Genghis Weekly Strategy - 26th August, 2019
Equities
- BUY KCB and EQTY as the retreat below KES 40.00, representing 55.9% and 21.6% upside potential based on our target prices of KES 62.52 and KES 48.38 respectively. The forward dividend yields on the respective counters is 8.7% and 5.2%. Both banks are fundamentally strong (NIM > 8.5%, CTI < 48.5%, NPL < 8.8% & ROE > 22.0%). With the two banks trading at 1.0x and 1.5x P/B multiples, significant discounts from historical averages, the current prices offer attractive entry points for long-term investors. In addition, a repeal or modification of the interest rate cap law that is currently under review would serve as a positive surprise and boost banking counters. The two counters form part of our momentum portfolio which has gained 18.0% since the turn of the year and any inflow of capital from foreign investors into the equity market will likely see these two counters be among the top beneficiaries of an upward trending market.
- BUY FXD3/2019/15 at 12.20%. Within the 15-year space, the on-the-run FXD3/2019/15 is relatively cheaper. More so, the recent announcement of September primary bond issue, with two 15-year papers, will likely trigger rotational strategies among institutional investors.
Genghis Capital is an innovative and customer focused Investment Bank licensed by the Capital Markets Authority (CMA). Founded in 2008, Genghis is one of the leading investment banks in Kenya. Since its establishment, Genghis has achieved tremendous growth to offer a well-diversified portfolio of financial services that includes:
- i. Securities(Equity/Debt) Trading
- ii. Research
- iii. Wealth Management services
- iv. Investment Advisory & Management via the GenCap Unit Trusts
- v. Corporate Finance & Transaction Advisory services
The Kenyan Capital Markets continue to develop in size, scope and sophistication. With this is an increasing demand for more specialized and personalized brokerage service and we at Genghis Capital are glad to be able to offer you this service. Our strength lies in ensuring our clients are up to speed with developments at the stock market and the economy. Research and technology remains our competitive and comparative advantage hence Experience, Expertise and Professionalism are some of the qualities you can expect from our team.
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