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Monday 14th of March 2016 |
Morning Africa |
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If you are tracking the NSE Do it via RICHLIVE and use Mozilla Firefox as your Browser. 0930-1500 KENYA TIME Normal Board - The Whole shebang Prompt Board Next day settlement Expert Board All you need re an Individual stock.
The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke
Looking forward to #Mindspeak this Saturday at the @SankaraNairobi from 0930 am.
We will be hosting @stpaulsplc The Founder Richard Britten-Long and Key Officers from the same |
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What is Mindspeak? @YouTube Africa |
Macro Thoughts
Home Thoughts
“Our lives are a battlefield on which is fought a continuous war between the forces that are pledged to confirm our humanity and those determined to dismantle it; those who strive to build a protective wall around it, and those who wish to pull it down; those who seek to mould it and those committed to breaking it up; those who aim to open our eyes, to make us see the light and look to tomorrow [...] and those who wish to lull us into closing our eyes” ― Ngũgĩ wa Thiong’o
“The condition of women in a nation is the real measure of its progress.” ― Ngũgĩ wa Thiong’o, Wizard of the Crow
“Prescription of the correct cure is dependent on a rigorous analysis of the reality.” ― Ngũgĩ wa Thiong’o, Decolonising the Mind: The Politics of Language in African Literature
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HILLARY CLINTON will be the Democratic nominee; the man most likely to face her in November on the Republican ticket is Donald Trump. Law & Politics |
Those are the battle lines after the primaries on Super Tuesday. In many ways this is profoundly gloomy. Mr Trump has said ever more repellent things about immigrants, women and Muslims and declined to condemn white supremacists. But he changes his sales pitch as easily as his socks: in a speech after winning seven out of 11 states, he stopped snarling and tried to sound presidential. It would be unwise to underestimate his ability to feign gravitas and transform himself into an apparent centrist.
The only obstacle between Mr Trump and the Oval Office would be Mrs Clinton. She is a formidable and in some ways admirable candidate, but flawed.
Conclusions
I think Trump missed a Golden Opportunity in Chicago to take the high ground and tack towards the centre where he will have to go if he is to win the White House. The current Tone is ultimately inimical to his chances. It was a West African MD of an International Bank who said that Trump is just terrorist Attack away from the White House.
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Syrian civil war: West failed to factor in Bashar al-Assad's Iranian backers as the conflict Law & Politics |
The Assad regime, came the message from the Washington think-tanks and mountebank “experts”, had reached – a cliché we should all beware of – the “tipping point”. La Clinton announced that Assad “had to go”. French Foreign Minister Laurent Fabius declared that Assad “did not deserve to live on this planet” – although he failed to name the galaxy to which the Syrian President might retire. And I complied with an Independent request to write Assad’s obituary – for future use, you understand – and still it moulders in the paper’s archives.
In May 2011, an Al Jazeera crew filmed armed men shooting at Syrian troops a few hundred metres from the northern border with Lebanon but the channel declined to air the footage, which their reporter later showed to me. A Syrian television crew, working for the government, produced a tape showing men with pistols and Kalashnikovs in a Deraa demonstration in the very early days of the “rising”.
This did not prove the Gulf-Turkish “terrorist conspiracy” which the Syrian regime now “revealed” to the world. But it did demonstrate that from the start – when ordinary Syrian families felt it necessary to defend their families with firearms – guns were available to the opposition.
And by constantly reminding readers and viewers of the Alawite “domination” of Assad, we journalists ourselves fell victim to our own reporting. We forgot – or did not care – that perhaps 80 per cent of the Syrian government army were Sunni Muslims who would, over the next four years, be fighting their co-religionists in the opposition militias and – by 2014 – struggling against them in the al-Qaeda/Nusra alliance and in Isis.
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A soldier stands over a body on a beach after the attack in Grand Bassam [Joe Penney/Reuters] Africa |
Al-Qaeda's North Africa branch claimed responsibility after six gunmen opened fire on civilians at an Ivory Coast beach resort, killing at least 16 people.
Bloody bodies were sprawled on the beach and witnesses described horrific scenes as a lazy Sunday afternoon was shattered by West Africa's latest attack.
Fourteen civilians and two special forces soldiers were killed before the six assailants were gunned down in the resort of Grand Bassam. Sunday's attack targeted three hotels in the southeastern town, located about 40km east of the country's economic capital, Abidjan.
Ivory Coast's President Alassane Ouattara arrived in Grand Bassam a few hours after the shooting rampage.
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Ivory Coast shooting: The Africa nation that became France's base for its war on Islamist terrorism Africa |
In 2014, France announced that its former colony would be its base for fighting Islamist terrorism in the Sahel region. A 3,000-strong taskforce of French soliders has been based there ever since.
In July 2015, foreign imams were banned from preaching in mosques in the north of the country, and the government also suspended the construction of new mosques around the northern city of Ouangolodougou.
The shooting is the first apparent terror attack to hit the country, which up till now had avoided attacks of the type experienced in nearby Cameroon, Chad, Mali, Niger, and Mali.
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Angola’s next presidential elections are expected to be held in 2017. Africa |
Lately, though, Mr. dos Santos’ government has faltered as such oil-fueled largess has collapsed along with global crude prices. Thousands of layoffs and a foreign-currency crunch have stoked unprecedented public dissatisfaction with the government. The International Monetary Fund expects economic growth of 3.5% this year, down from double-digit rates a few years ago.
The crisis is exacerbating longstanding economic tensions: Angola is one of the world’s most unequal societies, with a capital, Luanda, that ranks among the world’s most expensive cities, while most of the country’s $24 million people live on less than $2 a day. Transparency International in January ranked Angola the fourth-most corrupt country in the world.
Still, Ricardo Soares de Oliveira, a University of Oxford political scientist and author of a recent book on Angola under Mr. dos Santos, cautioned that the president was likely to use Friday’s announcement to try to mollify opponents within his party and guide efforts to appoint his successor.
Conclusions
“We are far from a post-dos Santos era,” he said.
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In South Sudan, City of Hope Is Now City of Fear NY TIMES Africa |
Tut glanced up at the gates of the displaced persons camp where he lives and shook his head.
“I can’t go out there,” he said.
“Why not?” he was asked.
“Because of this,” he said, rubbing the soft tribal scars on his forehead that mark him as a member of the Nuer ethnic group. “It’s my death certificate.”
A lot of people in this town feel the same way. Juba, South Sudan’s capital — and this whole country, for that matter — has slid so far from where its people dreamed it would go.
At the same time, South Sudan’s president, Salva Kiir, seems to be losing control.
Dressed in dark suits with his signature black cowboy hat (a gift from President George W. Bush), he is known as a decent and religious man but also as a bit of an enigma.
“It’s very difficult to pin down the personality of Kiir,” said James Solomon Padiet, a professor at Juba University. “Most of his decisions depend on who influences him at the moment he makes it.”
He said that Mr. Kiir had urged his generals to respect human rights but that when government troops committed atrocities, as they have over and over again, Mr. Kiir did not punish anyone.
“He says: ‘It’s on you. God will punish you,’ ” Mr. Padiet said.
Mr. Kiir also needs each and every one of those generals to stay in power, the professor added.
On a recent day, the waiting rooms outside Mr. Kiir’s office were crammed with high-ranking officials and other people hoping to meet with him, but he did not show up to work.
The well-worn narrative of helpless, starving South Sudanese “wildly oversimplifies” the reality, he said.
“The real story,” he said, “is one of a falling out among kleptocratic thieves, whose self-enrichment free-for-all before and after independence led competing factions to use ethnicity as a mobilizer, which is the equivalent of aiming a flamethrower at an oil rig.”
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UN Investigates Director Of Oil Firm Chaired By Michael Howard For “Possible Extremist Links” Africa |
A leaked memo, sent last month by a UN watchdog to diplomats in the UK and Norway, reveals that the executive director for Africa at Soma Oil and Gas is under investigation for possible ties to extremist groups in East Africa, including al-Shabaab, which in recent weeks has claimed responsibility for a series of deadly terrorist attacks in Somalia.
Soma is a London-based company chaired by Howard that was set up in 2013 to explore for offshore oil in Somalia. The Africa director, Hassan Khaire, and Howard are both shareholders in Soma and sit together on the boards of three of its group companies in the UK, according to records filed at Companies House.
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Old Mutual's Breakup Adds to South Africa Financial Market Woes Africa |
The main shareholders in two of South Africa’s four largest banks are scaling back at a time when investor confidence is at its lowest since apartheid ended. Africa’s most industrialized economy is confronting a potential downgrade to junk status, a weakening currency, inflation that is accelerating and interest rates at a six-year high.
“It’s not surprising people want to leave,” Mike Schussler, chief economist at Johannesburg-based research group Economists.co.za, said by phone. “There is a likelihood that you will see a lot more companies leave, in addition to the fact that many South African companies are focusing more outside the country.”
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29-FEB-2016 :: Barclays' Exit a Vote of No Confidence in Zuma @TheStarKenya Africa |
The real reason in my view is the Zuma ‘’Zupta’’ volatility. The Bar- clays Africa exit is a vote of no confidence in South Africa’s President Jacob Zuma and by extension in South Africa’s gateway position.
Two days before South Africa’s Finance minister Pravin Gordhan presented his budget last Wednesday, Zuma described Van Rooyen as the most qualified finance minister his administration has had. Unless the president is stopped, Barclays PLC’s move might well be the first in what becomes an Avalanche of Exits. |
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State capture: Did the Guptas offer Treasury's top job to Deputy Minister Jonas? Daily Maverick Africa |
Just as Finance Minister Pravin Gordhan touched down in London this week on the first leg of his investment roadshow to foreign investors and credit agencies, the influential publication the Financial Times dropped a bombshell of a story highlighting the extent of Gupta family's influence and control of President Jacob Zuma's government.
The story, by Andrew England, makes the startling claim that two weeks before President Jacob Zuma fired Finance Minister Nhlanla Nene, replacing him with backbencher David van Rooyen, the family had themselves met with Deputy Minister of Finance, Mcebisi Jonas, and had asked if he was “interested in the Treasury's top post”.
In the Financial Times piece England writes that under President Zuma's watch “predatory networks of patronage and cronyism are effectively looting the state” and that the phrase “state capture” had become part of the South African lexicon.
Breaking his silence with regard to the SARS “rogue unit” saga earlier this month Gordhan hinted at the source of the malaise that England says afflicts the nation; “There is a group of people that are not interested in the economic stability of this country and the welfare of its people. It seems they are interested in disrupting institutions and destroying reputations.”
As more information bubbles to the surface in this toxic mess, it appears that Gordhan is a well informed man.
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14-MAR-2016 :: @Barclays May Be The First of Many SA Exits @TheStarKenya Africa |
RISK appetite has returned some in the international markets and this can be glimpsed via the recent performance of higher beta currencies. For example, notwithstanding the determination of prosecutors to arrest Luiz Inácio Lula da Silva [the former president of Brazil], the Brazil real closed out last week at a 2016 high at 3.58 units against the US dollar. The South Korean won is back below 1,200.00 and is looking through some serious sabre-rattling on the Korean Peninsula. The South African rand is also close to a 2016 high. Crude oil has rebounded with WTI [US] oil closing last week at $39.50 a barrel, having twice touched $27.00 in January. President of the European Central Bank Mario Draghi turned up the QE [Quantitative Easing] a few notches on the dial last week. Gold is not buying into this “all is now well with the world” and remains locked at $1,250.00.
In South Africa, the equity market has pushed into positive territory, but you will recall I mentioned that the Barclays PLC exit could be the first in what might become an avalanche of exits. The news that Old Mutual is seeking its own break-up and that it will spin off its 54 per cent controlling stake in Johannesburg-based Nedbank Group to shareholders, is in essence the second exit after Barclays. Multinationals carrying large South African exposures via listings in Johannesburg are simply no longer prepared to wear the currency risk or ‘’Zupta’’ price volatility. South African assets are a sell, and Barclays and Old Mutual are signalling that loud and clear as are South Africans themselves who seemingly cannot get their own money out fast enough, according to the latest high Frequency Data.
The Nigeria All Share while still 9.27% lower year to date has cut its year to date loss by half over the last few weeks. Minutes of the last MPC meeting confirm that just one member of Nigeria’s central bank monetary policy committee Adedoyin Salami said the naira should be devalued and allowed to trade within a band, saying that the fixed exchange rate would not work alongside a planned rise in government borrowing. The naira trades some 40 per cent below the official rate on the black market versus the dollar and that confirms the current official rate is a Mickey Mouse price. Africa’s biggest economy grew by an estimated 2.8 per cent last year. Salami said his proposal gained no support at the meeting and that confirms that few are prepared to challenge President Muhammadu Buhari. The president is fixated and I expect Nigeria’s GDP to be at 0% through 2016. It is clear that this is a red-line for Buhari, but what is clear is that negative spill-over is going to get worse not better.
Here in Nairobi we find ourselves slap-bang in the middle of the earnings season. The banks have been reporting their full-year earnings and positive price reactions confirm that investors had become too bearish and we have seen some shapely rallies develop after these releases. Kenya Commercial Bank has definitely hurdled Sh40.00. Diamond Trust Bank closed at a 2016 high and reported that full-year loans and advances to customers accelerated 28.979% to Sh177.54 billion. Compare that to Barclays Kenya which reported a 15.91% expansion and clocked Sh145.38 billion. Bamburi Cement posted a big outsize full-year profit after tax gain of 50.45%. On balance, earnings at the Nairobi Securities Exchange have outperformed expectations. I expect Nairobi to outperform Lagos and Johannesburg through 2016.
This week, everyone will be keeping an eye on Federal Reserve, chaired by Janet Yellen. At the start of the year, the FED was predicting four 0.25% rate hikes through 2016. The markets are pricing in two rate hikes in 2016. The markets will pivot on the FED decision this week.
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KenGen woos financiers to its mega power investments Kenyan Economy |
Kenya Electricity Generating Company (KenGen) has received several commitments for the financing of its various projects as it seeks to spend a total of Sh140 billion ($1.4 billion) in the period to 2019 to meet the surging power demand.
Some international development and donor agencies are proposing to finance some of the projects with KenGen co-financing through its reserves, besides a rights issue and bank borrowing.
One of the projects is going to use the private public partnership (PPP) model of financing.
Among those committed are the Japanese International Cooperation Agency (JICA) and the European Investment Bank for two Olkaria projects totalling Sh60 billion.
On Wednesday, the Treasury signed for Sh40.6 billion with JICA. KenGen is negotiating with financiers AFD (the French Development Agency) of France and KfW of German to fund other projects.
The rights issue is expected to raise Sh28 billion with the government taking up its rights by converting its existing loans into equity.
“On the rights issue, we expect to complete the process and have the money by June 30 in order to be able to roll out the planned projects soon thereafter,” said Albert Mugo, KenGen’s chief executive in an interview.
Out of the targeted production of an extra 844 megawatts, the company has already created capacity of close to 400 MW following a series of launches of geothermal plants.
KenGen currently has a total installed capacity of 1617 MW out of the national capacity of 2300MW, indicating that it has a share of over 70 per cent. Independent power producers account for the rest of the capacity.
Out of the firm’s total capacity of 1617 MW, 820MW is hydro-generated, 510MW is from geothermal sources, 25MW is from wind energy while the rest is from thermal sources.
Olkaria 5 project, which is intended to generate 140 MW, is currently at the tendering stage to enable the company break ground by July and bring the power into the national grid by 2018.
The Olkaria 5 project is sponsored by JICA and KenGen itself. It is to cost Sh40 billion or $400 million.
Olkaria 6 is another Sh40 billion ($400 million) project with a 140MW power production potential. It was intended to be online by 2019.
KenGen intends to finance it through a partnership with a private sector player. The partner is however yet to be identified. A transaction advisor – who is also yet to be named – will advise on the way to procure the private sector partner.
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TransCentury running out of time, options over $75m loan East African Kenyan Economy |
Investors are growing wary after a key advisor, Rand Merchant Bank, severed links with TransCentury to protest the board’s ignoring of its proposals on how to pay the five-year loan, which matures on March 25.
Divisions in the board on how to tackle the debt were also behind the resignation of long-serving chief executive officer Gachao Kiuna and a director, Joseph Karago, earlier this year, according to correspondence seen by The EastAfrican.
TransCentury, which is listed on the Nairobi Securities Exchange, is now on the brink of default, with severe consequences for minority shareholders and its credit rating.
“In this instance, the shareholders can expect at best further deterioration in the share price, or worse, a complete wipe out of their ownership,” said Sancta.
Conclusions
The Equity Holders are extinguished in all scenarios, it seems to me.
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Limuru Tea FY PBT +146.679% Earnings here [-22.58% 2016] Kenyan Economy |
Par Value: 20/- Closing Price: 840.00 Total Shares Issued: 1200000.00 Market Capitalization: 1,008,000,000 EPS: 1.27 PE: 661.41
FY Biological assets 178.596m vs. 206.593m -13.552% FY Increase in cash and cash equivalents 0.789m vs. 0.105m +651.429% FY Cash and cash equivalents at the end of the year 8.661m vs. 7.872m +10.023% FY Turnover 122.374m vs. 92.250m +32.655% FY Profit before income tax 5.126m vs. 2.078m +146.679% FY Profit attributable to shareholders 3.044m vs. [0.330m] +1,022.424% EPS 1.27 vs. [0.28] +553.571% Dividends per share 1.00 vs. 1.00
Company Commentary
3,065,880 Kgs of green Leaf = 692,343 kilograms of Black Tea 10% decrease in green leaf attributed to drought during Q1 in 2015 +147% increase in Pre-Tax profits attributed to increased tea auction prices and favourable movements in exchange rates
Conclusions
Limuru Tea [given its position adjacent to Nairobi] is more a Real Estate Play than a Tea Story.
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N.S.E Today |
The Nairobi All Share Index improved +0.29 points to close at 145.26 The Nairobi NSE20 Index pushed +5.68 points higher to close at 3953.13. Equity Turnover clocked 613.897m T-Bill Rates slid meaningfully last week and the gentler interest rate structure supports the Equity Markets. Standard Chartered +7.17% in 2016, COOP Bank +12.5% in 2016, KenolKobil +14.0625% all have closed at Fresh 2016 Highs.
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N.S.E Equities - Agricultural |
Limuru Tea reported Full Year Earnings where FY Profit before Tax ramped +146.679% higher and FY Turnover expanded +32.655%.Limuru Tea is in fact more a Real Estate Play than a Tea Company. Limuru Tea owns 275 hectares of tea land situated four kilometers to the east of Limuru Town. The Market Capitalisation is 1.008b shillings which equates to 3.665m per hectare. Investors are buying the Real estate share price discount to NAV more than the Trajectory of Tea Earnings. Limuru Tea which has retreated -22.58% Year To Date did not trade.
Sasini Tea and Coffee ramped +8.75% better to close at 21.75 on heavy volume action of 525,700 shares.
Eaagads rallied +8.64% to close at 22.00.
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N.S.E Equities - Commercial & Services |
Safaricom was the most actively traded share at the Securities exchange and rallied +0.92% to close at 16.45 and traded 12.455m shares. Safaricom will test its 2016 High of 17.00 reached on the 4th through the 8th of this month, in short order.
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N.S.E Equities - Finance & Investment |
On the occasion that Citibank put out a 58.00 Price Target for Kenya Commercial Bank, KCB rallied +1.23% to close at 41.00 and was trading at 41.50 +2.47% at the Finish Line. KCB traded 3.509m shares and the Full Year Earnings is deserving of the Citi 58.00 Price Target. Barclays Kenya eased back -0.85% to close at 11.70 and traded 924,900 shares. Sellers outpaced Buyers by a Ratio of 2 to 1 and Barclays remains -13.97% Year To Date. With a 36 month dead-line, this Barclays Bank PLC divestment journey is set to be a long and drawn-out Affair and that will keep the Franchise and the share price playing defence.
Barclays Kenya share price data and FY 2015 Earnings here -13.97% in 2016 http://www.rich.co.ke/rcdata/company.php?i=MTQ%3D
Standard Chartered firmed +0.96% to close at an 8 week High of 209.00. StanChart is +7.17% in 2016 and will be an Out-Performer through 2016. COOP Bank firmed +1.25% to close at a Fresh 6 month High of 20.25 ahead of its Full Year Earnings Release this Thursday. COOP Bank is +12.5% in 2016.
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N.S.E Equities - Industrial & Allied |
Business Daily carried a report today that John O’Keeffe, Diageo Plc’s president for Africa, last week told analysts and investors that he expects that the EABL business will “continue growing net sales at low double-digits”, mainly as a result from a resurgence in Senator Keg. EABL firmed +0.35% to close at 283.00 and traded 504,800 shares. EABL is +3.66% in 2016 and has head-room up to 300.00.
The Weekly East African captioned a story ''TransCentury running out of time, options over $75m loan'' According to the East African, Rand Merchant Bank, severed links with TransCentury to protest the board’s ignoring of its proposals on how to pay the five-year loan, which matures on March 25.
“In this instance, the shareholders can expect at best further deterioration in the share price, or worse, a complete wipe out of their ownership,” said Sancta a Bond-Holder.
Transcentury traded 3,800 shares at an unchanged 5.65 and remains -31.51% Year To Date. The Equity Holders are extinguished in all scenarios, it seems to me.
KenGen rallied +1.28% to close at 7.90 and traded 958,500 shares. Todays Price was lifted by a report in the Business Daily which confirmed just JICA and the EIB are prepared to pump 60b shillings of Debt into KenGen's Geothermal Roll-Out. Shareholders will be diluted via the Rights Issue but at a PE Ratio of less than 2, this is all [and some] baked into the price. KenGen is +11.26% Year To Date and has plenty of head room to rally.
KenolKobil rallied +2.816% and regained a 6 month High of 10.95. KenolKobil is +14.0625% this Year.
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