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Satchu's Rich Wrap-Up
Thursday 05th of March 2015

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Macro Thoughts


Home Thoughts

A mind all logic is like a knife all blade. It makes the hand bleed
that uses it. Rabindranath Tagore

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@samdave69 Especially since the current weather has the perfect dusks for photographing NBI @alykhansatchu @UAPKenya @UAPInvest

Clouds come floating into my life, no longer to carry rain or usher
storm, but to add color to my sunset sky. Rabindranath Tagore

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African jawbone discovery pushes birth of humanity back by 400,000 years
Law & Politics

A fossilised jawbone found poking out of the ground in Ethiopia has
set the story of human origins back nearly half a million years to a
time when early man shared the vast grassland plains of eastern Africa
with a rich variety of prehistoric animals.

Scientists have confirmed that the jawbone belongs to the Homo genus
and, at 1.8 million years old, is more than 400,000 years older than
the oldest previous fossil of the same group of early humans who
eventually gave rise to our own species, Homo sapiens.

The discovery begins to fill in a huge gap in human origins between
the primitive "ape man" of Australopithecus afarensis - best known
from the Lucy fossil discovered in Ethiopia in 1974 - and the earliest
known members of the "human" family, the species Homo habilis or
"handy man".

"The jaw helps to narrow the evolutionary gap between Australopithecus
and early Homo. It's an excellent case of a transitional fossil in a
critical time period in human evolution," said Bill Kimbel, director
of the Institute of Human Origins at Arizona State University in

read more

Alien abduction? Stolen by Russia? #MH370 theories keep coming Reuters
Law & Politics

Lending credence to some of the skeptics, Tim Clark, head of Emirates
Airlines, said last November he believed information was being
withheld and questioned the Malaysian military's assertion that it
took no action because it identified MH370 as "friendly" when it
suddenly reversed course.


It was shot down somewhere near Diego Garcia

Diego Garcia


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25-Aug-2014 The signal announcing this new arrhythmic normal was the disappearance of the #MH370.
Law & Politics

''For years he'd been studying the phenomenon of chaos, of which an
arrhythmic heartbeat was a perfect example''

His excellency Johan Borgstam told me the signal announcing this new
arrhythmic normal was the disappearance of the MH370. Since then
planes have been fall- ing out of the sky like flies. And the
uncertainty around MH370 and MH17 which is sharpened by the way the
story is seemingly turned on and off took me back to Don Delillo

''"We are not witnessing the flow of information so much as pure
spectacle, or information made sacred, ritually unreadable. The small
monitors of the office, home and car become a kind of idolatry here,
where crowds might gather in astonishment.''

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1061 Edgy before the ECB's announcement on details of its QE
scheme, the euro fell as far as $1.1055 EUR=, a low not seen since
September 2003
Dollar Index 96.08 The euro's weakness helped the dollar index .DXY
rise to a new 11-year high of 96.114.
Japan Yen 119.90
Swiss Franc 0.9650
Pound 1.5249
Aussie 0.7820  The Aussie was up 0.1 percent at $0.7825 AUD=D4. The
currency hit a six-year nadir of $0.7627 early in February after the
RBA cut interest rates to a record-low 2.25 percent.
India Rupee 62.235
South Korea Won 1100.33
Brazil Real 2.9773
Egypt Pound 7.6312
South Africa Rand 11.7977

Dollar Index 3 Month Chart INO 96.08


The global markets will look to Friday's U.S. jobs data for further
confirmation that the world's largest economy is recovering enough to
justify a rate hike.


Economists polled by Reuters projected U.S. payrolls grew 240,000 in
February, following growth of 257,000 in January. ECONUS


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12-JAN-2015 I think the Fed is just one headline economic print from raising interest rates.
World Currencies

A rate hike, even as small as 0.25 per cent, will be the catalyst for
a renewed surge in the dollar. The Dollar Index is headed a lot higher
- buy the dollar.

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29-SEP-2014 A Small Window for Sharks as Dollar Rises
World Currencies

The point I am making is that the dollar has just started going. There
will be blood in the water. There is a small window if we want to be
the sharks.

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Euro versus the Dollar 3 Month Chart 1.1061 [0.9300 Target This is like Deja Vu]
World Currencies

ECB chief Mario Draghi will unveil specifics of the 1.1 trillion euro
($1.2 trillion) bond-buying plan the bank is deploying alongside
negative deposit rates in its fight against deflation. German factory
orders unexpectedly contracted in January from a year before, data
today showed, while a similar gauge from the U.S. is due.

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Commodity Markets at a Glance WSJ

Gold 6 month INO 1204.54


Crude Oil 1 Month Chart INO 51.73 [Capped at 55.00 ahead of
another breakdown to Fresh 2015 Lows]


Emerging Markets

Frontier Markets

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Where Cheap Oil Is Seriously Bad News

Crude oil has hit rock-bottom prices, and several African countries
are getting the worst of it. Algeria, Libya, Nigeria, Chad, Angola and
South Sudan are among the most oil-dependent economies in the world.

At the same time, these countries are facing some of the world's most
intractable security problems, and are relying on their
petroleum-funded militaries to an extraordinary degree.

Nigeria and Chad are battling the Boko Haram insurgency and various
other internal and external security threats.

Algeria and Angola are veritable dictatorships run by their military
establishments. And Libya and South Sudan are embroiled in civil wars
in which access to income from oil rents plays an important role.

"Oil prices are going to remain depressed for at least the better part
of 2016,"Oladiran Bello, an African resources expert at the South
African Institute for International Affairs, told War Is Boring. "That
has serious implications for the existing economic model in all of
those countries."

Because of this, Bello argued, some of Africa's oil-dependent
countries face an increased risk of social unrest and internal
instability. Nigeria, he says, "is the basket case."

The local oil barons, "are those who fund elections in Nigeria and
they make the political decisions," Bello said. "So if the trough is
drying out, expect some trouble. I see this as having a potentially
cataclysmic effect."

"In countries like Nigeria, Angola and Algeria, in a lot of the oil
autocracies, the military is the first priority and has the first call
on the public purse. The military budgets will likely see some
trimming, but it will not be slashed as much as the other sectors."

With well-equipped and well-paid security forces at their disposal,
these governments will likely be able to suppress public
demonstrations arising because of spending cuts. But if oil prices
remain depressed over the long term, this model will become

Some observers see falling prices as an opportunity to democratize
Africa's oil autocracies. But Bello is skeptical.

"In theory, an economy that is less dependent on rents expands the
space for democratic accountability. But the immediate impact of the
current oil prices is to create austerity in a way that makes a lot of
people unhappy."

But diversifying an oil-based rentier economy is easier when oil
prices are high--not low--according to Bello.

South Africa All Share Bloomberg +6.39% 2015


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Dollar versus Rand 6 Month Chart INO 11.7977

Egypt Pound versus The Dollar 3 Month Chart INO 7.6312


Egypt EGX30 Bloomberg +6.03% 2015


Nigeria All Share Bloomberg -11.42% 2015


Ghana Stock Exchange Composite Index Bloomberg -3.72% 2015


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Kenya economic update : anchoring high growth @WorldbankKenya #KenyaEconomicUpdate
Kenyan Economy

This Economic Update (KEU edition 11) has three main messages. First,
Kenya is poised to be among the fastest-growing economies in the
region in the next three years, with growth projections of 6.0 percent
in 2015, 6.6 percent in 2016, and 7.0 percent in 2017. External and
internal balances are expected to improve significantly, thanks to
falling oil prices, and public investment, mainly in infrastructure
(energy and the standard gauge railway), is expected to firm up growth
in the medium term.

Second, the external sector remains vulnerable, as import growth
continue to outpace export growth and short-term flows finance the
current account deficit. Sluggish external demand for exports and
declining production for export is widening the current account
deficit. These trends point toward underlying structural weaknesses
that need to be addressed.

Third, Kenya needs to increase the competitiveness of the
manufacturing sector so that it contributes more to growth and
employment. Over a long period, the relative size of the sector has
been stagnant, it has lost market share abroad, and it is struggling
with structural inefficiencies. Low overall productivity and large
productivity differences in firms across subsectors point to lack of
competition; a more efficient sector would do a better job of
allocating resources from low-to high-productivity firms, allowing
them to grow faster and hire more employees.

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World Bank said the Kenyan economy is expected to grow 6 percent this year, up from an earlier projection of 4.7 percent

 The World Bank said the Kenyan economy is expected to grow 6 percent
this year, up from an earlier projection of 4.7 percent, as lower oil
prices spur consumption and the government proceeds with rail and
energy projects.

The East African economy got off to a "strong" start in 2015 for the
first time in years, according to an e-mailed copy of the World Bank's
twice-yearly economic update released on Thursday in the capital,

Oil at a baseline price of about $65 per barrel may increase gross
domestic product by as much as 1.2 percentage points in the
petroleum-importing nation this year, the bank said. The plunge in
crude prices will also encourage consumer spending, providing a boost
to manufacturers, according to the report.

"The rise in real income is expected to trigger significant increases
in private consumption, the engine of Kenya's economy," the
Washington-based lender said in the report. "Higher aggregate demand
is also likely to incentivize private investment, particularly in the
manufacturing sector."

The economy is growing faster than many of its peers in the region,
with expansion pegged at 6.6 percent in 2016 and 7 percent the
following year, the bank said. Kenya attained lower-middle-income
status and became the fifth-largest economy in sub-Saharan Africa last
year after the country's statistics agency revised the method for
calculating GDP, increasing the size of the economy by a quarter.


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15-DEC-2014 :: East Africa Rising As Investors Shift Attention
Kenyan Economy

The lower oil price structure is set to translate into a further
upsizing of East Africa's GDP expansion and a further downshifting of
West Africa's.

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Falling oil price adds spurt to Kenyan grassroots February 15, 2015 5:36 pm Katrina Manson in Nairobi @FT
Kenyan Economy

"I think [the oil price drop] is going to be a massive stimulus at
grassroots," said Aly-Khan Satchu, a Kenya-based investment analyst
who thinks increased consumption due to oil price savings is likely to
boost overall GDP. "The economy outperforms when the average Joe,
who's earning not very much, has more in his pocket."

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"Safaricom is the latest firm that has sought type approval for a set-top box. They have also applied for a digital broadcasting licence but we have yet to approve that," Mr Wangusi
Kenyan Economy

Bob Collymore, the Safaricom chief executive said they are mainly
interested in using the set-top boxes to deliver Internet to
households that own a TV set.

If awarded a licence, he said, Safaricom would deepen its plan to
establish a presence in the emerging broadcasting sector by taking
competition to the doorsteps of the mainstream media.

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NIC Bank reports FY PAT 2014 +27.163% Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           63.00
Total Shares Issued:          639945603.00
Market Capitalization:        40,316,572,989
EPS:            7.07
PE:               8.9108

Group Full Year through 31st December 2014 versus 31st December 2013

FY Loans and Advances to Customers [net] 102.042135b versus 83.493313b +22.215%
Full Year Total Assets 145.780504b versus 121.062739b +20.4173%
Full Year Customer Deposits 100.434954b versus 91.565005b +9.687%
Full Year Total Interest Income 13.711068b versus 11.642416b
Full Year Total Interest Expense 5.712948b versus 4.374437b
Full Year Net Interest Income 7.998120b versus 7.267979b
FY Total Non-Interest Income 3.573179b versus 3.218319b
FY Total Operating Income 11.571299b versus 10.486298b
FY Operating Expenses 5.340649b versus 5.476726b
FY Loan Loss Provision 329.133m versus 1.092873b sharply lower
FY Other Operating expenses 1.646230b versus 1.317571b
Full Year Profit before Taxation 6.230650b versus 5.009572b +24.374%
Full Year Profit After Taxation 4.116674b versus 3.237302b +27.163%
Full Year EPS 7.07 versus 6.12 +15.522%
Final Dividend 1.00 versus 0.75 [+0.25 Interim last time]


Very solid results and now on a single digit P/E
There have been persistent rumours around a possible merger with CBA.

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National Bank Kenya reports FY 2014 Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           24.75
Total Shares Issued:          280000000.00
Market Capitalization:        6,930,000,000
EPS:             3.11
PE:                7.958

National Bank reports FY 2014 Earnings versus FY 2013 Earnings

Full Year Loans and Advances [Net] to Customers 65.641491b versus 39.566678b
Full Year total Assets 123.091996b versus 92.555717b
FY Total Interest Income 10.697180b versus 8.165790b
FY Total Interest Expenses 3.899729b versus 2.527676b
FY Net Interest Income 6.797451b versus 5.638114b
FY Other Fees and Commissions 1.725152b versus 11.76033b
FY Total Non Interest Income 3.,136743b versus 2.857038b
Full Year Total Operating Income 9.934194b versus 8.495152b
Full Year loan Loss Provision 525.307m versus 287.640m
Full Year Total operating Expenses 7.502509b versus 6.682984b
Full Year Profit before Tax 2.431685b versus 1.812168b
Full Year Profit after Tax 870.702m versus 1.112803b
Full Year EPS 3.11 versus 2.32

Special Business:
9. Approval of Bonus Issue:- To consider and, if thought fit, to pass
the following resolutions as special resolutions:
(a) "THAT subject to receipt of requisite regulatory approvals, the
sum of Kenya Shillings one hundred and forty million (KShs
140,000,000) being part of the amount standing to the credit of
revenue reserves be capitalised and accordingly that such sum be set
free for distribution amongst the shareholders of existing ordinary
shares in the capital of the Company in the share register as at 27th
March 2015, to be allocated on or about 27th April 2015, on the
condition that, the same be not paid in cash but applied in paying up
in full at par twenty eight million (28,000,000) of the unissued
ordinary shares of KShs 5.00 each in the authorized share capital of
the company, and that such twenty eight million (28,000,000) shares
credited as fully paid up be accordingly allotted to such shareholders
in the proportion of one (1) of such new share for every ten (10) of
existing issued and paid up two hundred and eighty million
(280,000,000) shares then held by such shareholders respectively
(fraction of a share to be disregarded), and that, the shares so
distributed shall be treated for all purposes as an increase of the
nominal amount of the capital of the Company held by each such
shareholder and not as income and further that such shares shall rank
pari passu for all purposes with the existing shares in the capital of
the Company, and the directors be and are hereby authorised and
directed to give effect to this resolution"; and ,
(b) THAT should any of the said twenty eight million (28,000,000)
bonus shares not be issued by reason of fractions of a share being
disregarded the same be retained as unallocated in the Company's

The bank spent Sh1.1 billion to retrench 190 employees as part of its
plans to cut its operating expenses which still increased 12.2 per
cent to Sh7.5 billion.

National Bank reported FY 2014 Earnings where the net profit  declined
to Sh870.7 million compared to Sh1.1 billion in 2013. The Profit
suppression was characterised by the CEO Munir Ahmed

"We have supplemented that with the voluntary retirement for 190 staff
where we paid 1.1 billion shillings."

"We are changing the wheels of a moving car," Ahmed said to Reuters


I am still struggling to understand how EPS has risen when profit
after Tax is down.
However if you strip out the effect of the 1.1b retrenchment charge it
was a commendable performance

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Carbacid reports H1 Earnings through 31st January 2015 here
Kenyan Economy

6 Month Turnover -15.00%
Exceptional demand for Carbon Dioxide seen in previous reporting
period has eased
H1 EPS 0.87 versus 0.92

Carbacid share price data here


@EnterpriseKenya Kenya's overall inflation rate stood at 5.61 per
cent in February 2015


This might go negative this year.

Kenya Shilling versus The Dollar Live ForexPros


Nairobi All Share Bloomberg +6.09% 2015


172.80 -0.27 -0.16%

The All Share has corrected 2.653% off an All Time reached on the 25th
of February.

Nairobi ^NSE20 Bloomberg +6.83% 2015


5,461.08 -13.37 -0.24%

NSE20 is outperforming the All Share for the first time in a more than
37 month bull market and this speaks to a Rally that has broadened

Every Listed Share can be interrogated here


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N.S.E Today

The World Bank released their flagship  Kenya economic update
pre-market this morning and said this in the opening Paragraph

''Kenya is poised to be among the fastest-growing economies in the
region in the next three years, with growth projections of 6.0 percent
in 2015, 6.6 percent in 2016, and 7.0 percent in 2017''

The Securities Exchange followed on yesterdays banner session of
1.992b with another high octane trading session which clocked 1.367b
making that 3.359b and $36.912m over two trading sessions and will
have the Stock Brokers popping Champagne.

The Indices have been on a profit-taking Trend after a very powerful
thrust higher in the opening 8 weeks of the year.

The Nairobi All Share shaved off 0.52 points to close at 172.28. The
All Share is +5.76% in 2015 but has corrected 2.946% off a record high
reached on the 25th of February and 6 sessions ago.

The Nairobi NSE20 gave up 50.03 points today to close at 5411.05. The
NSE20 is +5.84% in 2015 and has corrected 88 points off a 7 year High
reached on Monday of this week.

Losers outpaced Winners today by a factor of 3 to 1.

N.S.E Equities - Commercial & Services

"Safaricom is the latest firm that has sought type approval for a
set-top box. They have also applied for a digital broadcasting licence
but we have yet to approve that," Mr Wangusi said. The Digital
Switch-Over remains a potentially disruptive Schumpeter moment and Bob
Collymore's Safaricom is set to carve out a meaningful position in the
new landscape. Safaricom rallied +1.62% to close at 15.70 and traded
3.837m shares. Safaricom is +11.743% and set to test an All Time
Closing High of 15.85 reached last week.

Nation Media [NTV is apparently coming back on Air this evening but
you do not need to be a rocket scientist to know that the Stand-Off
has been expensive] fell sharply and 3.47% to close at 250.00 and
traded 21,200 shares. Nation Media is -4.94% in 2015. I would have
thought a Profits Warning is now overdue.
Standard Group [which is also set to switch on this evening] traded
2,700 shares at 42.75 -4.47%. Standard Group is very tightly held and
that best explains a +23.02% rally in the share price

N.S.E Equities - Finance & Investment

Equity Group was the most actively traded share at the Securities
Exchange and tacked 2.83% lower to close at 51.50 and traded good
volume action of 6.805m shares worth 351.37m. Equity Group is +3.00%
in 2015 and ahead of an imminent Full Year Earnings Release.

Kenya Commercial Bank firmed 0.85% to close at 59.50 and traded good
volume action of 4.282m shares worth 254.793m. Kenya Commercial Bank
played an offensive Game in 2014 and the market will rally the shares
towards 66.00 shortly. The unchanged Dividend supressed the rally

N.S.E Equities - Industrial & Allied

"The Kenyan sugar sector should be given a one-year extension of their
existing safeguard subject to review and renewal for another one
year," reads one of the recommendations from the COMESA Trade and
Customs Committee and this news naturally rallied Mumias Sugar which
rose 8% to close at 2.70 and was in fact locked at Limit Highs of 2.75
+10.00% for most of the session. Mumias Sugar traded 2.664m shares and
was the biggest Winner at the Bourse today.

EABL which had retreated 15.71% since closing at a 2015 high of 350.00
on 19th February through this morning, closed unchanged at 295.00 and
traded 1.151m shares worth 340.834m. EABL had 16 Buyers for every
Seller at the Finish and was trading at 298.00 +1.02%. The correction
which overshot big time is complete and EABL is headed higher again
and back towards 2015 highs at 350.00.

Carbacid retreated 3.03% to close at 24.00 and traded 50,400 shares
after releasing First Half Earnings where Turnover decelerated 15%
year on Year, the Company cited ''Exceptional demand for Carbon
Dioxide seen in previous reporting period has eased''. First Half
Earnings per share declined 5.43%.

KENGEN ahead of its Earnings Release tomorrow morning eased 1.63% to
close at 12.10 and traded 914,500 shares. KenGen had rallied steeply
and +13.888% over the previous 5 trading sessions so evidently some
Folks thought it wise to bag their gains.

by Aly Khan Satchu (www.rich.co.ke)
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March 2015

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