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The East African : Mar 30th 2015
MONEY AND EQUITY MARKETS MARCH 28 - APRIL 3, 2015 BUSINESS THRIVES AS ECONOMIES SLOW DOWN Listed companies cling to new businesses for growth Listed telecommunication firm Safaricom has remained resilient at the NSE, trading at highs of around $0.18 Further, with the telco having set a new profitability record of $161.53 million., net profit for the six months to September last year, the company is expected to break new records in its annual profit. British American Investment Company (Britam), a diversified financial services group dealing in insurance, asset management, banking and property development reported a 19 per cent jump in pre-tax profit for the 12 months to December 31, 2014. Its profit before tax acceler- ated to $41 million from $34.29 million in the previous year. The stock of the insurer, which listed on the NSE in July 2011, is trading at an average of $0.29 per share. Kenya’s economy is estimated Stockbrokers at the Nairobi Stock Exchange. Picture: File Companies aim to boost ea≥nings to gene≥ate ≥etu≥ns to sha≥eholde≥s and meet ≥egulato≥’s financial demands By JAMES ANYANZWA The EastAfrican good performance given their capacity to seize new investment opportunities for business growth and expansion. “Listed companies usually E move fast whenever there is an investment opportunity,” said Job Kihumba, executive director, Standard Investment Bank. “The financial and telecommunications sectors are growing very fast. In fact most of the companies on the Nairobi Securities Exchange are from insurance and banking subsectors. These are the ones driving the market,” he added According to Nicholas Malaki, a chief investment officer at PineBridge Investment East Africa, commercial banks particularly will make money irrespective of the performance of the economy. “Our view is that the economy is on a very sound footing with most sectors recording growth or recovery. A few sectors may be struggling but overall growth is strong and projected to accelerate. In an environment of low inflation, a stable currency as well as interest rates, corporate earnings are growing,” said Mr ast Africa’s listed companies are set to maintain their Malaki. “Companies in the financial sector tend to do well even when the economy is not growing because they finance investment and consumption.” Equity Group Holdings, the parent company of Equity Bank, posted a $189 million profit in the year ended December 2014,some 27.8 per cent higher than the $147.47 million recorded in 2013. Its performance was mainly driven by its core lending business and divestiture from listed mortgage lender Housing Finance. KCB, the region’s largest bank by branch network, whose stock at the Nairobi bourse is cur- KENYA The World Bank forecast Kenya’s growth in 2015 at six per cent, making the fastest growing economy in subSaharan Africa due to its heavy investment in infrastructure projects. Africa’s GDP growth is expected to accelerate from 3.5 per cent in 2014 to 4.6 per cent in 2015 and 4.9 per cent in 2016, according to the United Nations Department of Economic and Social Affairs. Kenya’s economy is estimated to have expanded by 5.5 per cent during the third quarter of 2014 compared with a revised growth of 6.2 per cent in the same period of 2013, according to data from the Kenya National Bureau of statistics. rently trading at around $0.66 per share, posted a 17.4 per cent growth in net profit, which rose to $184.61 million from $157.14 million. Swissport Tanzania Plc, a groundhandling company operating at Dar es Salaam and Kilimanjaro airports, posted a 23 per cent growth in operating revenues for the year ended December 31 2014, rising to $248,726.36 as compared with 2013. The operating profit for the year was $104,747.83, representing a 64 per cent increase compared with the previous year. The robust performance is at- tributed to increased traffic, the use of bigger aircraft, foreign exchange gains and enhanced operational efficiency and strict cost control. Uganda’s utility firm Umeme Ltd reported a three per cent growth in earnings for the six months to June 2014 with total revenues climbing to $162.24 million $156.87 million in a similar period last year. Revenue from electricity sales increased by six per cent due to reduction in energy losses and increase in purchases by 2.4 per cent as customers numbers and supply availability grew. “I think the performance of these listed companies has to do with sectors. Their performance is sector based and there is no direct correlation between margin growth of the individual companies and the entire economy,” said Geoffrey Odundo, chief executive of the NSE. to have expanded by 5.5 per cent during the third quarter of 2014 compared with a revised growth of 6.2 per cent in the same period of 2013, according to data from the Kenya National Bureau of statistics. The growth was mainly sup- ported by strong expansion of activities in construction, finance and insurance, wholesale and retail trade; information and communication, and agriculture and forestry. Increasing consumer con- fidence, an expanding middle class, improvements in the business environment and a reduction in the costs of doing business have also contributed to the continent’s economic growth. Of the five regions, East Af- rica is expected to experience the fastest growth, reaching 6.8 per cent in 2015 and 6.6 per cent in 2016. Kenya and Uganda will be key drivers of growth. Kenya will benefit from rapid expansion in banking and telecommunication services and investment in infrastructure, particularly railways. Uganda’s growth will be sup- ported by increasing activity in sectors such as construction, financial services, transport and telecommunications. “The projected growth in pop- ulation translates into growing demand and given that the region is not self-sufficient, investors are willing to set companies across the region as the cost of doing business falls with the introduction of cheaper alterna- tives for power production like geothermal,” said Vimal Shah, chairman of the Kenya Private Sector Alliance. 61 Da≥ banks post poo≥ ≥esults at bou≥se By HELLEN NACHILONGO Special Correspondent A DROP in share prices in the past six months has affected the performance of banks and major manufacturer at the Dar es Salaam Stock Exchange (DSE). According to DSE business development and projects manager Magabe Maasa both sectors have declined, because there are more sellers than buyers at the bourse. “The trend shows that for the past six months National Microfinance Bank (NMB) recorded the highest share price of Tsh4700 ($2.46), CRDB Tsh 520 (0$.27) and DCB Tsh 870 (0$.45)” he said. Mr Maasa added that the current price per share of NMB has dropped to Tsh3,510 ($1.84), CRDB Tsh 400 ($0.01) and DCB to Tsh 865 ($0.45). Manufacturers recorded the highest price for the previous six months were TBL atTsh18,580 ( $9.8), TCC at Tsh20,000 ($10.4), TCCL at Tsh6,900 ($3.61) , TPCC (Twiga) Tsh4600 ($2.41) and TTP (Tatepa) Tsh6500 ($3.4). The current price per share of TBL has dropped to Tsh14,500 ($7.6), TCC to Tsh17, 050($8.9), TCCL to Tsh4,500 ($2.3), TOL to Tsh5,700($2.98) and Twiga to Tsh3, 770 ($1.97). According to Orbit Securi- ties head of dealings and operations Juventus Simon, the indicator of poor performance is market behavior. The outcome of markets is determined by the interplay of the market rules and institutions on the one hand and the behaviour of market participants on the other. He added that since Octo- ber to date, the bourse has not been stable because most of the manufacturing companies were closed and activities on bank counters was minimal. He explained that so far only Maendeleo Bank has had a constant share price of Tsh600 (USCents 3). According to Mr Maasa, overall the manufacturing sector dropped by 17 per cent while the banking index dropped by 23 per cent.
Mar 23rd 2015
Apr 6th 2015