Genghis Weekly Strategy - 4th November 2019
In this week's edition of the Weekly Strategy Report, we give a recap of the equities and fixed income markets' performance over the past week and our trading ideas for the coming week.
Our Momentum, Income and Value equities portfolios continue to outperform the benchmark index, NSE 20 YTD. Notably, the Momentum portfolio YTD performance is ahead of all the benchmark indices including the Zamara Index.
Genghis Trading Ideas for the week…
Equities
BUY KenGen at current prices below KES 6.00. We updated our valuation on KenGen which is expected to release FY19 earnings during the month (pending appointment of the Auditor General). We expect full year 2019 EPS at KES 1.17 compared to KES 1.20 in 2018. The performance is expected to be dampened by faster growth in operating expenses (maintenance of wellheads in first half of the year plus impairment for decommissioned Garissa power plant. However, we expect the dividend per share to be maintained at KES 0.40. Performance is expected to rebound in 2020 on the back of the recently operationalized 165MW Olkaria V geothermal power plant coupled with the other revenue generating initiatives - geothermal contractual services across the Eastern African Region (Ethiopia and South Sudan). The risk of single buyer model is expected to persist given the current challenges of the sole customer, KPLC.
Fixed Income
BUY IFB1/2019/16 at 12.20% - 12.30%. We still see opportunity in the on-the-run infrastructure bond as the market awaits confirmation of interest rate cap repeal in the week coupled with possible announcement of this month’s issue. The bond’s tax-haven appeal would be an added incentive for income sensitive 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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