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Satchu's Rich Wrap-Up
Monday 07th of November 2016

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FBI director issues new letter saying it has 'not changed conclusion on Hillary Clinton' since deciding not to charge her
Law & Politics

The latest intervention from the FBI Director came two days before election day

He added: “Based on our review, we have not changed our conclusions
that we express in July.”


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Social media analysis pointing to Trump upset Techcentral
Law & Politics

BrandsEye's analysis of social media chatter accurately predicted that
Britain would vote for "Brexit", despite major polls pointing to the
opposite happening. Now new analysis by the company is pointing to a
possible upset in the US election. By JP Kloppers.

Social media is a scary place for Democrats right now.

The polls have favoured Hillary Clinton for months. Experts have begun
discussing her cabinet choices. Pundits have been wondering by just
how much Donald Trump will lose. (How big will the landslide be? How
severe the repudiation of his public persona?)

But after an analysis of social media data, using a crowd-integrated,
sentiment-driven research approach, we have seen a possible shock
arising in the conclusion of this unprecedentedly rancourous US

Positive sentiment is soaring for Trump nationwide. That is correct:
Donald Trump is crushing it online, and there is only a matter of days
before election day on 8 November.

It seems as though his negatives may have been “baked in” to voters’
appraisal of him. His skeletons probably came as no surprise to many,
and, as an outsider figure, he has always had a high threshold in
terms of the leeway the public has given him. It perhaps serves to
remind the electorate that he is indeed not a polished and
consultant-coached politician.

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DPRK News Service @DPRK_News Nov 4
Law & Politics

Near far, wherever you are
We believe the heart does go on
Once more you open the door
And you're here in our heart
And our heart will go on

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1077
Dollar Index 97.429
Japan Yen 104.38
Swiss Franc 0.9754
Pound 1.2458
Aussie 0.7674
India Rupee 66.695
South Korea Won 1141.60
Brazil Real 3.2339
Egypt Pound 15.4075
South Africa Rand 13.5677

Dollar Index 5 day Chart INO 97.429 [FOLEY POP]


China says its economy has grown at the same rate for three
quarters straight. How fishy is that? The Economist


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Keeping it Family : How Africa's Corrupt Leaders Stay in Power

The single most influential factor is that sub-Saharan African
economies are crucially dependent on export revenues, the inflow of
foreign aid and loans from international institutions or commercial
banks.  This enables ruling elites to control incoming and outgoing
financial flows. This they do by extracting rents, which they then use
to bolster their hold on power through patronage networks and,
naturally, to enrich themselves even further.

Many of Africa’s economies have become inordinately dependent on
export revenues, primarily based on agricultural or mineral
commodities. In most cases, this reliance on exports also is coupled
with a chronic failure to re-invest earned revenues, including loans
and international aid, into the necessary diversification and
broadening of those export-led economic sectors critical to
development. Domestic industrial, agricultural production and
commercial networks (providing consumer goods, processed foods and
fuel) would generate jobs plus a significant (and vital) domestic tax
base. Instead, these economies, largely because of insufficient
reinvestment in local infrastructure have performed poorly and so
explain economic stagnation. Income from exports is skimmed off by
political elites and sent abroad to be lodged in banks or invested in
Western economies rather than being used as the seed-corn for domestic

Regimes operating in this way only become fragile when export revenues
fall or when they suffer a loss of foreign loans generally a result of
severe indebtedness. Or because banks refuse – or not allowed – to
continue to fund those engaging in glaring mismanagement and
corruption. The ensuing fall from Western monetary grace can in turn
lead to a loss of domestic stability.

In recent years, however, one source of external backing that seems to
have enabled a variety of gatekeepers from Mugabe to Bashir, Dos
Santos, Meles Zenawi/Hailemariam Desalegn and Museveni to keep their
options open and even defy Western opprobrium or even sanctions, is

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07-NOV-2016 :: Bob is right Kenya Inc needs five Safaricoms @TheStarKenya
Kenyan Economy

This week past Safaricom released its First Half Earnings. The
centrality of Safaricom to the Nairobi Securities Exchange is shown
when you compare Safaricom's market capitalisation 851.39b [$8.429b]
to the market cap of the entire Stock Exchange 2.050 trillion
[$20.297b]. Safaricom constitutes 41.52% of the total value of the
Stock Exchange. The markets emit a very pure signal and this is the
first signal to note. Mr. Collymore has presided over a golden Age for
shareholders. The Total Return for shareholders during his tenure
clocks +711%. That Return surely ranks in the top percentile
world-wide. This is the second signal to note.

Mr. Collymore spoke of how Kenya Inc. needs to produce the equivalent
of 5 Safaricom's a year. He has a point.

Earlier in the week, Safaricom issued their Sustainability Report
which measures the ''True Value'' of Safaricom's business and it
calculates that the total value Safaricom created for Kenyan Society
in FY16 was around 413.86b [10.9 times greater than the financial
profit the company made during the same period].

Lets return to the first half Earnings release. First Half Revenue
topped 100b to clock 102.09b, H1 Profit before Tax was +30.6%, cash
and cash equivalents surged +126% to 43.02b. I, once described
Safaricom as a cash machine and a +126% surge in cash and cash
equivalents confirmed that. Non-Voice revenue [53.4% of total
Revenues] overtook Voice Revenue [46.6% of total revenue] for the
first time. Voice eked out a +1.1% gain.

Bob said ''Ive been saying for four years voice is not dead. We've got
1m people added to the population every year. We havent moved into the
bundled voice thing that many Europeans did and wished they hadn't'
[You could argue that Voice has confounded expectations exactly
because of the demographic dividend]

M-PESA which is ubiquitous and has helped Kenya Inc. re-frame itself
as the hot-bed of mobile money and financial inclusion saw revenues
surge +33.7% to 25.9b. Some of this surge was juiced by the Betting
Phenomenon, I am sure but the bottom-line is that M-PESA is still in a
parabolic and GO-GO growth phase. Transaction volumes have grown 27%
on a CAGR basis over 5 years and clocked an eye-popping 3.226 trillion
for this 6 month reporting period. At some point, Safaricom might
consider spinning off M-PESA via a separate listing.

The fastest growing slice of Safaricom's revenues remains Mobile Data
which accelerated +46.3% to 13.4b.  Today, There are more than 10m
Smart-Phones on Safaricom's Network. Data Usage per customer per month
grew +44% to 231MBs (YoY). The Mobile Data curve is entirely
correlated to the recent arrival of the Information century. The Speed
of the arrival is just breath-taking.
Interestingly when I asked Bob whether he was worried by the
Competition, he said this.

''We are always scanning the horizon. The Competition does not keep me
awake. Its new, emerging technologies like Whats App that keep me

By the way Whats App did not disrupt Safaricom, What happened is we
all started sending packets and packets of data across Whats App
juicing the mobile data curve. SMS Revenue registered a +8.1% gain.

Safaricom is an Outlier [In statistics, an outlier is an observation
point that is distant from other observations]. its centrality to the
Securities Exchange and Kenya Inc cannot be gainsaid. From the early
days of the Simu ya Jamii through to the 5 shilling scratch-card
through a proposed roll-out of up to 1,000 4G base stations over the
next few months, they have transformed lives, connected us to each
other, helped Kenyans meet their daily needs [M-PESA] and to the
c21st. As the rest of Africa sits in a deep funk, East Africa and
Kenya is shining bright exactly because Safaricom gave optionality to
Kenyans. When Folks speak to the fact that Kenya is resilient and
diversified, you have to recognise that a lot of this was due to
Safaricom. They democratised Kenya and made a tool-box [Voice,
''banking'' and Internet] available. This was as revolutionary as a
+711% 6 year return is.

Today, Safaricom is on the radar of every international Investor. I
cannot think of any other SSA Equity which occupies the same degree of
mind share. The Share price has been a bull market for more than 5
years. There are a few more years to go.

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Safaricom's shift from voice to data service will keep up growth @FT LEX
Kenyan Economy

Each year, east Africa plays host to one of the great natural wonders
of the world. Wildebeest migrate north into Kenya, seeking greener
pastures. So too have mobile operators like Kenya’s Safaricom, the
region’s premier mobile operator. It has sought out verdant businesses
in the quest for growth. It has its own beast to feed, the market.
Safaricom should sate its appetite by moving from voice to data
services in the year ahead.

Already voice represents less than half of Safaricom’s revenues
according to Friday’s interim result. Average revenue per (voice) user
slipped 8 per cent, another hint that the shift towards data services
has begun. Never mind: earnings before interest, tax, depreciation and
amortisation enjoyed another surge, up 31 per cent year on year. A
reported ebitda margin over 49 per cent leaves most world mobile
companies in the dust — including key shareholder Vodafone.

In fact, Safaricom is part telecom company and part financial
intermediary. Its transaction service Mpesa (Swahili for money) has
set the standard for a low tech, easy to use means of moving money to
and from bank accounts in Africa, not just Kenya. Mpesa already
accounts for about a quarter of revenues. While its profitability may
not yet match that of the telecom side, Renaissance Capital thinks
Mpesa should catch up as it expands. Its top-line contribution has
compounded at a 25 per cent rate over the past four interim periods.

This bullish outlook does not come cheap, though. At an enterprise
value of nine times its estimated ebitda, Safaricom has never been so
dear. That also looks pricey compared to most telecom companies
anywhere. It is hard to see what might push Safaricom off course,
though. More competition on financial products from banks, perhaps, as
smartphones spread across in Kenya. Yet Safaricom has quite a lead
over all its rivals. Only a serious change in the weather, like a
currency crisis or political upheaval, seems likely to slow its move
to greener lands.

Email the Lex team at lex@ft.com

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@Safaricomltd share price data here +39.20% 2016
Kenyan Economy

Par Value:                  0.05/-
Closing Price:           21.25
Total Shares Issued:          40065428000.00
Market Capitalization:        851,390,345,000
EPS:             0.95
PE:                 22.368

6 month Period through 30th September 2016
H1 Total revenue 102.094106b vs. 97.224275b +5.0%
EBITDA 50.805572b vs. 38.838467b +30.8%
H1 Profit before tax 34.489817b vs. 26.402729b +30.6%
Basic and diluted EPS 0.60 vs. 0.45 +33.3%
Cash and cash equivalents at the end of the period 43.028951b vs.
19.042871b +126.0%

Key Highlights

Customer numbers +6.00% to 26.61m
Voice Revenue +1.1% to 45.7b [46.6% of total revenues from 53.2%]
SMS Revenue +8.1% to 8.6b [8.8% of total revenues from 9.4%]
Mobile Data Revenue +46.3% to 13.4b
Fixed service revenue +29.1% to 2.4b
MPESA Revenue +33.7% to 25.9b [26.4% versus 22.8% of Total Revenues]
Non Voice Revenue now 53.4% of service revenues

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Kenya Airways chairman says deal with KLM set for renegotiation @BD_Africa
Kenyan Economy

Kenya Airways chairman Michael Joseph will meet KLM’s chief executive
in two weeks to discuss ways of amending the clauses which
disproportionately favour KQ’s partner of 16 years.

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Insta Products EPZ Limited chief executive officer Dhiren Chandaria. PHOTO | SALATON NJAU
Kenyan Economy

A nephew of industrialist Manu Chandaria is set to acquire an 80 per
cent stake in therapeutic foods manufacturer Insta Products, buying
out his partners in the Kenyan company.

The transaction was authorised by the Competition Authority of Kenya
(CAK) which says the deal will not affect competition negatively.

“In exercise of the powers conferred by section 42(1) of the
Competition Act, 2010, the Competition Authority of Kenya excludes the
proposed acquisition of 80 per cent shares in Insta Products Limited
by Dhiren Chandaria from Part IV of the Act,” reads a legal notice
published by the regulator.

The CAK filing shows Insta had a turnover of Sh342.7 million last
year, a level which is below the required threshold for mandatory
notification as contained in the Merger Threshold Guidelines.

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N.S.E Today

The FBI Director James Comey made an 11th hour decision to clear
Clinton of a crime related to her use of a private e-mail server —
This announcement triggered a sharp sell-off in safe haven assets with
Gold, for example, falling $17.00 to below $1,290.00.
The Mexican Peso is inversely correlated to Donald Trump's chances and
rallied on the Comey news.
Prediction Markets [where the Make-Up is 100.00] have Hillary Clinton
at 80 versus Donald Trump at 20.
The Nairobi All Share retreated -1.01 points to close at 140.49.
The Nairobi NSE20 Index eased back 2.93 points to close at 3248.54
Equity Turnover clocked 448.198m.

N.S.E Equities - Commercial & Services

Safaricom eased -1.18% to close at 21.00 and traded 5.744m shares
worth 120.742m. Safaricom released H1 Earnings last Friday where H1
EPS accelerated +33.33%. Any price correction will be shallow ahead of
a return to Fresh All Time Highs. Safaricom is +37.66% in 2016 on a
Total Return Basis vastly outperforming the Nairobi All Share which is
-4.00% over the same period.

Kenya Airways rallied +2.189% to close at a Fresh 2016 High of 7.00.
Kenya Airways closed the session trading session highs of 7.20 +5.11%
signalling the recent upswing has legs. Kenya Airways traded 1.774m
shares and is now +42.85% in 2016. Business Daily reported that the
Chairman Michael Joseph is set to visit the KLM CEO within two weeks
to renegotiate a number of agreements. Mr. Joseph has a legacy to
protect and his early moves signal he knows exactly what needs to be
done, hence the recent surge in the share price.

Nation Media retreated -1.00% to close at a 2016 Low of 99.00 and
traded 31,800 shares. NMG is -47.10% in 2016. What is clear is that
Government spending has slowed big but also not unlike the Banking
Sector, the Media sector is slap bang in the middle of its Schumpeter

According to Schumpeter, the "gale of creative destruction" describes
the "process of industrial mutation that incessantly revolutionizes
the economic structure from within, incessantly destroying the old
one, incessantly creating a new one".

N.S.E Equities - Finance & Investment

The Banks saw some broad-based activity.
Equity Bank which reported Q3 16 Earnings last week and also
pronounced the Branch dead, Equity closed unchanged at 30.75 and
traded 3.063m shares worth 94.398m.
KCB Group which will report Q3 Earnings as early as this week closed
unchanged at 28.75 and traded 1.717m shares.
DTB closed unchanged at 136.00 and traded 154,800 shares.
Standard Chartered is the only Kenyan Bank which has delivered a
positive Total Return in 2016. Stanchart eased -1.05% to close at
189.00. StanChart is +18.41% on a Total Return Basis in 2016 which is
a nice place to be for its CEO Lamin Manjang ahead of a visit of the
StanChart PLC Board to Kenya this week.
Barclays Bank Kenya turned +1.176% firmer to close at 8.6 and traded
1.228m shares. The Price has been supported of late.

Jubilee Insurance ticked +0.42% firmer to close at 473.00 and on good
ticket size of 92,000 shares. Jubilee Insurance is -2.272% through
2016 and outperforming all its Insurance Peers.

N.S.E Equities - Industrial & Allied

EABL eased -1.43% to close at 175.00 and traded 31,200 shares. The
down-draft was not helped by a Johnnie Walker PR Hullabaloo on social
media which was all downside for the Brand.

Total Kenya ticked +3.15% better to close at 18.00 and traded 3,300 shares.

by Aly Khan Satchu (www.rich.co.ke)
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November 2016

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