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Weekly Market Monitor-Issue 35/2018

Weekly Wrap: Macroeconomics & Corporate News

• I&M Holdings released 1H18 financial results reporting a 12.8% y/y increase in EPS. NIR grew 34.4% y/y while NII was muted at KES 6.9Bn. Total operating expenses increased 15.8% y/y due to a 46.2% y/y rise in Loan Loss Provisions to KES 1.4Bn and staff costs. The balance sheet grew 23.5% y/y driven primarily by customer deposits that were up 30.6% y/y. We upgrade our recommendation to a BUY on I&M Holdings at a target price of KES 126.18.
• Bamburi Cement released 1H18 reporting a 66.51% y/y drop in EPS to KES 1.47.  Turnover remained flat at KES 18.56Bn.  Operating profit declined by 56.17% y/y due to higher operating cost (+9.16 y/y). PBT declined 72.89% y/y to KES 0.7Bn. We maintain our HOLD recommendation against our target price of KES 176.
• DTB released 1H18 financial results reporting a 10.0% increase in PAT. NII grew 4.6% y/y while NIR grew 8.0% y/y. Operating income was up 5.3%. Total operating expenses increased by 4.0% to KES 7.3Bn. We maintain our BUY recommendation on Diamond Trust Bank at a target price of KES 231.23.
• UAP Holdings Ltd released 1H18 results, reporting a 76.9% y/y decline in EPS to KES 0.49. PBT excluding the reorganization cost grew by 14.5% to KES 780.7Mn. Gross Earned premium declined by 6.6% y/y to KES 8.9Bn. Net claims grew 4.3% y/y to KES 5.2Bn while operating expenses were muted at KES 2.4Bn (-0.4% y/y). Moving forward, the Group is expected to leverage on enhanced operational efficiency, coupled with an improved operating environment in its regional subsidiaries, with the peace deal in South Sudan and an improvement in economic conditions in Tanzania. 
• Kenya Airways Plc announced an improvement in 1H18 operating results where loss before tax narrowed to KES 4.0Bn from KES 5.8Bn in 1H17 mainly due to a 41.4% y/y cut in 'other costs'. Direct operating costs up 13.9% y/y mainly contributed by fuel costs which rose 16% y/y. Overheads and other fleet costs declined 20.4% y/y and 2.2% y/y respectively.Total income was up 3.1% y/y from an increase in passenger numbers to 2.3Mn (6.6% y/y). Long term, the prospects of the business look solid and we see a high probability of profitability in the medium term.
• Jubilee Holdings Ltd announced a 1.3% y/y drop in 1H18 EPS to KES 23.68. This was attributed to a 1.9% y/y decline in Net earned premium to KES 8.8Bn. Operating cost base held stable, +1.8% y/y to KES 2.11Bn. Claims ratio stood at 110% above the industry average of 64.16% (1Q18) while expense ratio stood at 23.81%. We maintain our BUY recommendation against our target price of KES 587. On a trailing basis, JUB is trading at a P/B of 1.45x in line with sector's 1.45x.

• NASI down 3.12% YTD to 167.59, down 2.11% in the week.NSE 20 Share Index down 13.70% YTD to 3203.4, down 2.82% in the week.
• Value traded at KES 2.46Bn (USD 24.31Mn) for the week.

• Currencies: Dollar gains strength on trade concerns …
• Commodities: Gold weighed down by strong US data; trade concerns …