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Recent Topicals

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Administration as a Business Restructuring Option

Sep 18, 2022

Recently, Kaluworks Limited successfully exited administration after struggling financially over the last few years on the back of weak sales and increased competition from other manufacturers. Key to note the company was under receivership for a period of fifteen months, and is now slated to resume operations. As such, we saw it fit to cover a topical on administration as a business restructuring option to shed light on the recent administrations and key lessons to draw from them. A business is said to be insolvent when it cannot be able to raise enough cash to meet its obligations. Generally, there are two types of insolvency i) Where the company’s liabilities are more than the assets, and, ii) Technical insolvency where the assets exceed liabilities but cannot be easily liquidated to pay off the obligations that are due. However, mere insolvency does not afford enough ground for lenders to petition for involuntary bankruptcy of the borrower, or force liquidation of...

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Kenya Listed Banks H1’2022 Report

Sep 11, 2022

Following the release of the H1’2022 results by Kenyan listed banks, the Cytonn Financial Services Research Team undertook an analysis on the financial performance of the listed banks and identified the key factors that shaped the performance of the sector. For the earnings notes of the various banks, click thee links below: Equity Group H1’2021 Earnings Note; KCB Group H1’2022 Earnings Note; ABSA Bank Kenya H1’2022 Earnings Note; Standard Chartered Bank Kenya H1’2022 Earnings Note;

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Investment Risk Analysis

Aug 28, 2022

All investments have a certain degree of risk owing to market conditions and the nature of specific businesses. In times of high uncertainty, investment risk tends to increase and decline during times of low uncertainty. Currently, the global economy is hailed by increased uncertainty emanating from elevated inflationary pressures, persistent supply chain bottlenecks, resurgence of COVID-19 infections and the prevailing geopolitical pressures. Closer home, Kenya has not been exempted with the uncertainty evidenced by increased investor sell-offs in the Nairobi Securities Exchange, increasing yields and the undersubscription of government securities. The uncertainty has also been reflected in the business environment characterized by slow activity with the average purchasing managers index (PMI) coming in at 48.8, in the first seven months of 2022. In light of the developments, we shift our focus to investment risks analysis in Kenya where we will discuss the types of investments ris...

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Post Elections Economic Focus

Aug 21, 2022

Kenya, like many other countries world over, has faced unprecedented challenges in the recent years which has had a major setback on the economy. One major issue; supply chain bottlenecks remains apparent and continues to worsen with new challenges such as geopolitical pressures and anticipation of increased demand as economies recover. Where we stand, the country is dealing with several issues including a high cost of living stemming from the prevailing inflationary pressures and local currency depreciation, rising debt levels currently at 69.1% of GDP as of May 2022 and a deteriorating business environment as consumers continue to cut back on spending. As such, we expect the incoming government to roll up its sleeves, perform a balancing act, and devise ways to stabilize key macroeconomic indicators while also supporting the ongoing economic recovery. We recently covered a topical on the “Effects of Ele...

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Kenya Retail Report 2022

Aug 14, 2022

In September 2021, we published the Kenya Retail Report 2021 themed “Rapid Expansion by Retailers to Cushion the Retail Sector,” which highlighted that the Kenyan retail sector performance recorded a 0.1% increase in the average rental yield to 6.8%, from 6.7% in 2020. The average occupancy rate and rent also increased by 1.8% points and 2.2% points, respectively, to 78.4% and Kshs 118 per SQFT in 2021 from 76.6% and Kshs 115 per SQFT in 2020, respectively. This was mainly attributed to an improved business environment as well as aggressive expansion by local and international retailers such as Carrefour and...

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