5

Daily Market Note

Bloomberg: GNCP <GO>

Equities Reprieve for the NSE

2011

The bourse bounced back today gaining 10.98 points to close at 3819. The NASI closed up as well edging 0.22 points higher with the FTSE 15 and 25 indices up 1.12% and 0.98%. Local investors dominated trading today accounting 57% but positivity among foreigners returned when they closed at a net inflow of Kes.10Mn. Equity turnover was halved from yesterdays value of Kes. 336Mn. Market Capitalisation was remianed stable at Kes.1.1Tn. "We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely." - Warren Buffett The highlights of the days trading activity are listed below:
Table 1: NSE Performance Table 2: NSE Indices

Top Traders Equity Safaricom Ltd CIC Insurance Group Ltd Centum Investments Ltd C0-operative Bank Ltd Mumias Sugar Co. Ltd Volume 2,932,000 1,454,600 1,116,700 1,093,800 604,100

Market Indices Summary

Index NASI NSE 20 Share FTSE NSE 15 FTSE NSE 25 Source: NSE

Previous 83.48 3808.47 109.48 112.12

Today 83.70 3819.45 110.71 113.22

% change 0.26% 0.29% 1.12% 0.98%

Gaining Stocks Equity Express Kenya Ltd CfC insurance Holdings Eveready EA Ltd Safaricom Ltd Nation Media Group Ltd Price (KES) 3.70 7.50 1.90 3.85 193.00 % Change 2.78 2.74 2.70 2.67 2.66

The Advance/Decline ratio at the close of todays trading session stood at 15/19 with 15 stocks advancing in price and 19 shedding prices. Foreign investor turnover jumped to 43.13% in todays trading compared to 28.11% at the closed Fridays session. Todays session resulted in a net inflow of Kes.10.6Mn compared to a net outflow of Kes.1.5Mn at the close of the previous trading session. The highest foreign investor turnover was recorded on East Africa Breweries Ltd (NSE: EABL) 52Mn and Safaricom Ltd (NSE: SCOM) Kes.5.7Mn. The 2 counters accounted for 35.59% and 82.51% of the total NSE and total foreign activity respectively. Safaricom Ltd (NSE: SCOM) recorded the highest net inflow of Kes.5.7Mn. The highest net outflow was recorded on Centum Investments Ltd (NSE: ICDC) at Kes.2.3Mn.

Losing Stocks Equity Jubilee Holdings Ltd Pan Africa Insurance Eaagads Ltd Sameer Africa Ltd Mumias Sugar Co. Ltd
Source: NSE

% Change -7.65 -5.59 -2.73 -2.53 -2.21

Price (KES) 157.00 33.75 53.50 3.85 6.65

*Closing Prices

Daily Market Note

21st August 2012 Market Cap. (Kes.Bn) Equity T/O: (Kes.Mn) Local/Foreign Equity T/O: (%) Advance:Decline Ratio Bond T/O: (Kes.Mn) Sell/Buy Back Transactions T/O: (Mn) Sell/Buy Back Transactions (% of Total Bond T/O)
Source: NSE & Genghis Capital Estimates

22nd August 2012 1104.71 162.03 56.87/43.13 15:19 3495.35 150.00 4.29%

% Change 0.27% -51.79% N/A N/A -22.75% N/A N/A

1101.79 336.11 71.89/28.11 18:20 4525.00 450.00 9.94%

Table 4: Foreign Equity Turnover

Foreign Investor Equity Turnover 21 August 2012 Buys (Kes) 11,240,297.50 Net Inflow/(Outflow) Position Sales (Kes) 12,772,387.50 1,532,090.00
st

22nd August 2012 Buys (Kes) 40,236,535.00 Net Inflow/(Outflow) Position Sales (Kes) 29,655,370.00 10,581,165.00

Source: NSE & Genghis Capital Dealers

The Telecommunication & Technology Sector closed at the top spot marginally up 0.81% buoyed by the performance of Safaricom Ltd (NSE: SCOM) which gained 2.67% to close at a VWAP Kes.3.85. The Total Index was suppressed by decreasing prices in 8 segments to 0.21%. The Insurance segment occupied the bottom spot down 1.44% depressed by Jubilee Holdings Ltd (NSE: JUB) which shed 7.65% to close at a VWAP of Kes.157.00.

Table 5: Daily Segmental Price Performance Analysis

Sector Telecommunication & Technology Commercial & Services Energy & Petroleum Manufacturing & Allied Investment Construction & Allied Agricultural Banking Automobiles & Accessories Insurance Total Index Source: NSE & Genghis Capital

Constituents 2 9 4 9 4 5 7 10 4 6 60

Price Performance (% Change) 0.81 0.60 -0.02 -0.05 -0.11 -0.19 -0.52 -0.53 -0.63 -1.44 -0.21

Daily Market Note

Company Centum Investments Ltd Equity Bank Limited KenolKobil Limited NIC Bank Limited EA Cables Ltd Athi River Mining Ltd Diamond Trust Bank Ltd KCB Group Ltd Uchumi Supermarkets Ltd Kenya Power & Lighting Co. Nation Media Group Ltd British American Investments Cooperative Bank Limited Kenya Reinsurance Corp. Scangroup Ltd Portfolio Return Source: Genghis Capital Ltd

Price at Recommendation 14.55 15.80 9.80 26.50 11.80 156.00 88.50 18.50 7.20 15.85 153.00 4.00 11.55 10.05 49.25

Target Price Current Price 19.55 19.90 16.90 45.50 14.55 198.50 123.40 27.10 17.25 22.00 195.00 6.25 18.50 15.35 59.60 11.60 21.00 14.85 31.75 10.25 196.00 98.50 25.50 15.25 16.05 193.00 5.70 10.95 10.40 56.00

Upside Potential 40.66% -5.53% 12.13% 30.22% 29.55% 1.26% 20.18% 5.90% 11.59% 27.05% 1.03% 8.80% 40.81% 32.25% 6.04%

Return to Date -20.27% 32.91% 51.53% 19.81% -13.14% 25.64% 11.30% 37.84% 111.81% 1.26% 26.14% 42.50% -5.19% 3.48% 13.71% 22.62%

Recommendation

BUY HOLD HOLD BUY BUY HOLD BUY BUY HOLD BUY HOLD HOLD BUY BUY HOLD

Fixed Income: Yields under Pressure from Oversubscription Money Markets: The CBK remained relevant in the market to mop up Kes.8Bn in excess liquidity through repos and TADs with the interbank rate marginally ascended to 8.177% from yesterdays close of 8.069%. Primary Markets: The regulator auctioned the 182-Day T-Bill paper today with a bid to cover of 1.25 as the huge oversubscription pushed yields 1.33% lower to 10.032%. The yield on the new 2-Yr Treasury bond fell to 11.114% from 13.826%. The bond was oversubscribed by 303% receiving bids worth Kes.30.3Bn, accepting bids worth Kes.16Bn after it had offered kes.10Bn. The 91-Day paper will be auctioned tomorrow. Secondary Markets: The fixed income market had a turnover decrease of 23% to Kes.3.4Bn driven by 5-Yr Bonds that transacted Kes.1.8Bn; 53% of total turnover.
Table 7: Short -Term Interest Rates, Treasury Notes & CDs

Tenor 91 Day 182 Day 1 Year 2 Year 5 Year 10 Year

Kenya 10.27% 10.03% 12.85% 11.11% 11.86% 12.71%

Uganda 18.11% 18.06% 17.00% 14.84% 15.39% 15.28%

Tanzania 13.06% 13.53% 13.54% 14.77% 14.74% 14.99%

U.S 0.10% 0.14% 0.18% 0.26% 0.62% 1.49%

LIBOR (USD) 0.46% 0.74% 1.07% ----

Source: CBK, BOU, BOT, US Treasury, BBA, Genghis Capital

Daily Market Note

Performance: The national currency held on to its previous performance losing ground against 4 of the currency pairs listed in Table 8. The largest loss was recorded in the KESTZS pair shedding 0.40%. The KES slipped in the USDKES pair -0.24% and GBPKES -0.11% but marginally up 0.07% vs. EUR. The shilling is expected to strengthen against the dollars with inflows from tea export.

Table 8: Currency Rate

Currency Pair USD/KES GBP/KES EUR/KES ZAR/KES KES/UGX KES/TZS INR/KES Source: Bloomberg 4.00pm E.A.T, Genghis Est.

21st August 2012 83.85 132.33 104.53 10.18 29.65 18.78 1.52 27thJan 2012

22nd August 2012 84.05 132.48 104.46 10.08 29.78 18.70 1.52 30thJan 2012

Technical Analysis and Outlook: The chart below shows the candle sticks for the USDKES pair for the year. Over the past few months this pair has been dominated by Double Dojis Estimatesindicating a preparation for a major move but the regulator has been very active in the market ensuring this pair remains stable at current rates.

Daily Market Note

Table 9: Genghis Index Performance

Large-Cap Index

Genghis Large-Cap Index Indicator Price Index Performance (%) Market Capitalization (Kes.Bn) No. of Shares Traded (000) P/E Ratio Previous -0.28% 894.115 6,604 9.96x Current 0.01% 898.490 6,199 9.98x % Change N/A 0.49% -6.13% N/A

The index marginally gained 0.01% as Market Capitalisation was flat at Kes.894Bn. The best performing counter in this segment was Safaricom Ltd (NSE: SCOM) up 2.67%. Losing by the biggest margin in this segment Mumias Sugar Company Ltd (NSE: MSC) shedding 2.21%.
Mid-Cap Index

Genghis Mid-Cap Index Indicator Price Index Performance (%) Market Capitalization (Kes.Bn) No. of Shares Traded (000) P/E Ratio Previous 0.31% 135.693 8,578 6.37x Current -0.93% 134.404 1,852 6.29x % Change N/A -0.95% -78.42% N/A

The Index closed 0.93% lower over yesterdays close as Market Capitalisation was stagnant at Kes.134Bn. This sections best performer was CfC Insurance Holdings Ltd (NSE: CFCI) up 2.74%. Losing by the biggest margin was Jubilee Holdings Ltd (NSE: JUB) down 7.65%.
Small-Cap Index

Genghis Small-Cap Index Indicator Price Index Performance Market Capitalization (Kes.Bn) No. of Shares Traded (000) P/E Ratio Previous 0.37% 22.714 933 13.45x Today 0.04% 22.663 2,715 13.37x % Change N/A -0.23% 190.85% N/A

Source: Genghis Capital

Price performance improved to 0.04% with market capitalization down to Kes.22.6Bn. Express Kenya Ltd (NSE: XPRS) gained 2.78% to lead the section as the best performer. Losing by the biggest margin was Eaagads Ltd (NSE: EGAD) shedding 2.73%.

Daily Market Note

Daily Market Note

Contacts Report By: Moses Waireri,Research Analyst | Tel:+254 20 2774781 | Email: mwaireri@genghis-capital.com Report By: Evelyne Wanjiku, Research Analyst | Tel:+254 20 2774781 | Email: ewanjiku@genghis-capital.com Anthony Kimani, Research Analyst | Tel:+254 20 2774781 | Email: akimani@genghis-capital.com Kelvin Nyabando, Research Analyst | Tel:+25420 2774781 | Email: knyabando@genghis-capital.com George Guy,Fixed Income Dealer | Tel:+254 20 2774756| Mob: +254 727 142231 | Email: gguy@genghis-capital.com Nyawira Waithaka, Equity Dealer | Tel:+254 20 2774777 | Mob: +254 723 693481 | Email: nwaithaka@genghis-capital.com Andrew Maina, Senior Equity Dealer | Tel:+254 20 2774789 | Mob: +254 722 667936 | Email: amaina@genghis-capital.com
Disclaimer: The content provided on this document is provided as general information and does not constitute advice or recommendation by Genghis Capital Ltd and should not be relied upon for investment decisions or any other matter and that this document does not constitute a distribution recommending the purchase or sale of any security or portfolio. Please note that past performance is no indication of future results. The ideas expressed in the document are solely the opinions of the author at the time of publication and are subject to change without notice. Although the author has made every effort to provide accurate information at the date of publication all information available in this report is provided without any express or implied warranty of any kind as to its correctness. You should consult your own independent financial adviser to obtain professional advice before exercising any decisions based on the information present in this document. Any action that you take as a result of this information, analysis, or advertisement is ultimately your responsibility.

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