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Kenya Macroeconomic Review

Apr 5, 2020

During Q1’2020, we tracked Kenya 2020 GDP growth projections released by 11 organizations, that comprised of research houses, global agencies, and government organizations. At the beginning of the quarter the average growth rate was projected to be 6.0% but due to the novel Coronavirus pandemic, economic growth is expected to decline due to reduced demand by Kenya’s main trading partners and disruptions of supply chains and domestic production. Based on the impact on other economies, Cytonn Investments, have also reduced Kenya’s forecasted GDP growth. Based on the impact on other economies, we believe that Coronavirus may have a 10.0% to 25.0% impact on GDP growth for the year 2020. The 10.0% impact is an optimistic case in the event the outbreak is contained, and a 25.0% impact in the event it is not contained. As such, the Coronavirus could reduce Kenya’s GDP growth to 4.3% for the year 2020 depending on the severity of the outbreak and economic implication...

Sub-Saharan Africa Regional Review

Apr 5, 2020

During Q1’2020, the United Nations Economic Commission for Africa (UNECA) released the World Economic Situation and Prospects for 2020, revising the Sub-Saharan Africa (SSA) GDP growth to 1.8% from the earlier projected 3.2% in January 2020. The lower growth rate was majorly attributed to the economic impact of the COVID-19 pandemic set to disrupt supply chains, plummeting commodity prices and key sectors such as tourism, agriculture, oil and mining set to be greatly affected. The projections for 2020 are lower by 140 bps compared to the previous projection of October 2019, which stood at 3.4%. The largest economy in SSA, Nigeria, is expected to experience a less robust GDP growth in 2020 with the International Monetary Fund (IMF) revising this downwards by 30 bps to 2.0%, from 2.3% previously, attributable to the decline in the oil price growth and disruption of global s...

Global Markets Review

Apr 5, 2020

Introduction According to the United Nations Department of Economic and Social Affairs (UN-DESA), the global economy is expected to contract by 0.9% in 2020 as a result of the spread of the coronavirus, lower than the expectation of a 1.5% growth at the beginning of the year and the estimated 2.9% recorded in 2019. Further to this, the International Monetary Fund (IMF) Managing Director, Mrs. Kristalina Georgieva, highlighted in a press release that the ongoing COVID-19 pandemic has had an immeasurable human cost and emphasized that countries need to work together to protect people and limit the economic damage. Despite this, the IMF believes that recovery is expected in 2021 but this is dependent on how fast the virus is stopped. They advise that this can be done by (i) prioritizing containment, and (ii) strengthening health systems everywhere. Also, they are advocating for extraordinary fiscal actions by governments, such as...


Mar 29, 2020

Valuation Summary We are of the view that I&M Holdings Plc is a “BUY” with a target price of Kshs 75.2, representing an upside of 51.0%, from the current price of Kshs 49.8 as of 27th March 2020, inclusive of a dividend yield of 5.1%, I&M Holdings Plc is currently trading at a P/TBV of 8x and a P/E of 4.0x vs an industry average of 1.2x and 6.1x, respectively. Key Highlights FY The parent company I&M Holdings injected an additional Kshs 1.8 bn into the bank following the expansion of operations after the acquisition of Giro Commercial Bank in 2017. The bank joined the class of large banks after its market share grew by 0.5% points to 5.3%, thus surpassing the 5.0% benchmark used by the Central Bank of Kenya (CBK) to classify banks as large industry players. The growth in market share was driven by new business from its acquisition of Giro Bank.

Standard Chartered Bank of Kenya Plc – FY’2019

Mar 22, 2020

Valuation Summary We are of the view that Standard Chartered is a “BUY” with a target price of Kshs 211.6, representing an upside of 19.8%, from the current price of Kshs 193.25 as of 20thMarch 2020, inclusive of a dividend yield of 10.3%,  Standard Chartered Bank is currently trading at a P/TBV of 1.5x and a P/E of 8.1x vs an industry average of 1.2x and 6.3x, respectively.  Key Highlights FY’2019 Standard Chartered Bank Kenya launched its innovation hub in Nairobi dubbed “eXellerator”. The innovation hub is aimed at supporting financial technology startups to scale up and generate ideas that will solve banking problems. Income Statement Core earnings per share increasing by 1.7% to Kshs 24.0 from Kshs 23.6 in FY’2018, below our expectations of a 9.8% increase to Kshs 25.9. The performance...