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Daily Market Report – 10th August 2020


Faida Research - August 11, 2020 - 0 comments

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Market Commentary:

The All Share Index eased by 0.3% to close the day at 130.21. This was partly attributed to Safaricom declining by 0.7% to KES close (VWAP) at 27.50. Activity on the counter accounted for 92.1% of the day’s traded value. The NSE 20 Index however gained by 0.2% to close at 1,761.43. Market turnover rose to KES 481.6 million from KES 211.2 million in the previous trading session while the number of shares traded increased by 79.2% to 18.5 million. Bamburi (+7.0% to KES 26.62), HF Group (+5.6% to KES 3.93) and Standard Chartered (+5.4% to KES 160.00) emerged as the top 3 gainers while Scangroup (-8.7% to KES 9.06), EA Cables (-8.1% to KES 1.93) and Sameer (-6.6% to KES 3.25) emerged as the top 3 losers. Foreign investors dominated today’s trading activity (89.0% participation).

 

News Highlights:

Limuru Tea Lowers after Tax Loss in 1H2020

 Limuru Tea posted an after-tax loss of KES 11.1 million for 1H2020, an improvement from a loss of KES 18.2 million reported in 1H2019. The improvement was attributed to top-line growth as well as effective cost management initiatives.
 Turnover edged up by 72.5% y/y to KES 50.6 million (1H2019: KES 29.4 million). This was attributed to higher sales volumes which offset the adverse impact of declining market prices.
 According to management, the company produced 2,172 tons of green leaf which was in turn manufactured into 458 tons of black tea.
 Management expects depressed market prices to continue to pose a risk to the business performance and is focusing on volume growth, cost management and other strategic initiatives to mitigate the market impact.
 The Covid-19 pandemic is expected to remain a risk to the operations of the business.

Commentary
 As countries open up and ease restrictions, we expect this to offer some reprieve. However, for the most part, demand and tea prices will be affected by the pandemic.

 

Recommendations:

Long Term Buy- KCB, Equity, Absa, Stanbic, NCBA

Hold- Safaricom

Sell- Stanchart, Bamburi, HF

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