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
