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Satchu's Rich Wrap-Up
 
 
Thursday 26th of March 2020
 
Afternoon,
Africa

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Macro Thoughts

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There are over 470,000 cases of #COVID2019 and more than 21,000 deaths @catecadell
Law & Politics


To me, ~15K cases reported by the U.S. in the 24hrs is not the biggest
news - it's the fact that 90+ countries & territories are poised for
similar outbreaks in the coming week/s.

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The epicenter has shifted from China --> Southern Europe --> the U.S., and data suggests that Africa & South America could be next, with countries like Venezuela and Egypt breaking out @catecadell
Law & Politics


The epicenter has shifted from China --> Southern Europe --> the U.S.,
and data suggests that Africa & South America could be next, with
countries like Venezuela and Egypt breaking out - Algeria, Indonesia
and Bangladesh reporting disturbing fatality rates.

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Dr. Fauci: "You don't make the timeline. The virus makes the timeline." @jimsciutto
Law & Politics


Dr. Fauci: “You don't make the timeline. The virus makes the timeline.
So you've got to respond in what you see happen. And if you keep
seeing this acceleration, it doesn't matter what you say. 1 week, 2
weeks, 3 weeks - you've got to go with what the situation on the
ground is.”

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22-MAR-2020 :: COVID-19 and a Rolling Sudden Stop #COVID19
Law & Politics


We are moving from a World of Hyper Connectedness to a World of
Quarantine. A complete Quarantine is the only way to vaccine this
c21st World of ours
#Coronavirus "has started behaving a lot like the once-in-a-century
pathogen we've been worried about." - @BillGates

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.0912
Dollar Index 100.838
Japan Yen 110.43
Swiss Franc 0.9743
Pound 1.1885
Aussie 0.5937
India Rupee 75.185
South Korea Won 1230.00
Brazil Real 5.0349
Egypt Pound 15.7492
South Africa Rand 17.47

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24-FEB-2020 The Viral Moment has Arrived #COVID19
Commodities


At this point I would venture Gold is correlated to the #Coronavirus
which is set to turn parabolic and is already non linear and
exponential ~

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22-MAR-2020 :: COVID-19 and a Rolling Sudden Stop.
Commodities


We are moving from a World of Hyper Connectedness to a World of
Quarantine. A complete Quarantine
The Price of Crude Oil is perfectly correlated to the #COVID19 Sudden Stop

Emerging Markets

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2-SEP-2019 :: the China EM Frontier Feedback Loop Phenomenon. #COVID19
Emerging Markets


China EM Frontier Feedback Loop Phenomenon. This Phenomenon was
positive for the last two decades but has now undergone a Trend
reversal.
The Fall-out is being experienced as far away as Germany Inc. The ZAR
is the purest proxy for this Phenomenon.
African Countries heavily dependent on China being the main Taker are
also at the bleeding edge of this Phenomenon.
This Pressure Point will not ease soon but will continue to intensify.

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5-FEB-2018 :: [The End of] Halcyon Days These became known as the "halcyon days," when storms do not occur.
Emerging Markets


Wikipedia has an article on: halcyon days and it reads thus,

From Latin Alcyone, daughter of Aeolus and wife of Ceyx. When her
husband died in a shipwreck, Alcyone threw herself into the sea
whereupon the gods transformed them both into halcyon birds
(kingfishers). When Alcyone made her nest on the beach, waves
threatened to destroy it. Aeolus restrained his winds and kept them
calm during seven days in each year, so she could lay her eggs. These
became known as the “halcyon days,” when storms do not occur. Today,
the term is used to denote a past period that is being remembered for
being happy and/or successfuL

Frontier Markets

Sub Saharan Africa

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.@afreximbank creates $3 bln pandemic credit facility for Africa
Africa


The African Export Import Bank is creating a $3 billion credit
facility to help African countries overcome the effects of the
coronavirus pandemic, Afreximbank announced in a statement.
The Pandemic Trade Impact Mitigation Facility will help countries
avoid trade payment defaults, support foreign exchange reserves and
assist commodities exporters struggling with declining revenues, the
statement, released late on Tuesday, said.
“Africa is exposed on many fronts, including significant declines in
tourism earnings, migrant remittances, commodity prices and disruption
of manufacturing supply chains,” said Benedict Oramah, president of
the Cairo-based bank.
“A rapid and impactful financial response is required to avert a major
crisis in Africa.”
The pandemic is expected to strain Africa’s under-equipped health
systems. Many African countries are already reeling from declining oil
and commodities prices. And weakening local currencies are making it
more expensive to service foreign currency-denominated debt.

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@IMFNews to Make $50 Billion Available in Emergency Aid @economics @Habesh_
Africa


The International Monetary Fund will provide $50 billion in emergency
facilities to low-income and emerging-market countries to mitigate the
economic shocks of the coronavirus, including $10 billion in
concessional loans.
“Our member countries need us more than ever,” the IMF said on its
website Wednesday. “Discussions between IMF teams and country
officials are advancing quickly.”
The IMF has received requests for emergency financing from almost 20
countries in Africa and expects 10 additional countries on the
continent to seek its help, it said.

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02-MAR-2020 :: The #COVID19 and SSA
Africa


The First Issue is whether The #CoronaVirus will infect the Continent.
We Know that the #Coronavirus is exponential, non linear and
multiplicative.what exponential disease propagation looks like in the
real world.
Real world exponential growth looks like nothing, nothing, nothing ...
then cluster, cluster, cluster ... then BOOM!

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Rwandan Police Shoot Two People Defying Virus Lockdown Orders @business
Africa


Rwandan police shot and killed two people who defied lockdown orders
imposed by the government to curb the spread of the coronavirus.
The two men in their twenties “attempted to tussle with officers,”
Rwanda National Police spokesman John Bosco Kabera said by phone
Wednesday.
Rwanda began a two-week lockdown on March 22, restricting travel
between towns and cities and asking people to stay indoors.
Its measures are among the most stringent in Africa. The East African
nation has 40 confirmed Covid-19 cases.

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Nigerian army prepares for coronavirus lockdown, mass burials @ReutersAfrica
Africa


The Nigerian Army is preparing to forcibly transfer the sick to
hospital and enforce curbs on movement to try to shield the country
from the coronavirus, and is leasing equipment for “possible mass
burial”, according to an army memo seen by Reuters.

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NCBA Group PLC reports FY EPS 2019 +22.222%
Africa


Par Value:                  5/-
Closing Price:           25.10
Total Shares 1,497,745,029
Market Capitalization:        37,593,390,163
EPS:             8.69
PE:               2.88

Well established Kenyan commercial bank.

NCBA Group PLC FY 2019 results through 31st December 2019 vs. 31st December 2018
FY Kenya Government securities – held to maturity 79.507225b vs.
45.671551b +74.085%
FY Kenya Government securities – available for sale 49.500824b vs.
14.505166b +241.263%
FY Loans and advances to customers (net) 249.355409b vs. 121.503411b +105.225%
FY Total assets 494.843401b vs. 245.106892b +101.889%
FY Customer deposits 378.237043b vs. 196.527724b +92.460%
FY Total shareholders’ funds 67.259825b vs. 30.607811b +119.747%
FY Loans and advances interest income 15.703106b vs. 11.556752b +35.878%
FY Government securities income 9.174993b vs. 7.386562b +24.212%
FY Total interest income 25.513831b vs. 19.443557b +31.220%
FY Customer deposits expense [10.580382b] vs. [8.521652b] +24.159%
FY Total interest expense [12.175938b] vs. [9.740305b] +25.006%
FY Net interest income 13.337893b vs. 9.703252b +37.458%
FY Fees and commissions on loans and advances 9.392394b vs. 6.693583b +40.319%
FY Other income 5.582864b vs. 461.443m +1,109.871%
FY Total non-interest income 20.321833b vs. 11.497319b +76.753%
FY Total operating income 33.659726b vs. 21.200571b +58.768%
FY Loan loss provision [6.250273b] vs. [3.709228b] +68.506%
FY Other operating expenses [5.915085b] vs. [5.049467b] +17.143%
FY Total operating expenses [20.357328b] vs. [14.750362b] +38.012%
FY Profit before tax and exceptional items 13.302398b vs. 6.450209b +106.232%
FY Exceptional Items [2.132719b] vs. –
FY Deferred tax [625.013m] vs. 497.836m -225.546%
FY Profit after tax and exceptional items 7.841776b vs. 5.003319b +56.731%
Basic and diluted EPS 8.69 vs. 7.11 +22.222%
Total dividend 1.75 vs. 1.25 +40.000%
Net NPL and advances 14.846755b vs. 2.802881b +429.696%


Merger of Commercial Bank of Africa Limited and NIC Group PLC
On 1 October 2019 NIC Group PLC (NIC) and Commercial Bank of Africa
Limited (CBA) completed the merger of both institutions through a
share exchange with NIC issuing new shares to the shareholders of CBA
as consideration for the transfer of all their shares in CBA.
The merged Group was renamed NCBA Group PLC.
This merger transaction is accounted for in accordance with IFRS 3 -
Business combinations.
The amalgamation of the Kenyan banking business was achieved by
transferring the business and net assets of NIC Bank Kenya PLC to CBA
(which was renamed NCBA Bank Kenya PLC) on 1 October 2019.
The financial statements of the bank are prepared on a prospective
basis (a continuation of CBA), representing the 9 months performance
of CBA Bank and 3 months performance of NCBA Bank (merged bank); prior
year comparatives are those of CBA Bank.
The consolidated financial statements are also a continuation of the
financial statements of CBA with an adjustment to capital to reflect
the legal capital of NIC. Therefore, pre-combination net income and
net assets are those of CBA, including prior year comparatives.
The net assets transferred have been adjusted to their fair value and
intangible assets identified as part of the purchase price allocation
exercise incorporated in the consolidated financial statements in
accordance with IFRS 3.
The consideration when compared to the fair value of net assets
transferred at the completion date, resulted in a bargain purchase
gain of KES 4.1 billion which has been reflected in the Group’s
comprehensive income statement under other income.
On completion of the business combination, the Group reassessed the
carrying amounts of pre-combination goodwill values existing in both
Groups and these were fully impaired.
In addition, the carrying amounts of deferred tax assets were reviewed
and reduced to the extent that future taxable profits will be
available against which the assets can be utilized.
Merger related costs are included in the comprehensive income
statements and are disclosed as exceptional items.
The planned integration of other NCBA Group PLC subsidiaries in Kenya
has been completed. Integration in the other jurisdictions where NCBA
Group has a presence is ongoing.
Proposed dividend
The Board has resolved to recommend to the shareholders for their
approval at the Annual General Meeting to be scheduled, the payment of
a final dividend for the year of Shs 1.50 per share.
The total dividend for the year is Shs 1.75 per share (2018: Shs 1.25
per share). The dividend will be payable to the shareholders
registered on the Company’s register at the close of business on 23
April 2020 (closing date for determination of entitlement to
dividend).
These financial statements are extracts from the books of NCBA Group
PLC as audited by PricewaterhouseCoopers and received an unqualified
opinion.
The complete set of audited financial statements, statutory and
qualitative disclosures can be accessed on the institution’s website
www.ncbagroup.com.
They may also be accessed at the institution’s head office located at
NCBA Centre, Mara and Ragati Road, Upper Hill.

Conclusions

one-off costs came in at KES 2.1bn
NCBA currently trades at a P/B of 0.5x.
Thats a cheap share on every metric.
Final Dividend is worth 6.97%

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by Aly Khan Satchu (www.rich.co.ke)
 
 
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March 2020
 
 
 
 
 
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