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Satchu's Rich Wrap-Up
Friday 28th of December 2018

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The Latest Daily PodCast can be found here on the Front Page of the site

Macro Thoughts

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06-AUG-2018 :: The Indian Ocean Economy and a Port Race. @TheStarKenya

China [The BRI initiative], the Gulf Countries [who now appear to see
the Horn of Africa as their hinter- land], Japan and India [to a
lesser degree] are all jostling for optimal ‘’geo-economic’’
positioning. Overlay the Geopolitics and its worth noting that the
Geopolitics has become much more fluid.

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Elephant gathering in Tsavo - It doesn't get much more beautiful than this. @DSWT

Elephant gathering in Tsavo - It doesn't get much more beautiful than
this. This magical landscape is the location of our first
Reintegration Unit. While huge herds roam the plains (can you spot the
tuskers peeking out of the bushes?), 26 milk dependent orphans also
live here!

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THE WHITE DARKNESS A solitary journey across Antarctica. By David Grann @NewYorker

The man felt like a speck in the frozen nothingness. Every direction
he turned, he could see ice stretching to the edge of the Earth: white
ice and blue ice, glacial-ice tongues and ice wedges. There were no
living creatures in sight. Not a bear or even a bird. Nothing but him.
It was hard to breathe, and each time he exhaled the moisture froze on
his face: a chandelier of crystals hung from his beard; his eyebrows
were encased like preserved specimens; his eyelashes cracked when he
blinked. Get wet and you die, he often reminded himself. The
temperature was nearly minus forty degrees Fahrenheit, and it felt far
colder because of the wind, which sometimes whipped icy particles into
a blinding cloud, making him so disoriented that he toppled over, his
bones rattling against the ground.
“The Heart of the Antarctic,” Shackleton’s account of his gallant but
doomed attempt, in 1907-09, to reach the South Pole. (The journey was
known as the Nimrod expedition, for the ship he had commanded.)
Worsley read the opening lines: “Men go out into the void spaces of
the world for various reasons. Some are actuated simply by a love of
adventure, some have the keen thirst for scientific knowledge, and
others again are drawn away from the trodden paths by the ‘lure of
little voices,’ the mysterious fascination of the unknown.”

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10-DEC-2018 :: Truce dinner @Huawei
Law & Politics

Sirloin steaks, Catena Zapata Nicolas Malbec [2014] Huawei
Technologies Co. and Wanzhou Meng

You will recall that Presidents Trump and Xi Jinping enjoyed a much
anticipated ''Truce'' Dinner at the G20 in Buenos Aires and quaffed a
Catena Zapata Nicolas Malbec [2014] wine with their sirloin steaks and
finished it all off with caramel rolled pancakes, crispy chocolate and
fresh cream, a dinner that ran over by 60 minutes and one where the
dinner Guests broke out into spontaneous applause thereafter.

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When a general popularly known as "Mad Dog" Mattis abandons a really mad American president, you know something has fallen off the edge in Washington. @Independent
Law & Politics

Since the Roman empire, formerly loyal military chiefs have fled
crackpot leaders, and Mattis’ retreat from the White House might have
the smell of de Gaulle and Petain about it.

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@jeremycorbyn : Labour bid to force general election matter of 'when, not if @Reuters
Law & Politics

British opposition leader Jeremy Corbyn told the Independent newspaper
the Labour party’s attempt to force a general election by tabling a
no-confidence motion was a matter of “when, not if.”
Corbyn suggested the move would be unavoidable if British Prime
Minister Theresa May fails to secure backing for her Brexit policies
from parliament.
"We've made clear it's a question of when not if we do a vote of no
confidence in the government, and obviously we do (it) at a time when
their confidence is the lowest ever, which I suspect will be after
they've lost the vote", Corbyn told the newspaper ind.pn/2CAZymq in an
A new election is not due until 2022 but one could be called if May
fails to get her primary policy through parliament.

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Russian President Vladimir Putin watches the launch of the Avangard hypersonic missile at the National Defense Control Center via a video conference. Photo: Mikhael Klimentyev / @SputnikInt / @AFP
Law & Politics

On Wednesday, the Avangard missile, one of a new suite of nuclear
weapons designed to overcome US missile defense systems, was tested.
The weapon reportedly has an intercontinental range and can fly at
hypersonic speeds – 20 times the speed of sound – enabling it to
outpace any existing missile defenses. It was launched from the
Dombarovskiy missile base in the southern Urals and, according to
Russian sources, it hit a target on a range in Kamchatka, Siberia,
3,700 miles distant.
“The Avangard is invulnerable to intercept by any existing and
prospective missile defense means of the potential adversary,” Putin,
who watched the test from the control room, said afterward.

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Currency Markets at a Glance WSJ
International Trade

Euro 1.1457
Dollar Index 96.313
Japan Yen 110.39
Swiss Franc 0.9843
Pound 1.2651
Aussie 0.7050
India Rupee 70.045
South Korea Won 1115.96
Brazil Real 3.8736
Egypt Pound 17.8930
South Africa Rand 14.45

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Crude Oil 45.67

Emerging Markets

Frontier Markets

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Madagascar's Rajoelina declared winner of presidential vote @SABCNewsOnline

Andry Rajoelina has been declared the winner of a runoff presidential
election in Madagascar, according to full provisional results released
on Thursday by the electoral commission.
The High Constitutional Court has nine days from Thursday to decide
whether to confirm the provisional results.
Rajoelina’s rival Marc Ravalomanana on Sunday alleged fraud.
Rajoelina won 55.66 % of the vote compared to 44.34 % for
Ravalomanana, and turnout was just over 48%, the commission said.

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Five things that shook Africa in 2018 @FT @davidpilling

As 2018 draws to a close, protesters in Sudan are mounting one of the
sturdiest challenges yet against Omar Hassan al-Bashir’s 29-year rule,
rounding off a year in which, across Africa, the leadership of old men
has come under increasing scrutiny.

This year, the continent lost two giants: Kofi Annan, the first black
African to head the United Nations, and Winnie Mandela, whose
significance in South Africa’s liberation is hard to overstate (if
easy to malign). But it gained at least two more: Abiy Ahmed, the
Ethiopian prime minister whose whirlwind political opening in Africa’s
second most populous country has electrified the continent, and Denis
Mukwege, the Congolese surgeon whose treatment of rape victims earned
him the Nobel Peace prize alongside Iraqi human rights activist Nadia

Average growth on the continent of 2.7 per cent has been dispiriting,
diluted by the pallid performance of two heavyweights, Nigeria and
South Africa. But in numbers breathlessly cited by manufacturers of
beer to medical equipment, six of the fastest-growing countries in the
world are again likely to be African: Ghana, Ethiopia, Ivory Coast,
Djibouti, Senegal and Tanzania.

Africa is so vast and varied that, whatever is true about it, is also
untrue. In a continent that is increasingly peaceful, Cameroon
continued to slide towards civil war, and in one that is increasingly
healthy, the second worst outbreak of Ebola in history raged in the
eastern Democratic Republic of Congo where a promising vaccine is
being tested.

In what is bound to be a subjective — not to say random — exercise in
a continent of 54 countries, here are five of the most significant
events this year.

The African Continental Free Trade Area: In March, 40-plus nations
signed a free trade agreement with the potential to lift Africa’s
economic potential. Colonialism bequeathed a Balkanised continent of
sub-scale states, 16 of them landlocked. Inter-regional trade is a
paltry 15 per cent.

By trading with each other, African countries can raise value-added
content and stop simply shipping raw materials abroad. Bigger markets
will attract more foreign investment. The free trade area is a baby
step. And Nigeria has not yet committed to it. Tariff barriers pale
beside treacherous roads as barriers to trade. But it is a baby step
in the right direction.

China debt scare: This was the year African nations — and western
propagandists— woke up to the pitfalls of Chinese financing. China
contributes a sixth of all lending to Africa and countries from
Djibouti to Zambia are becoming more beholden to Beijing.

It is fashionable to talk of China’s “debt trap diplomacy”, though
some 40 African leaders rushed to Beijing for the triennial Forum on
China-Africa Cooperation to load up on more. But hyperbole about
China’s influence ignores the positive effects that its infrastructure
will bring and the fact that Africa benefits from having options.

Zimbabwe’s flawed election: After the ousting of Robert Mugabe in a
military coup in 2017, there was widespread hope that the elections of
July 2018 could consolidate change. They could not. The ruling Zanu-PF
pulled out all the tricks of incumbency to ensure victory for
President Emmerson Mnangagwa. Demonstrators protesting against the
process were shot as the count came in. Zanu-PF has since descended
into infighting and the economy into further chaos. One day, Zimbabwe
will emerge from this mess. But not yet.

Bobi Wine: It took Ugandan rapper, parliamentarian and “Ghetto
President” Bobi Wine to challenge the authority of Yoweri Museveni,
one of a shrinking number of African autocrats clinging to power long
past their sell-by date. Mr Wine has struck a nerve. Authorities beat
him to within an inch of his life. A Boxing Day performance has been
stopped. He could yet challenge Mr Museveni for the presidency in
2021. More important, he represents a stirring of youth across a
continent whose average age is 19.

“Abiymania”: With the possible exception of Joao Lourenço, the Angolan
president who has been busy dismantling the kleptocratic empire of his
predecessor, no one has done more to turn their country upside down
than Abiy Ahmed. At 42, he is the youngest leader in Africa. Since he
was elected prime minister in March, he has concluded peace with
Eritrea, emptied jails of political prisoners, challenged the economic
stranglehold of corrupt state-owned entities and appointed women to
half the positions in his cabinet. He has survived an assassination
plot and what looked like an attempted coup. If 2019 is half as
exciting, Ethiopia will remain a country to watch, not only for Africa
but for the world.

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South Africa All Share Bloomberg -13.37% 2018

Dollar versus Rand 6 Month Chart INO 14.46


Egypt Pound versus The Dollar 3 Month Chart INO 17.89


Nigeria All Share Bloomberg -17.13% 2018


Ghana Stock Exchange Composite Index Bloomberg -2.50% 2018


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US investors keen on Zim

“Regarding investment, the Ambassador said an American company called
GE Hydro is planning to invest millions of dollars in Zimbabwe,” said
Deputy Minister Modi.

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@KenGenKenya was the first Kenyan company to earn Carbon Asset Funds under the Clean Development Mechanism (CDM)
Kenyan Economy

In the relatively niche world of carbon trading, the prices rallied
230% between the start of the year and September, a 10-year high

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@KenGenKenya share price data here
Kenyan Economy

Closing Price:           7.02
Total Shares Issued:          6243873667.00
Market Capitalization:        43,831,993,142
EPS:             1.2
PE:                 5.850

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@CarandGeneral reports FY 2018 EPS +212.865% Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           18.50
Total Shares Issued:          40103308.00
Market Capitalization:        741,911,198
EPS:             5.35

Franchise holder for leading automotive and engineering products.

Car & General (Kenya) Limited FY 2018 results through 30th September
2018 vs. 30th September 2017
FY Revenue 10.079734b vs. 9.635150b +4.614%
FY Cost of sales [8.513513b] vs. [8.184936b] +4.014%
FY Gross profit 1.566221b vs. 1.450214b +7.999%
FY Other income 89.531m vs. 257.508m -65.232%
FY Gain in fair value of investment properties 339.513m vs. 229.496m +47.939%
FY Selling & distribution costs [576.570m] vs. [622.406m] -7.364%
FY Administrative expenses [748.344m] vs. [739.836m] +1.150%
FY Finance costs [353.182m] vs. [407.625m] -13.356%
FY Net FX Gains/ [Losses] 4.361m vs. [61.878m] +107.048%
FY Share of profit/ [Loss] in an associate 28.504m vs. [1.221m] +2,434.480%
FY Share of profit/ [Loss] in joint venture 7.777m vs. [5.947m] +230.772%
PBT 357.811m vs. 98.305m +263.980%
Profit for the year 225.716m vs. 79.841m +182.707%
Basic and diluted EPS 5.35 vs. 1.71 +212.865%
Total Assets 10.173507b vs. 9.267544b +9.776%
Total Equity 3.603966b vs. 3.357807b +7.331%
Cash & cash equivalents at the end of the year 61.817m vs. 258.353m -76.073%
Dividend per share 0.80 vs. 0.60 +33.333%

Car & General (Kenya) PLC-Final results 30 September 2018 commentary

Turnover for the twelve months to 30 September 2018 was KSh 10.079
billion. This represents an increase of 4.6% over the previous
financial year which included Cummins sales before the formation of
the Cummins joint venture. Excluding Cummins sales, like for like
sales were 18% above the same period in the previous year. Earnings
before interest and tax were 40% higher than the previous year at Kshs
711 million as compared to Kshs 506 million. The group made a profit
before tax of Kshs 358 million against a profit of Kshs 98 million
over the same period last year. This includes the impact of investment
property valuations.
In Kenya, volumes in our consumer business (two wheelers and three
wheelers) made good progress. However, due to the restriction on bank
financing result from the interest rate cap, volumes in our equipment
businesses (generators, construction equipment, tractors and
forklifts) remained constrained.
In Tanzania, which accounts for 25% of Group turnover, despite
challenging economic conditions, we maintained strong market share in
our three-wheeler business. We have made good progress in growing our
two-wheeler business and continue to invest in this. We see this as an
excellent opportunity going forward. Our equipment businesses
including Cummins have declined given a corresponding decline in
market size. Margins remain low. Our focus is volume growth in the
consumer segment.
In Uganda and Rwanda, which account for 5% of Group turnover, our
business is mainly equipment related. Uganda and Rwanda have performed
reasonably at EBIT level before forex adjustments and extraordinary
items which resulted in a loss for the year.
The Poultry operations in Tanzania made a small profit.
On Investment Property business we will Clark on at least one property
redevelopment in the next three months. We hope to comment another
property development by the end of 2019 assuming we can secure an
anchor tenant. We expect these developments will improve our
Investment Property fields and values.
Our investment in Watu Credit is progressing satisfactorily having
generated reasonable returns. Our Cummins Joint Venture has returned a
profit and we expect improved results going forward.
The Company now has a comprehensive product line up with good balance,
a solid infrastructure and an expanding distribution network. No
further investments are required in infrastructure. Our diverse
portfolio gives our business more optionality and ultimately more
The current financial year looks positive in spite of current
challenges relating to logistics largely port clearance processes (in
both Kenya and Tanzania) and increased shipping lead times. Our focus
will be on similar growth and operational efficiency. Critical will be
the comment of our property redevelopment.

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by Aly Khan Satchu (www.rich.co.ke)
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December 2018

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