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Recent Topicals

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I&M-holdings-plc-fy2019-earnings-note

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.

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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...

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Diamond Trust Bank Kenya – FY’2019

Mar 22, 2020

Valuation Summary We are of the view that Diamond Trust Bank Kenya is a “buy” with a target price of Kshs 189.0, representing an upside of 110.0%, from the current price of Kshs 90.0 as of 20th March 2020, inclusive of a dividend yield of 2.9%, Diamond Trust Bank Kenya is currently trading at a P/TBV of 0.4x and a P/E of 3.5x vs an industry average of 1.1 x and 5.9x, respectively. Key Highlights FY’2019 DTBK partnered with the Simba Corporation to enable Small and Medium Enterprises category to acquire new Fuso trucks. The vehicles will be made available with 100 percent financing under the bank’s motor vehicle financing scheme dubbed ‘Beba Leo’. The partnership was aimed at cementing the bank’s commitment to growing the SME sector’ Income Statement Diamond Trust...

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Equity Group Holdings- FY’2019

Mar 22, 2020

Valuation Summary We are of the view that Equity Group is a “BUY” with a target price of Kshs 56.7, representing an upside of 52.0%, from the current price of Kshs 38.95 as of 20th March 2020, inclusive of a dividend yield of 6.4%, Equity Group is currently trading at a P/TBV of 1.4x and a P/E of 6.5x vs an industry average of 1.2x and 6.3x, respectively. Key Highlights FY’2019 Equity Group Holdings’ board of directors entered into a non-binding agreement with shareholders of Democratic Republic Bank of Congo to acquire a majority stake for, a move, which will see it, increase its market share in Congo, having expanded into the region through its subsidiary, Equity Bank Congo. The proposed transaction together with the binding term sheet signed with Atlas Mara Limited to acquire certain banking assets in 4 countries in exchange for shares in Equity Group. These include...

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Potential Effects COVID-19 on Money Market Funds

Mar 22, 2020

Introduction The novel Coronavirus, better known as COVID-19 in the medical community, is a group of viruses that causes respiratory tract illnesses. COVID-19 was first reported on 31st December 2019 in the city of Wuhan, China and currently, the disease has spread to over 104 countries with major economies such as Italy, Japan, South Korea, France, Spain, Australia, and the US reporting thousands of cases of the virus within their borders, and deaths related to the virus. The first case of Coronavirus infection within Kenya’s borders was reported on the 13th of March 2019, and so far, Kenya has reported seven confirmed cases. The impact felt in the local financial market mirrors what has equally been witnessed in the global setting. The uncertainty brought about by the disease, more so with World Health Organization (WHO) declaring it a pandemic, has seen investors selling-off risky assets such as equities in favor of safe...

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