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Daily Market Report – 25th September 2020


Faida Research - September 26, 2020 - 0 comments

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Market Commentary:

  • The All Share and NSE 20 Share Indices gained by 0.1% and 0.01% w-o-w to close the week at 140.37 and 1,847.43 respectively. Market turnover declined by 33.1% w-o-w to KES 3.4 billion as the number of shares traded declined by 30.6% w-o-w to 122.1 million shares. Safaricom gained 0.2% w-o-w to close the week at KES 30.05 (41.8% of week’s traded value). The banking sector traded 50.8% of the week’s traded value with Equity trading 35.6m shares (-0.1% w-o-w to KES 36.10). Other notable movements were posted on KCB (+2.6% to KES 38.90), Co-op (-0.8% to KES 11.90) with HF emerging the top loser of the sector (-8.2% to KES 4.01%). We expect price stability in the coming week.

 

News Highlights:

 General Electric to Exit Lamu Coal Power Plant Project

 General Electric (GE) announced plans to exit the Lamu 1,050 megawatt coal power plant project (Amu Power) as it shifts to renewable energy.

 The Amu Power project, a joint venture with Centum investment (51.0% stake), was estimated to cost KES 216.0 billion. GE had signed the agreement with Amu Power in May 2018 to design, construct and maintain the plant.

 Moreover, GE had set to acquire an undisclosed sake in the project at a later stage, subject to approvals from regulators, lenders and the board of Amu Power.

 The project has been facing challenges including; environmental concerns and difficulty raising funds, with the environmental approvals getting revoked by the National Environment Tribunal (the company appealed this decision before the High Court).

 Increasing focus on climate change has seen investors divest from nonrenewable sources of energy.

Commentary
 We note that at the end of FY2019/20, Centum had fully written down (to nil) the investment in Amu Power.
 We therefore do not expect this to have a major impact on the Centum’s performance going forward.

 

Recommendations:

Long Term Buy- Equity, BAT

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