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Market Report – 28th May 2021


Faida Research - May 31, 2021 - 0 comments

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Feature of the week:

This week, we look at the first quarter results for Equity, KCB, Standard Chartered and NCBA. Read more on the performance of these banks and our thoughts in this week’s report here:

Equities Market Summary:

Nairobi Securities Exchange Performance

The All Share Index (NASI) and the NSE 20 Share Index rose by 4.2% w/w and 0.2% w/w to close the week at 172.69 and 1,862.15 respectively. The market was characterized by an increase in market turnover (57.0% to KES 5.0 billion) and volume of shares traded (32.3% to 123.3 million shares). We attribute the gains in the indices mainly to price gains on Safaricom, EABL and banking counters.

Safaricom rose by 5.9% w/w to close at KES 41.85 as investors remained cautiously optimistic in the company’s imminent entry into Ethiopia.

The gains in the banking counters were on the back of relatively good financial performance in the 1Q2021.  Equity, KCB, NCBA and Standard Chartered released their 1Q2021 results this week. Notably, Equity holdings reported growth of 63.8% y/y in after tax profits to KES 8.7 billion. Equity’s share price reacted positively, gaining by 3.6% w/w to KES 43.00.  Although KCB’s performance was less impressive (after tax profit growth of 1.8% y/y to KES 6.4 billion), the price rose 3.4% w/w to KES 42.40. This may signal investor optimism in future performance. Other notable price gains included EABL (+7.0% w/w to KES 186.25) which hit a new 52-week high, HF (6.4% w/w to KES 3.85), Absa Kenya (3.5% w/w to KES 9.52) and NCBA (2.4% w/w to KES 25.45).

The banking sector is one the sectors that we expect to benefit immensely from a stable macroeconomic environment. Please look out for our revised banking sector recommendations in the coming weeks.

 

Recommendations:

EABL – Long-term Buy

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