-old company report record quarterly
profit in the three months ended Sept. 30 and prompted it to acquire
plantations in Uganda and Vietnam. Prices in North India, which
accounts for 70 percent of the nation’s output, may rise as much as 15
percent as demand for the beverage rises and costs increase for
companies including Tata Tea Ltd., the owner of the Tetley brand, and
Unilever Plc.The company completed the acquisition of James Finlay
Uganda Ltd., which makes and markets 15 million kilograms of tea
annually, McLeod said on Jan. 18. It bought U.S.-based Olyana Holdings
LLC for $2.75 million in August last year to gain control of Gisovu
Tea Co., a Rwandan plantation company.

“It makes sense for Indian tea companies to look for plantations
overseas as asset prices in India are high at the moment,” Anup
Ranadive, an analyst at Tower Capital & Securities Ltd. said. “McLeod,
with most of its gardens in Assam, will continue to command a premium
and that should help them generate enough cash.”

Khaitan expects India’s demand for the beverage to rise 3.5 percent
annually, outpacing the estimated 1.5 percent rise in production this
year. India’s output last year dropped 0.18 percent to 978.9 million
kilograms, according to the state-run Tea Board. Exports declined 5.7
percent to 191.4 million kilograms.

“India is becoming a story in itself,” Khaitan said. “Money is flowing
into rural India and they are spending it on basic necessities.”

Conclusions

This is the PE Arbitrage I have been talking about ad infinitum.

read more



 
 
N.S.E Today

The NSE20 rallied 37.64 points to close at 4288.84.
The NASI rose 0.74 points to close at 91.13 and this a new 2010 high.
Market Cap was 1.062344 Trillion versus 1.053757 Trillion.
Equity Turnover was 611.066m versus 823.519m and You will note the two
day spike in Volumes in the last 2 sessions. I believe we are headed
back to 5,000 on the NSE20 which was the level we were at in January
2008. We remain in a Bull channel as do a whole series of African
Markets from Lagos to Accra to Cairo. South Africa is the poorest
performing SSA market at +2.00% for the year.  I believe we are in the
throes of a major Asset allocation into African equities.



N.S.E Equities - Agricultural

The Wires are carrying a Report that Mcleod Russel is putting together

a war chest of $250m with which to pick up Plantation Assets. They

have already made moves in Uganda and Rwanda. There is an enormous
Arbitrage for Indian Tea Companies which trade at PEs of 5x the Kenya
Average, which means any acquisition here adds immediate Value.  This
News will begin to filter into the Market and Prices going forward.

Sasini Tea was unchanged at 15.00 and traded 55,600 shares.
Limuru Tea firmed 4.165% to close at 312.00 and traded 200 shares.
Kakuzi was unchanged at 77.00 and trade 1,000 shares.
Williamson Tea traded 400 shares at 205.00.
Rea Vipingo firmed 10 cents to close at 19.10 and traded 9,300 shares.



N.S.E Equities - Commercial & Services

SAFARICOM

shares volume     72.928m
total turnover      414,748,832
avg price     5.70 Closing Price 5.70 +0.88%0
high price     5.80
low price     5.70
last price     5.70

Conclusions

That is the 2nd Consecutive session of High Volume Activity. Safaricom
was the most active Counter by a wide margin. Investors will now
anticipate full year results which are due for release before the end
of the Month. Yesterdays and Todays volumes in the Counter are
noteworthy.

Safaricom share price Graphs Price and Volume from www.rich.co.ke
http://bit.ly/4cdZRM

Access Kenya rallied 4.6% to close at 18.20 [and took the Business
Daily Front Page in its stride today] and traded an 18.00-19.00 range
and 665,300 shares worth 12.148m.

Scangroup traded a new 5 year high this week at 35.00 before meeting
some profit taking yesterday. Today Scangroup was unchanged at 31.00
today and traded out the session at 32.00 +3.23%. Scangroup traded
29,900 shares. The Ogilvy Transaction is transformative with respect
to SSA for Scangroup and hence I expect the price to be supported on
the fact that Scangroup will pop up on a lot more Fund Managers Radar
screens.

CMC Holdings firmed a further 1.75% to close at 14.60 and traded
288,700 shares. It would be very interesting to get a Look at the
share Register because there has been some serious movement.
Car and General did not trade.

Kenya Airways closed a further 1.833% easier at 53.50 with 87,400
shares. There is an overhang of Supply but way above the market and
might be some subtle bullying of the price lower.

Nation closed 2.22% firmer at 138.00 and traded 3,500 shares.
Standard was unchanged at 40.50 and traded 2,200 shares.

TPS Serena firmed 0.805% to close at 62.50 and traded 8,600 shares.



N.S.E Equities - Finance & Investment

Barclays Bank firmed 0.83% to close at 60.50 and traded a 62.00 high
and 82,600 shares. There is a 3-1 Demand versus Supply Disequilibrium
and Investors are anticipating a muscular 1st Quarter Earnings Release
especially after the Recent Earnings Narrative.
KCB firmed 2.791% to close at 20.25 and traded a 20.00-20.75 range and
372,300 shares. It has been in a Range for nearly 2 Years, that being
19.00-24.00 and You could just have traded that and done rather well.
KCB now has a 4-1 Demand versus Supply Disequilibrium.
Equity Bank was unchanged at 19.00 and traded a 19.10 high and 463,000 shares.
COOP Bank was unchanged at 12.10 and traded 540,600 shares.
Stanchart was unchanged at 204.00 and traded 6,200 shares. Supply is
thin and scrappy.

NIC was the 4th most active Counter at the Bourse. NIC rallied 1.31%
to close at 38.75 and traded 447,300 shares worth 17.321m. NIC
reported strong 1st Quarter Earnings +43% and the Implied Forward is
just below 10.00, assuming the 1st Quarter Run Rate is maintained
through the Year.

NIC share price data from www.rich.co.ke

Par Value:                  5/-
Closing Price:          38.25
Total Shares Issued:          358,997,792
Market Capitalization:        13,732M
EPS:            3.31
PE:                11.556

CFC StanBic closed at 59.50 and traded 62,500 shares. Buyers have
become a great deal more earnest.
DTB closed up 50 cents at 85.50 and traded 26,000 shares.
HFCK drifted back to close at 21.00 and traded 44,200 shares. I met
Frank Ireri the MD in the Foyer today and said a little tongue in
cheek
'Frank How does it feel to be the Prey?
Frank to me 'It is because we are beautiful.' Which I thought rather good.
NBK firmed 25 cents to close at 42.75 and traded 77,300 shares.

Centum rallied another 3.97% to close at 19.60 and traded an
18.80-20.00 range and 232,100 shares. Centum has returned 83.178% over
12 months and this is now a closing high for 2010 and levels not seen
since September 2008.

Kenya Re firmed 1.568% to close at 12.95 and traded 343,700 shares.
Jubilee traded a 100 shares at 175.00.
PanAfric traded 3,500 shares at 60.00.

Olympia Capital closed at 9.95.



N.S.E Equities - Industrial & Allied

Kenolkobil surged 6% to close at 106.00 and traded a session high of

110.00 +10.00% and Limit. Kenolkobil traded 105,800 shares worth
11.298m. Kenolkobil has returned 79.233% over 12 months and Kenolkobil
is trading at 28 month highs. They announced an intention to split the
shares 10 for every 1 held.
Total was unchanged at 31.25 and traded 46,200 shares.

EABL was the 2nd most active Counter at the Bourse after Safaricom.
EABL was unchanged at 171.00 and traded a 169.00-172.00 range and
243,900 shares worth 41.937m.

Mumias Sugar was the 3rd most active Counter and rallied 1.533% to
close at 13.25. Mumias Sugar traded a 13.00-13.45 range and 1.447m
shares worth 19.184. Demand outweighs Supply and 13.00 is now a key
Price Pivot and Support.

ARM rallied 2.52% to close at 122.00 and was trading 123.00 +3.36%
into the session close. ARM traded 32,600 shares. This is a very
bullish Break Out on the charts and I expect follow through. 120.00
has been resistance for ever. ARM has returned 62.934% 12 months and
this is a 5 Year closing High.

ARM share price data from www.rich.co.ke
http://bit.ly/4slEGv

Par Value:                  5/-
Closing Price:          119.00
Total Shares Issued:          99,055,000
Market Capitalization:        11,788M
EPS:            6.52
PE:                18.252

Bamburi rallied 2.094% to close at 195.00 and traded a session high of
200.00 +4.71% into the Finish. Bamburi traded 51,200 shares worth
10.032m.
Portland traded 17,000 shares at 120.00 and unchanged.

Kengen closed 1.16% firmer at 17.30 and traded a 17.10-17.45 range and
157,500 shares. There is a 5-1 Demand versus Supply Disequilibrium
which points at strong support underneath the Price. Kengen traded
157,500 shares with Demand for over half a million. The Reception was
a Buzz of Activity today and it was a pleasure to catch up with Eddie
Njoroge this morning.
KPLC firmed 0.51% and closed at 198.00. KPLC traded a 200.00 +1.52%
session high into the close and on the charts a close over 200.00
might trigger at least a 10% run up.
Cables closed 2.36% better at 21.75 and traded 19,300 shares.

BAT traded a 1,000 shares and closed at 197.00 -0.51%.
BOC Kenya traded 2,000 shares at 135.00 +0.75%.
Carbacid traded 5,600 shares all at 151.00 +0.67%.
Crown Berger traded 6,700 shares all at 32.50 +2.36%.
Eveready fell 2.17% to close at 4.50 and traded 25,000 shares.
Sameer closed at 8.95 -.56%.
Unga closed lower at 11.80.



by Aly Khan Satchu (www.rich.co.ke)
 
 
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May 2010
 
 
 
 
 
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