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Wednesday 30th of August 2017 |
Morning, Africa |
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If you are tracking the NSE Do it via RICHLIVE and use Mozilla Firefox as your Browser. 0930-1500 KENYA TIME Normal Board - The Whole shebang Prompt Board Next day settlement Expert Board All you need re an Individual stock.
The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke
Macro Thoughts |
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Gold looks to be overtaking the yen as a favoured haven Africa |
Gold looks to be overtaking the yen as a favored haven, and North Korea’s missile launches look to be reinforcing that trend by spurring investors to seek alternatives to the Japanese currency in times of trouble. Tuesday’s provocation from Pyongyang saw gold rise more than the yen on the early panic, and when calm returned to markets, the barbarous relic’s 0.1 percent loss on the day looked good compared to the Japanese currency’s 0.4 percent slide. The yellow metal has beaten the yen about 65 percent of the time over the past three months on days when both advanced; that compares with the earlier part of the year when gold only beat the currency half of the time.
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Total G-3 Central Bank Control Africa |
To that end, daily observation of trading patterns allows us to observe a clear and obvious, algo-driven program in the all-important USDJPY. Because of the sheer size of the forex market (up to $7T/day), any algorithm put in place to manage this pair could only come from pockets deep enough to make it happen....namely, the G-3.
And what does this computer-based, G-3 buying program look like. Again, in the simplest terms, this program sets up a USDJPY floor at some pre-determined or even random level. Once a bounce is initiated, a buy program then follows after the pair have come back down to a newly-discovered double bottom. For today (Tuesday, the 29th), it looked like this:
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Hajj Pilgrimage Entangled in Web of Saudi Politics Law & Politics |
More than 1.7 million Muslims from around the world have arrived in Saudi Arabia for the start of the annual hajj pilgrimage this week. Once in Mecca — the site of Islam's holiest place of worship— they will be reminded that the ruling Al Saud family is the only custodian of this place.
Large portraits of the king and the country's founder hang in hotel lobbies across the city. A massive clock tower bearing the name of King Salman's predecessor flashes fluorescent green lights at worshippers below. A large new wing of the Grand Mosque in Mecca is named after a former Saudi king, and one of the mosque's entrances is named after another.
It's just one of the many ways that Saudi Arabia uses its oversight of the hajj to bolster its standing in the Muslim world — and to spite its foes, from Iran and Syria to Qatar. Its archrival, the Shiite power Iran, has in turn tried to utilize the hajj to undermine the kingdom.
The hajj has long been a part of Saudi Arabia's politics.
For nearly 100 years, the ruling Al Saud family has decided who gets in and out of Mecca, setting quotas for pilgrims from various countries, facilitating visas through Saudi embassies abroad and providing accommodation for hundreds of thousands of people in and around Mecca.
"Whoever controls Mecca and Medina has tremendous soft power," said Ali Shihabi, executive director of the Arabia Foundation, a pro-Saudi center in Washington. "Saudi Arabia has been extremely careful from day one not to restrict any Muslim's access to hajj so they never get accused of using hajj for political purposes."
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Trump Vows 'All Options' Open After North Korea Missile Launch Law & Politics |
U.S. President Donald Trump said that “all options” are under consideration in response to North Korea firing an unidentified ballistic missile over Japan on Tuesday as Kim Jong Un’s latest provocation rattled markets.
“The world has received North Korea’s latest message loud and clear: this regime has signaled its contempt for its neighbors, for all members of the United Nations, and for minimum standards of acceptable international behavior,” Trump said in a statement issued by the White House.
“Threatening and destabilizing actions only increase the North Korean regime’s isolation in the region and among all nations of the world. All options are on the table.”
With sanctions having little impact and any war likely to be catastrophic, the U.S. and its allies have few good options to stop Kim from obtaining the capability to hit North America with a nuclear weapon. Russian Deputy Foreign Minister Sergei Ryabkov said “it’s already obvious to everyone that the resource of sanctions pressure is exhausted.”
“North Korea is acting as if it’s a nuclear weapons state,” John Park, director of the Korea Working Group at Harvard Kennedy School, told Bloomberg Television. “You can draw any number of red lines; in North Korea’s mind they’re on the cusp of getting itself the capabilities that are in the realm of the great powers.”
Conclusions
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NORTH KOREA'S MISSILE SHOT OVER JAPAN CALLS TRUMP'S BLUFF @wired Law & Politics |
WHEN NORTH KOREA launched a ballistic missile toward northern Japan's Hokkaido Island late Monday, its trajectory was initially unclear. Fearing the worst, the Japanese government interrupted television programming and issued digital alerts advising locals to find shelter. Though the missile ultimately flew over Japan and landed in the northern Pacific Ocean after a roughly 1,700-mile journey, the flyover was a powerful symbol of North Korea's resolute effort to develop its missile program in spite of longstanding international opposition. North Korea has flown projectiles over Japan twice before. The first instance, in 1998, came with no warning; North Korea gave advance notice of the second, in 2009. The country couched both of those events as being part of satellite launches. Monday's surprise launch came with no such explanation. But it fits into the larger context of North Korea's rapidly escalating nuclear and missile ambitions—and, more alarmingly, it shows outright disdain for President Donald Trump's recent bluster. It was just a few weeks ago, after all, that Trump declared that further threats from North Korea would prompt "fire, fury, and frankly power the likes of which this world has never seen before." While the rhetoric seemed intended to cow North Korean leader Kim Jong-un, repeated threats against US territory Guam and Monday's missile scare suggest that Trump’s words, along with recent military exercises conducted by the US and South Korea, had the exact opposite impact.
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Implications of the Hokkaido missile miss Law & Politics |
This week Japan found out just how vulnerable it was when a ballistic missile fired by North Korea broke up in airspace close to Hokkaido, Japan’s northernmost island. According to experts in Japan who spoke to me on background, Japan had no capable air defense assets in the north, leaving a significant part of its territory completely unprotected. In essence, the Japanese government has failed in its primary mission to protect its territory and people.
In the bigger picture, Japan is at a strategic crossroads. It isn’t so much North Korea as it is a resurgent and wide awake China that worries Japan. One consequence, something perfectly in view in the shadow of Hokkaido is that reliance on the US for protection may be a big risk. The US did not step in regarding the Hokkaido threat, and while the US Air Force and Navy have been showing the flag, Japan is rightfully uncertain the US would come to their aid.
For Japan the quandary is what to do now? Should Japan step up its defense procurement and strengthen its missile defenses? Should Japan offer some olive branches to North Korea, and if so what would entice Kim Jong-un? Is it cheaper for Japan to buy their way out of a North Korean problem than to spend tens of billions on missile defense that, to a degree, makes them more rather than less of a target? How can Japan “manage” the US if it takes steps to favor North Korea or even North Korea and China?
These are difficult questions and it isn’t certain Japan will make any concrete decisions soon. But it is clear that US influence has taken a hard hit, just as the missile that broke apart near Hokkaido also damaged Japan’s security posture.
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Ship collisions raise specter of Chinese electronic warfare @asiatimesonline Law & Politics |
China’s military has developed advanced electronic warfare capabilities capable of disabling ships, aircraft and missiles and there are signs the People’s Liberation Army is preparing to use exotic electronic attacks in a future conflict with the United States.
Two recent collisions between US Navy warships and commercial ships have raised the specter that China was behind the accidents, using electronic means to disrupt or fool radar or navigation systems into creating deliberate collisions, according to military experts.
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28-AUG-2017 :: China Rising @TheStarKenya World Currencies |
Apart from a few half-hearted and timid FONOPs [freedom of navigation operations], China has established control over the South China Sea. It has created artificial Islands and then militarised those artificial islands across the South China Sea. It is a mind-boggling geopolitical advance any which way you care to cut it. China has advanced its footprint in Pakistan, where it has leased the Gwadar Port [giving China and Central Asia access to the Gulf region and the Middle East] for 43 years. Sri Lanka, which gorged on Chinese debt, has had to disgorge the Hambantota Port to its creditor. And recently, we saw China formally open a mliitary facility in Djibouti. These moves taken together speak to a material Chinese advance. The pivot to Asia which was supposed to contain China is dead in the water and China has sprung that trap.
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Rebel Group Vows to Step Up Attacks Against Burundi's Government Africa |
A Burundi rebel group vowed to intensify attacks on President Pierre Nkurunziza’s government, potentially deepening the East African country’s more than two-year political crisis.
The Burundi Popular Forces see the violence as necessary to compel Nkurunziza’s administration to join peace talks with all the country’s opposition groups, spokesman Adolphe Manirakiza said in an interview. The rebels, who include former army and police officers, were previously part of the Forebu group that claimed attacks on military sites in Burundi in the past year, he said.
“We are obliged to take military action against the powers in Bujumbura to stop the crimes that are being committed against the population by state organs,” Manirakiza said by phone from a location he wouldn’t disclose. Bujumbura is Burundi’s capital.
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Kenya: Post-Election Killings, Abuse HRW Kenyan Economy |
Kenya’s presidential election on August 8, 2017 was marred by serious human rights violations, including unlawful killings and beatings by police during protests and house-to-house operations in western Kenya, Human Rights Watch said today. At least 12 people were killed and over 100 badly injured.
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@StanChartKE reports H1 EPS 2017 -35.003% Earnings here Kenyan Economy |
Par Value: 5/- Closing Price: 239.00 Total Shares Issued: 343510571.00 Market Capitalization: 82,099,026,469 EPS: 25.85 PE: 9.246
Standard Chartered Bank of Kenya Limited H1 2017 results through 30th June 2017 vs. 30th June 2016 H1 Kenya Government securities available for sale 105.588613b vs. 85.402418b +23.637% H1 Loans and advances to customers (net) 113.040256b vs. 114.265013b -1.072% H1 Total assets 289.077286b vs. 255.948220b +12.944% H1 Customer deposits 224.482823b vs. 190.872512b +17.609% H1 Total shareholders’ equity 43.589956b vs. 43.581629b +0.019% H1 Total interest income 12.738535b vs. 13.043903b -2.341% H1 Total interest expenses [3.582021b] vs. [3.084111b] +16.144% H1 Net interest income/ [loss] 9.156514b vs. 9.959792b -8.065% H1 Foreign exchange trading income/ [loss] 1.246808b vs. 1.567336b -20.450% H1 Total non-interest income 4.296419b vs. 4.535623b -5.274% H1 Total operating income 13.452933b vs. 14.495415b -7.192% H1 Loan loss provision [2.311347b] vs. [1.371367b] +68.543% H1 Staff costs [3.326830b] vs. [3.075669b] +8.166% H1 Total other operating expenses [8.475708b] vs. [7.022816b] +20.688% H1 Profit/ [Loss] before tax and exceptional items 4.977225b vs. 7.472599b -33.394% H1 Profit/ [Loss] after tax and exceptional items 3.426768b vs. 5.226314b -34.432% Basic and diluted EPS 9.73 vs. 14.97-35.003% Dividend per share 4.50 vs. 6.00 -25.000% Gross NPL and Advances 16.913092b vs. 15.360300b +10.109% Net NPL and Advances 4.751185b vs. 5.824481b -18.427% Liquidity ratio 69.09% vs. 61.93% +7.160%
From Kestrel
Loans and advances (net) declined by 1.1% y/y to KES 113.0bn. On a YTD basis, the decline stood at 7.9%. Customer deposits increased by 17.6% y/y to KES 224.5bn. On a YTD basis, the customer deposits growth stood at 20.3%. This is especially notable given that StanChart’s cost of customer deposits remain unchanged for the period at 3.0%. StanChart’s loan to deposit ratio now stands at 50.4%, one of the lowest across the banking sector. We continue to believe that StanChart will accelerate lending going forward, and especially from a NIM perspective, this would be a positive. Operating expenses (inclusive of loan loss provisions) increased by 20.7% y/y to KES 8.5bn, above our expectations of KES 7.6bn, largely on account of increased provisions (CoR as at 1H17 stood at 2.8%). The cost to income ratio increased to 63.0% from 48.4% in 1H16. Excluding provisions, operating expenses were largely in line with estimates. Notably, staff costs increased by 8.2% y/y to KES 3.3bn. Cost to income ratio excluding provisions stood 44.8%. As per our conversations with management, the staff costs have largely been driven by shared services staff (who had been rationalized towards the end of 2016) working as consultants to transfer shared services operations to StanChart Chennai. We expect staff costs to come down significantly in 3Q17 onwards as the shared services consultants now complete their projects. Of particular interest is the trend in loan loss provisions, which increased by 68.5% y/y to KES 2.3bn from 1.4bn in 1H16. Gross NPLs stood at KES 16.9bn. As a result, the bank's coverage ratio (excluding interest expenses) rose considerably to 40.1% from 33.3% at the end of 1Q17. This is the highest level of coverage StanChart has reported since at least 2013. StanChart Bank currently trades at a trailing P/E of 11.0x and a P/B of 1.8x. Subsequently, the dividend yield currently stands at 7.9%. RoAE at the end of 1H17 stood at 16.2%, driven largely by the increase in provisions.
Conclusions
Plenty of Dry Powder in my opinion. very defensive results Release leaving a lot of room for a material H2 improvement
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Standard Group H1 EPS [0.34] Earnings here @StandardKenya +112.12% in 2017 Kenyan Economy |
Par Value: 5/- Closing Price: 35.00 Total Shares Issued: 81731808.00 Market Capitalization: 2,860,613,280 EPS: 2.14 PE: 16.355
H1 Revenue 2.439529b vs. 2.220707b +9.854% H1 Total operating costs [2.315528b] vs. [2.057942b] +12.517% H1 Finance costs (net) [86.704m] vs. [130.583m] -33.602% H1 Profit before income tax 37.297m vs. 32.182m +15.894% H1 Profit after tax 34.290m vs. 32.182m +6.550% H1 Profit attributable to shareholders [27.570m] vs. 44.177m -162.408% Basic and diluted EPS [0.34] vs. 0.54 -162.963% No interim dividend Total assets 4.564090b vs. 4.315257b +5.766% Total shareholders’ equity 2.110384b vs. 1.909755b +10.505% Cash and cash equivalents at the end of the period [436.691m] vs. [482.481m] -9.491%
Company Commentary
Group performance continued its upward momentum for the second year running largely driven by growth in revenues. All business segments except print advertising reported revenue growth, with Radio +58% and TV +33% versus 2016 Print segment revenue was 4% behind 2016 [8% decline in advertisement revenue while copy sales revenue increased by 3%]
Conclusions
The minority interest snaffled up 61.86m. Headline Revenue +9.854% was better than satisfactory. Radio +58% TV +33% Print -4.00%
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Deacons (East Africa) PLC reports H1 2017 EPS -266.667% Earnings here Kenyan Economy |
Par Value: Closing Price: 4.00 Total Shares Issued: 123558228.00 Market Capitalization: 494,232,912 EPS: -2.24 PE: -1.786
Deacons (East Africa) PLC H1 2017 results through 30th June 2017 vs. 30th June 2016
H1 Revenue 1.077695b vs. 1.026090b +5.029% H1 Net operating profit 333.572m vs. 491.342m -32.110% H1 Expenses [523.969m] vs. [466.396m] +12.344% H1 EBITDA [190.397m] vs. 24.946m -863.237% H1 Depreciation [48.172m] vs. [50.844m] -5.255% H1 Finance costs [36.627m] vs. [46.848m] -21.817% H1 Net foreign exchange [Loss]/ gain 17.450m vs. 2.578m +576.881% H1 Profit from continuing operations [257.746m] vs. [70.168m] -267.327% H1 Profit before taxation [257.746m] vs. [70.168m] -267.327% H1 Profit/ [loss] for the period [180.422m] vs. [52.626m] -242.838% H1 Basic and diluted EPS [2.09] vs. [0.57] -266.667% No interim dividend
Company Commentary
overall retail trading environment during the period under review was characterised by extraordinary and exceptional events that adversely affected the business, key among them as follows 1. Drought - reduction in disposable income, coupled with lack of consumer credit ad a direct impact on customer shopping trends. 2. Overall unit sales increased by 14% and total number of transactions +9.00% average unit price sold reduced by 13% with a drop in per customer average spend by 17% 3. 190,341 square feet in 2017 versus 169,516 in 2016 8 additional stores. marginal 5% increase in revenue. Resultant cannibalisation led to a drop in traffic into all malls 4. non-performance of major anchor tenants reduced traffic into all malls..With 98% of our stores operating in malls whose anchor tenants are experiencing stocking challenges, data sows that footfall as decreased by over 60% with Customers closing to visit other facilities. 5. National elections fever 6. aggressive sale offers in Q2 reduced average gross margins to 39% ''wellness and leisure'' market segment will continue to represent growth opportunities Bossing Adidas and Lifefitness brands posted good results a reduction in margins by a major brand did not lead to an increase in volume sales
Conclusions
Lots of Detail in the commentary. I am just concerned that this type of business is going to get uber'ed
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N.S.E Today |
The Dollar rebounded. The Bank Of Japan surely stepped in to sell the Yen. The Nairobi All Share Index corrected a further -0.89% to close at 171.21. The All Share Index has corrected -1.302% over 2 sessions and since closing at a 29 month high on August 28th. The Nairobi NSE20 eased a marginal 3.22 points to close at 4038.86. Equity Turnover registered 620.554m. The Equity market has responded very bullishly since August 8th and called this election early. It is clear that there is no smoking Gun and Fridays widely anticipated Supreme Court decision will be the catalyst for another upwards re-rating.
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N.S.E Equities - Commercial & Services |
Safaricom was the most actively traded share at the Exchange and eased -1.86% off a record closing high to close at 26.25 and traded 9.833m shares. Safaricom remains in a long established Bull Channel which is expected to hold through year end and therefore corrections will remain shallow and corrective ahead of a move to 32.00.
Deacons (East Africa) PLC reported First Half Earnings where H1 2017 Revenue expanded +5.029% to 1.077695b, H1 Profit before taxation slumped -267.327% to [257.746m] from. [70.168m] in 2016, and H1 Earnings Per Share clocked -2.09 versus -57cents last time. Deacons scared a lot of granular detail in their commentary;
1. Drought - reduction in disposable income, coupled with lack of consumer credit had a direct impact on customer shopping trends. 2. Overall unit sales increased by 14% and total number of transactions +9.00% average unit price sold reduced by 13% with a drop in per customer average spend by 17% 3. 190,341 square feet in 2017 versus 169,516 in 2016 8 additional stores. marginal 5% increase in revenue. Resultant cannibalisation led to a drop in traffic into all malls 4. non-performance of major anchor tenants reduced traffic into all malls..With 98% of our stores operating in malls whose anchor tenants are experiencing stocking challenges, data shows that footfall has decreased by over 60% with Customers choosing to visit other facilities.
Deacons slumped -8.15% to close at 3.95 and is -34.71% in 2017. The Uber threat is real.
Standard Group which had rallied an eye-popping +112.12% through this morning, reported First Half Earnings where H1 Revenue clocked a +9.854% expansion to register 2.439529b, H1 Profit before Tax clocked a +15.894% increase to reach 37.297m, but H1 2017 Profit attributable to shareholders was [27.570m] vs. 44.177m in 2016. Essentially, The minority interest snaffled up 61.86m. Radio Revenue was a standout at +58%, TV +33%, with Print the laggard at -4.00%. Standard Group did not trade.
TPS Serena Hotels firmed +1.79% to close at 28.50 and is +39.02% in 2017. TPS Serena traded 330,700 shares and has further to go as the Tourism rebound gains traction.
Kenya Airways rallied +5.43% to close at 4.85 and traded 326,500 shares.
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N.S.E Equities - Finance & Investment |
Standard Chartered Bank reported a -34.432% slide in H1 2017 Profit after Tax to clock 3.426768b vs. 5.226314b. In line with its Peer Group, StanChart reported a +23.637% uplift in its GOK Securities to 105.588b and a -1.072% decrease in its net Customer Lending to 113.04b. H1 EPS was 9.73 versus 14.97 in 2016 and StanChart is paying an Interim Dividend of 4.50 a rare versus 6.00 last time. Customer deposits increased by 17.6% y/y to KES 224.5bn and StanChart has been a serious beneficiary of the Deposit flight to Quality and this is evidenced by the fact that they were able to hold the cost of Customer deposits at an unchanged 3%. Operating expenses (inclusive of loan loss provisions) increased by 20.7% y/y to KES 8.5bn, largely on account of increased provisions. Kestrel Research noted the following
''Of particular interest is the trend in loan loss provisions, which increased by 68.5% y/y to KES 2.3bn from 1.4bn in 1H16. Gross NPLs stood at KES 16.9bn. As a result, the bank's coverage ratio (excluding interest expenses) rose considerably to 40.1% from 33.3% at the end of 1Q17. This is the highest level of coverage StanChart has reported since at least 2013.''
StanChart’s loan to deposit ratio now stands at 50.4%, one of the lowest across the banking sector, which informs me of the following; StanChart has plenty of Dry Powder and these very defensive results leave a lot of room for a material H2 improvement.
StanChart eased -1.26% to close at 235.00 and traded 27,200 shares. Shares are tightly held and I expect the share price to push on from here. StanChart is +34.92% in 2017 on a Total Return Basis.
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N.S.E Equities - Industrial & Allied |
EABL traded 2nd at the Exchange and eased -0.38% to close at 262.00 and traded 529,500 shares.
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