reports
- Gerald Muriuki
Genghis Cross-Asset Weekly Strategy - 8th February 2021
In this week's edition of the Weekly Cross-Asset Strategy Report, we give a recap of the equities, fixed income, currencies and derivatives 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 is ahead of all the benchmark indices including the Nairobi All Share Index (NASI) and Zamara Index. Genghis Trading Ideas ...
- Gerald Muriuki
East African Breweries Ltd (NSE: EABL) 1H21 Earnings Note
East African Breweries Ltd (NSE: EABL) announced weak y/y performance as expected but a rebound h/h with net revenue down 3.1% y/y (+53.2% h/h) to KES 44.5Bn. The h/h recovery follows relaxation of pandemic-related restrictions in the July-Dec 2020 period with volumes (-5.0% y/y) and sales almost normalizing to pre-pandemic levels in 2019. In addition to the weak volumes, the business grappled with weaker currency, higher direct costs (gross margin at 43.5% from 47.7% in 1H20) and one-off tax pr...
- Gerald Muriuki
GENGHIS CAPITAL PLAYBOOK 2021: Navigating the Now Normal
Dear Investors,No, that’s not a typo. The theme is just what it is, ‘Navigating the Now Normal’. The COVID-19 shock upended the world last year with far-reaching consequences; an earthquake of a magnitude 9 comes closer. While the rollout of the vaccines this year are meant to be a shot in the arm (no pun intended) to global economies, we are alive to the fact that the pandemic’s scars will still linger longer. Not only has COVID-19 exposed the domestic economy’s soft spots, but the spillover e...
- Gerald Muriuki
Genghis Cross-Asset Weekly Strategy - 4th January 2021
In this week's edition of the Weekly Cross-Asset Strategy Report, we give a recap of the equities, fixed income, currencies and derivatives 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 is ahead of all the benchmark indices including the Nairobi All Share Index (NASI) and Zamara Index. Genghis Trading Ideas ...
- Gerald Muriuki
Genghis Cross-Asset Weekly Strategy - 21st December 2020
In this week's edition of the Weekly Cross-Asset Strategy Report, we give a recap of the equities, fixed income, currencies and derivatives 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 is ahead of all the benchmark indices including the Nairobi All Share Index (NASI) and Zamara Index. Genghis Trading Ideas ...
- Gerald Muriuki
Genghis Cross-Asset Weekly Strategy - 3rd August 2020
In this week's edition of the Weekly Cross-Asset Strategy Report, we give a recap of the equities, fixed income, currencies and derivatives 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) and Zamara Index. Genghis Trading Ideas...
- Gerald Muriuki
East African Breweries Ltd (NSE: EABL) FY20 Earnings Note
East African Breweries Ltd (NSE: EABL) announced weak performance as expected, with net revenue drop matching our expectations (-9.0% y/y to KES 74.9Bn) with 2H20 heavily impacted by the pandemic (net sales -29.0% h/h). A surprise one-off provision of KES 3.2Bn led to divergence from our expected Profit After Tax (PAT) decline of 26.3% y/y to record a drop of 39.0% y/y to KES 7.0Bn. Citing increased uncertainty in the business environment (bars were closed indefinitely in Kenya), there will be n...
- Gerald Muriuki
Genghis Cross-Asset Weekly Strategy - 27th July 2020
In this week's edition of the Weekly Cross-Asset Strategy Report, we give a recap of the equities, fixed income, currencies and derivatives 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) and Zamara Index.Genghis Trading Ideas fo...
- Gerald Muriuki
East African Breweries Ltd (NSE: EABL) Company Update and FY20 Pre-ear...
Ahead of EABL’s FY20 earnings on 30th July 2020 against a full year profit warning thanks to the ravaging impact of the coronavirus pandemic, we have reviewed our estimates and subsequently our target price. We estimate FY20 EPS to decline 26.3% y/y (KES 8.28) driven by 9.0% y/y drop in net revenue, on the back of weak second half (with closure of bars and social events) of mostly beer especially Senator Keg-the most reliant of on-premise consumption. Management had indicated spirits (better ...
- Nirgunan Tiruchelvam
How Africa's poor will drive consumer spending after Covid-19
Covid-19 has devastated the lives of Africa's poor. In many countries, the lockdowns have halted the income of day labourers, andcurbed their spending. Working primarily in construction, transport and hospitality, they are an engine of consumption, and as some countries begin to ease lockdowns, the pivotal role that the African poor pays in consumption growth will again be apparent. HOW CAN AFRICAN COMPANIES BETTER TARGET THE POOR? Companies can successfully target the poor by selling product...
- Gerald Muriuki
Genghis 2Q20 Equity Investment Strategy
The COVID-19 pandemic hit fast and hard. In just a few weeks of the month of March, the global economy was down on its knees. Before the pandemic, the general feel was that we were in the tail end of economic and market cycles (especially in the US and advanced markets). However, nobody could have predicted at the start of the year that in just a few weeks’ time, almost the entire global economy would come to an abrupt halt caused by the COVID-19 pandemic. The aftermath is not a normal recession...
- Gerald Muriuki
Genghis Weekly Strategy - 30th March 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…EquitiesBUY EABL at the KES 130 levels. ...
- Gerald Muriuki
Genghis Weekly Strategy - 2nd March 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…EquitiesWe urge caution on taking a posi...
- Gerald Muriuki
East African Breweries Ltd (NSE: EABL) 1H20 Earnings Note
East African Breweries Ltd (NSE: EABL) announced decent 1H20 numbers with an EPS growth of 7.4% y/y to KES 7.00, in line with expected KES 7.50 and a 20.0% increase in dividend per share to KES 3.00 as expected (trailing dividend yield 4.0%). Net revenue slightly lagged the expected growth of 11.3% to post a 10.3% y/y performance to KES 45.9Bn. We are pleased with the performance delivered under a constrained consumer spending environment and persistent tax hikes. At an upside potential of 14.3%...
- Ross Hindle
EABL | 99 problems but a beer ain't one
East African Breweries grew revenue by 12% for the full year ending June 2019 (Avior: +12% y/y). Strong volume growth (+11% y/y) contributed to the increase. Strong performances in mainstream spirits, bottled beer and Senator Keg influenced volume growth. A positive mix led to operating margins expanding 510bp to 25.7% for the full year. The renewed growth in Senator Keg, with Kenya sales growing by 32% y/y, is encouraging. We believe the segment will continue to influence future growth as ...
- Gerald Muriuki
East African Breweries Ltd (NSE: EABL) FY19 Earnings Note
East African Breweries Ltd (NSE: EABL) announced stronger than expected FY19 performance with an EPS growth of 56.2% y/y to KES 11.23, ahead of our expected KES 10.02. Net revenue was up 12.4% y/y to KES 82.5Bn against our expected KES 81.7Bn. The Board recommended a final dividend per share of KES 6.00 (Total DPS of KES 8.50) reflecting a 9.1% y/y increment. This implies a trailing dividend yield of 4.0%. Following the stellar FY19 performance, we maintain our BUY recommendation with a target p...
- Gerald Muriuki
East African Breweries Ltd (NSE: EABL) 2019 Company Update
Ahead of EABL’s FY19 earnings release on 26th July and given the developments in the company since our last company update, we have reviewed our forecasts and subsequently our valuation of the stock. We estimate that FY19 EPS will grow 39.4% y/y driven by 11.2% y/y growth in net revenue, on the back of resumption of production of Senator Keg and performance of Tanzania market with an estimated net sales growth of c.26% y/y. Additionally, FY18 was a low base as EPS dropped 26.0% y/y to KES 7.91 d...
- Ross Hindle
EABL | Moving up the ladder
East African Breweries grew revenue by 13% for the half-year ending December 2018 (versus -0.3% y/y in H1'18). Strong volume growth (+13% y/y) contributed to the increase. Robust performances in mainstream spirits, bottled beer and Senator Keg influenced volume growth. A positive mix led to operating margins expanding 230bp to 27% for the half-year. The renewed growth in Senator Keg, with Kenya sales growing by 35% y/y, is encouraging. We believe the segment will continue to act as a catalyst fo...
- Gerald Muriuki
East African Breweries Ltd (NSE: EABL) 1H19 Earnings Note
East African Breweries Ltd (NSE: EABL) 1H19 results snapshotEast African Breweries Ltd (NSE: EABL) announced great 1H19 performance with an EPS growth of 25.1% y/y (KES 6.52 ahead of our expected KES 6.00) from a 13.0% y/y growth in revenue. Performance was positive across the key product portfolios, mainly Senator Keg which recovered (+35% y/y) from a setback in 1H18. and in Tanzania (+26% y/y in net sales) and Uganda. Gross margin improved to 46.1% from 44.8% supported by the 16% y/y growth in...
- Gerald Muriuki
East African Breweries Ltd (NSE: EABL) FY18 Earnings Note
Mainstream beers and spirits continue to perform while the Tanzania business is on stellar growth trajectory, though the 41% y/y net sale value (NSV) growth is unsustainable. A KES 2.0Bn provision for taxes, whose details management flatly declined to discuss, was the primer to the 15.0% y/y drop in bottom-line performance. 1) Re-emergence of bottled beer posts the best sales for a typically weaker second half (Jan – June) period 2) Mainstream spirits shine. Spirits’ consumption grew 18% in 2H...
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