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Satchu's Rich Wrap-Up
Friday 19th of July 2019

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Macro Thoughts

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The shattering honesty of V.S. Naipaul @SpectatorUSA

V.S. Naipaul, who died on Saturday at the age of 85, was sustained
most of all by self-belief. The society in which he launched himself
as a writer was not created to support a man like him. It was designed
to degrade him. His career was without precedent. When he arrived in
England as a teenager armed with a scholarship to Oxford, he was a man
apart, the descendant of Indians shipped out by the British Empire to
toil as indentured labour in the sugarcane plantations of the
Caribbean. Against his ambition, self-worth and dignity were arrayed
the stifling prejudices of a conservative and hierarchical nation long
accustomed to stamping on people of his appearance. The racism Naipaul
was subjected to was of a vicious and crippling variety. When he
attended an interview for a trainee position at the BBC, the
interviewers erupted in sniggers. Naipaul did not complain. He could
not. ‘You couldn’t be a victim in the 1950s’, he once said. ‘There
wasn’t the market.’

The exposure to bigotry bred despair, but not self-pity. ‘I have got
to show these people that I can beat them at their own language’,
Naipaul had said in a letter to his beloved father from Oxford. After
two false starts, Naipaul, without rejecting the world, retreated
inwards and mined his childhood memories and family history to feed
his early novels: The Mystic Masseur (1957), The Suffrage of Elivra
(1958), Miguel Street(1959), and, his acknowledged masterpiece, A
House for Mr Biswas (1961). Now his formidable talent unsettled his
peers. ‘That clever little nigger Naipaul has won another literary
prize,’ Evelyn Waugh complained in 1963.

If Naipaul had written nothing else after Biswas, he would still be
counted among the greatest writers of the 20th century. But it is the
range of his output after Biswas that qualifies him as the greatest
writer of English prose of the past six decades. Naipaul did not, in
the more than 30 books of fiction and nonfiction he published, attempt
to write lapidary sentences. He strove always to strip language down
to its basics. Literature’s purpose, he believed, was to reveal and
not to obscure. He abhorred jargon. And his directness is what made
him so unpalatable to critics as he began writing from Africa,
Americas and Asia.

He travelled to Iran, Pakistan, Indonesia, Malaysia and wrote with
shattering forthrightness about the effect of Islam, a faith
originally of the Arabs, on non-Arab Muslims. In mimicking the Arabs
and their austere ways, the converts and the descendants of converts,
he wrote, were stamping on their own rich heritage. The Arabs had
stormed Sindh, now in Pakistan, in the 8th century and spent days
slaughtering the natives and plundering their riches. But Pakistan’s
great public works were given the names of the Arab conquerors.
Naipaul noticed that it was the defeated indigenous king, the ancestor
of the modern Pakistani, who was despised.

The hatred of Pakistan’s Arabs manqué for the natives rooted in the
culture of their soil was not theoretical. It had fatal consequences.
In 1971, the Pakistani army slaughtered three million people in what
is today Bangladesh – the largest single massacre of a predominantly
Muslim population – because it regarded them, as the US consul-general
in Dhaka put it, as ‘Hindu-corrupted’ heretics. ‘It turns out now,’
Naipaul wrote after studying Pakistanis desperately pretending to be
Arabs by denying their pluralistic pre-Islamic past, ‘that the Arabs
were the most successful imperialists of all time; since to be
conquered by them (and then to be like them) is still, in the minds of
the faithful, to be saved’. Naipaul’s incisive observation, published
more than three decades ago in Among the Believers (1981), was
validated just last month by Imran Khan, Pakistan’s pious new prime
minister-elect, when he declared that his aspiration was to build in
Pakistan a new Medina.

Sympathetic on the page to the tyrannised, the exploited and the
discarded, in life Naipaul was a man without sentiment or illusions.
‘Hate oppression. Fear the oppressed’, he said. His fidelity to truth
as he perceived it unnerved both liberals and conservatives. On
migrants from anti-Western Muslim states: ‘They appealed to the ideals
of the alien civilisations whose virtues they denied at home.’ On
Argentinians: ‘They lie to themselves every day and try to invent a
sort of cosmic mythology …  Genocide is their history’. And on British
attitudes to slavery: ‘They reduce the history of slavery not to the
horrors of the crime extending over a couple of hundred years, but to
the few years of the fight to abolish it.’

For me, however, it is Naipaul’s writing on India – beginning in the
1960s and culminating in the 1990s – that constitutes his most
accomplished work. Hinduism has seldom known a fiercer or more
trenchant critic. Naipaul dismantled every consoling lie Indians told
themselves to reveal a wounded civilisation. I can still remember
reading An Area of Darkness (1964) and India: A Wounded Civilisation
(1976), in a single sitting, and feeling, for the first time, the
power of the written word to disconcert. These books crawled under my
skin. They shook me. They were the closest thing to an out of body
experience I have ever known. After this, I approached Naipaul’s books
with the reverence with which a believer approaches holy texts.

Naipaul troubles Indians so much because of his honesty. If his
portraits appear unflattering, it is because they are not tempered
with spurious politeness. He did us the greatest honour any observer
ever could: he saw us as we were. None of our fortifications against
foreign scrutiny could withstand the sharpness of his vision. His
India books truly are remarkable, full of the author’s confusion and
rage at his ancestral homeland but also a refreshing clarity about its
history and a deep affection for its people.

Naipaul maintained a tough exterior throughout his travels, but there
is a moment in An Area of Darkness when, on a train from southern
India, accompanied by army officers and soldiers being transported to
the frontlines to resist Chinese troops as Mao Zedong launched an
invasion of India, he abruptly softens up. ‘I did not want India to
sink’, he concedes, ‘the mere thought was painful’. The prospect of
India’s defeat moves him, for the only time, to lyricism: ‘Out of its
squalor and human decay, its eruptions of butchery, India produced so
many people of grace and beauty, ruled by elaborate courtesy.
Producing too much life, it denied the value of life; yet it permitted
a unique human development to so many. Nowhere were people so
heightened, rounded and individualistic; nowhere did they offer
themselves up so fully and with such reassurance. To know Indians was
to take a delight in people as people’.

The accusation that Naipaul was trying to comfort white reactionaries
in the West with his depictions of non-Western places tells us more
about his critics than about Naipaul. Whenever I have come across such
charges, imputing the basest motives to Naipaul, I have wondered: have
they read his work? Because nobody in the English language – not even
Orwell – wrote with greater acuity about the delusions, the horrors,
the futility and the wastefulness of European imperialism than

The allegation that Naipaul harboured Hindu-supremacist sympathies
because he wrote and spoke frankly about the devastation caused by the
Islamic invasions of India is impossible to reconcile with the
fellow-feeling for downtrodden Muslims that courses through his
writings. Naipaul’s blunt assessment of India’s pre-colonial history
was followed by an injunction that has conveniently been overlooked:
‘The past has to be seen to be dead; or the past will kill.’ Accept
what happened, Naipaul was saying, and move on. India’s preening
post-colonial elite of course expressed contempt for Naipaul. Today,
the secular state they panegyrised is on the deathbed. The past is
suddenly alive again, and people are being killed in its name.
(Naipaul himself is despised by Hindu extremists in India for marrying
a Pakistani woman.)

In the so-called Third World, Naipaul was read with diligence and
devotion. It is the people who set themselves up in the West as the
authentic representatives of the Third World who were most irked by
Naipaul. Part of the reason for this, as the Indian novelist Amitav
Ghosh candidly admitted, was that Naipaul’s writing uncovered ‘truths
that were too painful to acknowledge’. There was a genuine expectation
among the permanently aggrieved but rarely intelligible eminences of
post-colonial thought at Western universities that Naipaul, an
unapologetic believer in what he called ‘universal civilisation’,
should perform a role on their behalf. When he did not, the attacks
turned ad hominem. Naipaul was traduced as a careerist who succeeded
because he ingratiated himself with white masters. The Nobel,
Naipaul’s admirers justly felt, was withheld for too long from a
writer who, as Irving Howe suggested, was without equal by the close
of the 1970s.

The last piece of writing Naipaul published was an essay on ISIS in
2015. It was a phenomenally alert work, coaxed out of him by Geordie
Greig, who – along with James Wood, Jason Cowley, and Zoe Heller – is
one of a small group of a younger generation of British writers and
editors who understood and valued Naipaul’s insights. A voice such as
Naipaul’s will probably not be allowed to rise today, in our age of
hot takes and constant outrage. The ‘respectable’ journals will not
open themselves to him.

Condemn Naipaul for his private cruelties. Deplore the irascible
provocateur he relished playing in interviews. But read his books.
Because any idea of the 20th century formed by omitting Naipaul’s
oeuvre is an incomplete and impoverished idea. His works, embodying
the triumph of unremitting perseverance against insuperable odds,
anticipated the fervours that define our times. They will endure long
after Naipaul’s criticasters have faded from the scene. As he said in
his Nobel lecture in 2001, ‘everything of value about me is in my
books’. The world is enhanced by the outstanding literary legacy
Naipaul, refusing to become nothing, bequeathed it.

Kapil Komireddi’s The Malevolent Republic: India Under Modi will be
published by Hurst in the winter.

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"The president won this one," said House Dem 1 of the Trump v Squad (AOC, Tlaib, Omar & Pressley) showdown. @jaketapper
Law & Politics

"What the president has done is politically brilliant. Pelosi was
trying to marginalize these folks and the president has now identified
the entire party with them."

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Iran's top military spokesman said all the country's drones had returned safely to base, Tasnim news agency reported, after President Donald Trump said a U.S. Navy ship had "destroyed" one
Law & Politics

“All drones belonging to Iran in the Persian Gulf and the Strait of
Hormuz ... returned safely to their bases after their mission of
identification and control, and there is no report of any operational
response by USS Boxer,” Abolfazl Shekarchi, a senior armed forces
spokesman, was quoted as saying by Tasnim.
Trump said on Thursday that the drone had flown to within 1,000 yards
(914 meters) of the U.S. warship Boxer and had ignored “multiple calls
to stand down” in the latest episode to stir tensions in the Gulf.

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The days of investors using bond markets to cow world leaders may be over
International Trade

Bill Clinton’s political adviser, James Carville, once said he’d like
to be reincarnated as the bond market, since “you can intimidate
everybody.” Those days of cowing even presidents may be over.
The term ‘bond vigilante’ was coined in the 1980s for investors who
punished governments by selling off sovereign debt and sending yields
surging, forcing changes in policies or personnel.
They had their heyday during the European debt crisis that kicked off
in 2009, when investors had the power to make or break governments.
From Greece to Italy and Ireland, leaders fell as yields soared and
governments were forced into international bailouts.
Now, with interest rates at rock bottom, bond yields are at historic
lows and investors’ ability to bully governments is waning.
Italy remains politically volatile, but yields on its two-year debt
went into negative territory this month. Spain doesn’t yet have a
government after April elections, but it too can borrow at negative
rates. Investors are snapping up bonds in troubled Turkey and Ukraine
in search of some kind of returns.
Some might see the end of the bond vigilante as healthy. But with
politics increasingly divisive, the removal of a layer of market
pressure on governments to stay within certain guardrails may mean
even more wayward behavior.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1259
Dollar Index 96.865
Japan Yen 107.67
Swiss Franc 0.9837
Pound 1.2521
Aussie 0.7064
India Rupee 68.8125
South Korea Won 1175.25
Brazil Real 3.7184
Egypt Pound 16.6160
South Africa Rand 13.85

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Don't Look Now @realDonaldTrump Iran's Currency Is Soaring @economics
Emerging Markets

If there was a currency you wouldn’t expect to be strengthening, it
would be Iran’s.
But the truth is that the rial is soaring on the country’s parallel
market, gaining 8% against the dollar this week alone to extend its
advance since early May to 30%.
That’s according to Bonbast.com, a local website that monitors the
currency. The appreciation is borne out by a Bloomberg survey of
street traders in Tehran.
U.S. President Donald Trump’s administration has been toughening up
sanctions on the Islamic Republic, all but preventing it from
exporting oil, the lifeblood of its economy.
Trump, who regularly touts the success of those penalties, tightened
them further last month after Tehran shot down an American drone near
the Persian Gulf.
The rial’s resilience is evidence that Iran, which implements a range
of import restrictions to preserve foreign exchange, has “hunkered
down,” according to Steve H. Hanke, a professor of applied economics
at Johns Hopkins University in Baltimore.
There have also been changes to the currency system. The Central Bank
of Iran maintains an official exchange rate of 42,000 rials per
dollar. But it’s recently tried to get more exporters to use a trading
platform known as Nima, which was set up last year. The rate on Nima
has been allowed to weaken in recent months to encourage more
companies to sell their foreign exchange.
That’s eased pressure on the rial on the unregulated parallel market,
which is used by small businesses and individuals. There, the currency
now trades at 120,000 per dollar and has almost converged with the
Nima rate of around 115,0000.
For all the gains, the rial has still weakened 32% in the past year.
And the recent appreciation could be short-lived given the scarcity of
hard currency in Iran and the declining prospect of the U.S. easing
sanctions any time soon.

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Sudan political turmoil drives fears of economic collapse @AFP @YahooNews

Abul Fadel said the unrest had slashed his overall sales by 20-25
percent -- or as much as 40 percent for some items.
"The government has yet to announce its economic policies, and as an
investor, I can't take any decisions in the current climate," he said.
The millionaire businessman depends heavily on imports to stock his
five Khartoum malls, but he said many firms have stopped bringing in
goods due to the uncertainty.
Fellow entrepreneur Mohammad Hussein Madwi, who owns a string of
agricultural and manufacturing firms, echoed his concerns.
"Sales are down by at least 30 percent because of the lack of demand
and the collapse of the Sudanese pound," Madwi said.
"The state of political uncertainty makes me hesitant to invest or
import goods, so things have pretty much come to a standstill."
Inflation has meanwhile fallen from a high of 70 percent in December
to below 50 percent, according to the country's central statistics
"Everyone is alert and waiting," Abul Fadel said. "If this state of
tension and uncertainty continues, the economy will collapse."
For the tycoon, there is only one way forward.
"A political deal between the military council and (protest leaders)
is the only way out of the current economic situation," he said.

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Ethiopia Offers New Hope for Phone Providers @technology

Yabsira Tadesse had no trouble getting a new SIM card when he popped
into an Ethio Telecom store in northern Addis Ababa the other day. He
still thinks it’s terrible that the state-owned behemoth is the only
option for phone and internet users in a country of 100 million.
“The status quo is terrible,” the 22-year-old student said, standing
next to a dirty sign displaying the company’s green logo. As the owner
of a fledgling cryptocurrency business, Yabsira is dependent on Ethio
Telecom’s occasionally patchy service.
He also said he fears the state uses the group to spy on him. If a new
wireless carrier “can come here and government lets them be
competitive, I would be the first to line up and support it.”
Yabsira’s wish may be about to come true. As part of an ambitious
reform program, the government of Prime Minister Abiy Ahmed plans to
award telecommunications licenses to two private operators next year,
and sell a minority stake in Ethio Telecom.
The hope is the move will boost foreign direct investment into an
economy long hostile to international companies, while expanding
internet services in rural areas.
The potential downside for any bidder: Operating in a country that’s
prone to turning off the internet for political reasons, where
violence and anti-government activity remains prevalent and where Abiy
and his promises of reform face significant opposition, including from
within the ruling coalition he leads.
Johannesburg-based carriers MTN Group Ltd. and Vodacom Group Ltd. have
been quick to express an interest in the auction, as has French
operator Orange SA, which operates in African countries from Egypt to
Ivory Coast and once had a partnership with Ethio Telecom.
More may put up their hands, including Airtel Africa Plc, which
recently spun out of its Indian parent, Bharti Airtel Ltd., and Abu
Dhabi-based Etisalat.
Ethiopia is “close to being an absolute exception in the world,”
Orange Deputy Chief Executive Officer Ramon Fernandez said in London,
referring to the closed-off nature of the market. The Horn of Africa
country has “a very bright future.”
Up for grabs is access to Africa’s second-largest population and a
growing market where the license winners can profit from higher-margin
data and mobile-money services. What’s more, the $80 billion economy
is set to grow at about 7.2% a year through 2024, according to the
International Monetary Fund.
Expanding on the continent has hardly been plain sailing. MTN, the
continent’s market leader by subscribers and revenue, has been plagued
by government and regulatory disputes in Nigeria, its biggest market.
MTN shares have halved in value over the past four years.
Vodacom, majority-owned by the U.K.’s Vodafone Group Plc, is fighting
the removal of its 2G license in the Democratic Republic of Congo.
Millicom International Cellular SA has decided enough is enough and is
trying to exit the continent completely in favor of Latin America.
MTN, Orange and Vodacom will have to ensure the regulatory structure
will let them generate sufficient returns before committing to
Ethiopia, said John Davies, an analyst at Bloomberg Intelligence. “If
the upside is shared rather than all going to the government in the
form of enormous license fees, then it’s relatively attractive,” he
Other barriers to entry include ethnic unrest and opposition to Abiy
from factions within the ruling party. Last month, the head of the
army and a state president were among five government officials killed
in violent attacks.
No one has claimed responsibility. The government switched off
internet access for 10 days in the aftermath of the assassinations, a
measure likely to ring alarm bells for the prospective owners of new
telecom licenses.
Undeterred, Orange’s Africa CEO, Alioune Ndiaye, traveled to Addis
Ababa last month -- before the killings -- alongside other potential
entrants to meet local officials and gather information about the
auction plans, Fernandez said.
And CEO Stephane Richard was part of a business delegation that in
March accompanied French President Emmanuel Macron to Ethiopia, and
described the country as “a priority for our development in Africa.”
Revenue and profit growth rates in the region are stronger than the
“tepid rates” Orange is experiencing in Europe, according to Stephane
Beyazian, an analyst at Main First. That said, “operating in those
countries isn’t always a walk in the park. Currency as well as
geopolitical risks come to mind.”
Orange revenue has risen faster in Africa and the Middle East
Africa and the Middle East represented 13% of Orange’s total revenue
last year, compared with 44% for France. And while it had a mobile
base of 120 million customers there at the end of March, only 17.6
million were premium 4G customers.
MTN CEO Rob Shuter said in a May interview that Ethiopia was a market
“where we would be really excited to participate in some way.” Few
large markets are both “under-penetrated” and have the scope for a No.
1 or No. 2 operator, he said.
In Airtel’s prospectus, published ahead of recent listings in London
and Nigeria, the carrier highlighted the continent’s rising
urbanization rates and household consumption.
Africa’s middle class, defined by Deloitte as those with earnings
between $2 to $20 per day, is forecast to grow to 582 million people
by 2030, representing 34% of the total African population.
“There is an emerging middle class, there is economic growth, and
there is an under-penetrated market for the services we can offer,”
Orange’s Fernandez said. “Our track record in Africa shows that we are
committed to be there, not on a stop-and-go basis, but on a durable

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South Africa All Share Bloomberg +9.74% 2019

Dollar versus Rand 6 Month Chart INO 13.8512


Egypt Pound versus The Dollar 3 Month Chart INO 16.610


Egypt EGX30 Bloomberg +4.87% 2019


Nigeria All Share Bloomberg +11.35% 2019


Ghana Stock Exchange Composite Index Bloomberg -6.82% 2019


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China's Built a Railroad to Nowhere in Kenya @business
Kenyan Economy

Beijing is withholding the $4.9 billion needed to finish the project,
once a flagship for Xi Jinping’s Belt and Road initiative.
Gleaming concrete sleepers run across a new railway bridge in Kenya,
the latest stretch of a Chinese-built line from the coast all the way
to Uganda.
Only, it doesn’t quite reach the border. Instead, the railroad ends
abruptly by a sleepy village about 75 miles west of the Kenyan
capital, Nairobi, the tracks laid but unused.
Construction of what was intended to be a flagship infrastructure
project for Eastern Africa was halted earlier this year after China
withheld some $4.9 billion in funding needed to allow the line’s
Beijing’s sudden financial reticence appeared to catch the governments
of Kenya and Uganda off guard: Both may now be forced to reinstate a
colonial-era line in a bid to patch the link and boost regional trade.
The reason for China’s attack of cold feet may lie in the project’s
high profile. Chinese state media repeatedly used the Mombasa-Nairobi
Standard Gauge Railway (SGR) project as a showcase for President Xi
Jinping’s Belt and Road Initiative.
But with concerns rising globally that Belt and Road was loading
poorer nations with unsustainable debt, Xi signaled in April that
Beijing would exert more control over projects and tighten oversight.
That extra rigor is beginning to be felt worldwide. A planned
light-railway system that was the most high profile belt and road
project in Kazakhstan is on hold after the collapse of a local bank
that handled Chinese funds.
In Zimbabwe, a giant solar project hit a funding shortfall after the
Export Import Bank of China backed out of providing financing due to
the Zimbabwean government’s legacy debts, RWR Belt and Road Monitor
reported this month. Kenya’s line may be next.
The Chinese “are adopting a more cautious approach to their debt
exposure in Africa,” said Piers Dawson, a consultant at London-based
investment consultancy Africa Matters Ltd. He cites “increased noise
around its sustainability and potential default.”
China is now the single largest financier for infrastructure in
Africa, funding one-in-five projects and constructing every third one,
according to a Deloitte report.
With infrastructure needs that the African Development Bank estimates
at $130 billion to $170 billion yearly, governments are only too
willing to take out Chinese loans to plug the funding gap.
The downside is that Kenya was one of three African countries
identified in a March 2018 report by the Washington-based Center for
Global Development as at risk of debt distress as a result of its Belt
and Road participation. The others were Egypt and Ethiopia.
“China has its own issues it’s dealing with, including perceptions
that it is ‘trapping’ many of its Belt and Road partners by drowning
them in debt,” said Jacques Nel, an economist at NKC African
Economics. China’s government has “put the brakes on its external
expansion plans, or has at least become more focused on the viability
of projects due to its own corporate debt concerns,” he said.
The first half of the Kenya-Uganda railway, a 470-kilometer (290-mile)
stretch between the port city of Mombasa and Nairobi, is operational
but not yet making money. Beijing balked at funding the extension to
Uganda amid concerns it may be a step too far beyond viability.
The situation doesn’t bode well for Kenyatta’s legacy, which he was
building around the railroad as the nation’s single-biggest investment
since Kenya attained self-rule over five decades ago.
Knowing that alternative—and probably more expensive—debt could
further widen Kenya’s deficit, Kenyatta is courting private investors
to build the link between the new and old railroads. Uganda will
meanwhile include the $205 million needed to rehabilitate its old
tracks in the budget, but hasn’t said how it plans to raise the funds.
China supports the Kenya railway project but requires a reasonable and
sustainable financing plan, according to a person involved with the
project. Because China now requires high-quality projects and a more
thorough feasibility study, the process of approving loans has slowed
in general, but it doesn’t mean the project is terminated, said the
person, who asked not to be named as they are not authorized to speak
publicly. Related parties in the Chinese government and banks are
still deliberating financing options, the person said.
China’s Ambassador to Kenya, Wu Peng, was asked in May by local
newspaper the Daily Nation about expectations President Kenyatta’s
visit to China that month would secure funding for the missing section
of the railway, to Kisumu by Lake Victoria.
“I really don’t know where those expectations came from,” Wu was cited
as saying.


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The Clue to all of this was contained in xi Jinping's Speech at the opening ceremony of the 2018 Beijing Summit of the Forum on China-Africa Cooperation (#FOCAC) in Beijing
Kenyan Economy

September has just set in Beijing, bringing with it refreshing breeze
and picturesque autumn scenery. And we are so delighted to have all of
you with us, friends both old and new,

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Well-placed sources have told the investigative website Finance Uncovered that @SportPesa made more than $1bn revenues last year in Kenya, but the company does not make its revenues or profits, in Africa or the UK, public @guardiannews
Kenyan Economy

The holding company’s largest Bulgarian shareholder, Guerassim
Nikolov, a casino owner, moved to Nairobi in 1999 from Sofia, where he
operated a casino, and he founded SportPesa in 2014. Described as the
group chief executive, Nikolov wholly denies claims made in Bulgarian
media in 2006 that he left the country after being questioned by
police in relation to an alleged criminal incident
Nikolov and other Bulgarian investors are said to have provided the
gambling and digital technology expertise in the partnership that
founded SportPesa. The largest Kenyan shareholder is Asenath Wacera,
whose late husband, Dickson Wathika, was the mayor of Nairobi and a
long-term friend of the country’s president, Uhuru Kenyatta. Paul
Wanderi Ndung’u, another major shareholder, is a prominent
entrepreneur in Kenya, having invested early in mobile
telecommunications, and he is a major financier and fundraiser for
Kenyatta’s Jubilee party.

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British American Tobacco Kenya Ltd. BAT reports HY EPS +25.521%


Par Value:                  10/-
Closing Price:           510.00
Total Shares Issued:          100000000.00
Market Capitalization:        51,000,000,000
EPS:             40.85
PE:                 12.485

British American Tobacco Kenya PLC HY 2019 Results through 30th June
2019 vs. 30th June 2018
HY Gross revenue 19.228b vs. 17.472b +10.050%
HY Excise duty and VAT [7.939b] vs. [7.655b] +3.710%
HY Net revenue 11.289b vs. 9.817b +14.994%
HY Operating profit 3.738b vs. 3.035b +23.163%
HY Finance costs [126m] vs. [164m] -23.171%
HY PBT 3.612b vs. 2.871b +25.810%
HY Income tax expense [1.084b] vs. [857m] -26.488%
HY PAT 2.528b vs. 2.071b +22.067%
HY Interim dividend/ share 3.50 vs. 3.50 -
HY Basic and diluted EPS 25.28 vs. 20.14 +25.521%
Shareholders’ funds 8.693b vs. 7.661b +13.471%
Net cash from operating activities 1.925b vs. [21m] +9,266.667%
Cash and cash equivalents at the end of the year [414m] vs. [4.189b] +90.117%
Business performance
The Company grew shareholder value in a challenging operating
environment in Kenya and across its export markets to deliver a solid
set of results.
Gross revenue increased by 10.1% to KSh 19.2 billion. This was driven
by excise-led pricing impacts in Kenya and Somalia coupled with growth
in cut rag sales to Sudan. This was offset by lower sales volumes in
Kenya and the Democratic Republic of Congo as a result of the
continued impact of affordability challenges, together with a high
incidence of duty not paid cigarette sales in Kenya.
This latter issue has continued to deny the Government an estimated
KSh 2.5 billion per annum in revenue. We continue to engage the
relevant Government agencies to double their efforts to reduce the
incidence of the illicit trade in cigarettes.
Our operating margin increased by 2.2 percentage points to 33.1%. This
also resulted from excise-led pricing and an improved sales mix which
more than offset the higher costs associated with increased cut rag
and export sales volumes.
Profit before tax increased by 25.8% to KSh 3.6 billion reflecting the
impact of the higher operating margin and lower finance costs due to
lower borrowing as a result of further improvements in working capital
Cash from operating activities increased following higher profits and
further improvements in working capital management.
Contribution to Government revenues
Our contribution to Government revenues in the form of Excise Duty,
Value Added Tax (VAT), Pay As You Earn (PAYE) and Corporation Tax
increased by KSh 503 million to KSh 9.3 billion, mainly due to higher
sales revenues in Kenya as highlighted above.
The Board of Directors recommend an interim dividend in respect the
year ending 31 December 2019 of KSh 3.50 per KSh 10 ordinary share.
The interim dividend, which is subject to withholding tax, will be
paid on 20 September 2019 to shareholders on the register at the close
of business on 19 August 2019.
19 July 2019


Muscular. Its inexpensive on a Forward and a Trailing PE Basis.

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Kenya Shilling versus The Dollar Live ForexPros
Kenyan Economy

Nairobi All Share Bloomberg +6.28% 2019


Nairobi ^NSE20 Bloomberg -5.54% 2019


Every Listed Share can be interrogated here


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by Aly Khan Satchu (www.rich.co.ke)
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July 2019

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