Genghis Weekly Strategy - 4th May 2020
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 NSE 20 index. Performance of the Momentum and Income portfolios was ahead of all the benchmark indices including the Nairobi All Share Index (NASI).
Genghis Trading Ideas for the week…
Equities
Safaricom posted solid FY20 performance and increased its dividend per share by 12.0% y/y to KES 1.40; normalized EPS grew 14.3% y/y to KES 1.78 mainly due to efficiencies (operating margin at 38.7% from 35.5% in FY19) and growth in M-Pesa revenue (12.6%), mobile data revenue (12.1%) and fixed data revenue (10.7%). The recommended dividend translates to a modest dividend yield of 4.9%. We maintain our HOLD recommendation on SCOM at a fair value estimate of KES 33.25.
Fixed Income
BID FXD1/2020/5 at 11.40% - 11.50% levels. We expect outsized appetite for this paper and the pent-up demand will mainly be due to its shorter duration appeal. The 2-year historical average on the 5-year clocked 11.21%. Currently, the implied yield on the tenor stands at 11.23%. Overall, our sentiment is that the weighted average accepted rate for FXD1/2020/5 will be 11.40% - 11.50%.
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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