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Daily Market Report – 9th June 2020

- June 10, 2020 - 0 comments

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Market Commentary:

  • The All Share Index eased marginally by 0.5% to close the day at 140.08 which we attribute to price declines in large cap counters: Safaricom (-0.8%), EABL (-0.4%) and KCB (-0.1%). However, the NSE 20 index gained by 0.7%. Foreign investors emerged net sellers for the day with foreign sells at 83.9% against foreign buys at 71.0%. Safaricom retreated on account of profit taking activities while Longhorn emerged amongst the biggest losers of the day (-4.8%) which we attribute to their profit warning announcement (see below).


News Highlights:

Longhorn Publishers Issues Profit Warning

 Longhorn Publishers has issued a profit warning for the FY2020.
 Listed companies are required to issue profit warnings when they expect projected earnings for the current financial year to be at least 25.0% lower than the earnings reported in the preceding financial year. This could mean that the group’s profits for FY2020 could be at least 25.0% lower.
 The group cites the COVID-19 crisis and the ensuing mitigating measures (including the suspension of learning in schools) as the key reasons for the expected poor performance.
 The group is currently focused on scaling and optimizing its digital learning solutions as well as enhancing operational efficiency in order to support the recovery of the group’s financial performance.

 The anticipated poor performance of Longhorn may also have a direct impact on Centum’s financial performance; Longhorn is one of Centum’s portfolio companies (Centum holds a 60.2% equity stake in Longhorn).
 In light of the challenges brought on by the COVID-19 crisis, we expect many businesses to struggle this calendar year. Thus, we expect to see more profit warning announcements.
 We expect to see more companies attempt to protect earnings by adopting cost-reducing measures.



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

Hold- Safaricom

Sell- Stanchart, Bamburi, HF

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