Shares Portfolio February 2011

A tale of Two Brewers – comparing shares to November 2010 and a year ago

The Stable

Bralirwa (Rwanda) ↑
Diamond Trust Bank ↑
East African Breweries (EABL)
Kenya Airways ↓
Kenya Commercial Bank (KCB) ↑
Kenya Oil Company (Kenol) ↓
Safaricom ↓
Scangroup ↓
Stanbic (Uganda) ↑
Uchumi ↔

Review:
- Best performer: Bralirwa up 31% since their 2010 IPO
- Worst performer: Scangroup (down 14%), then EABL
- In: Bralirwa
- Out: None
- Increase None
- Decrease: None
- Unexpected gains/losses: - Uchumi shares have not been re-listed despite the company’s exit from receivership a year ago

Events & Outlook: - Performance: The Portfolio is down 3% in the last three months while the NSE Index is down 6%
-Bralirwa Rwanda was a good buy as the Rwanda (virtual monopoly) beer company listed shares that were open to all East African nationals and many retail shareholders got full allocation (still waiting for a similar offer from Tanzania); However in Kenya EABL faces challenges from the so-called Mututho Law which appears to have curtailed sales of alcohol through reduced hours.
- Safaricom seem to be weathering the storm from Airtel Kenya and their battle has extended to political and regulatory circles. Airtel added only 2 million more customers in all Africa compared to a year ago (Dec '09)
- Kenol has gone quiet since the Kenya Government instituted price controls around the country and despite popular expectations, prices have steadily risen in the two months since the program started.

Looking forward to: - February brought news that Transcentury and Britak - British American insurance plan to list at the stock exchange this year. Britak, Kenya’s 4th largest insurance company looks more likely – it had a 2009 pre-tax profit of Kshs 500 million and assets of 15 billion ($185 million). Transcentury shares trade at an OTC market run by Dyer & Blair - and (this week) are at Kshs 35 per share compared to Kshs 48 in 2010 according to the East African.

CIC Insurance, CFC Life and Family Bank are silent, while government linked companies like New KCC, Consolidated Bank, and National bank, are also likely to go through more political hoops before they reach the market.

- Also on offer this month is a 30 year savings bond from the Central Bank of Kenya to promote savings in the country. It pays 12% per year and targets to raise Kshs 18 billion ($221 million) with a minimum investment of Kshs 50,000 ($615), and closes on. Exactly two years ago, there was a similar push for an infrastructure bond offered by the Kenya Government to raise 18.5 billion ($231 million) by offering investors 12.5% returns over 12 years.

Award Season

Capital Market Awards: These took place late in January 2011 and were organized by Think Business who also organize awards for the banking and insurance industry. The awards gained notoriety when they started a few years ago when the regulator capital markets authority (CMA Kenya) complained about their implied association /endorsement as a result of the name.

Some of the winners this year included;
Custodian of the year: KCB
Bond deal of the year: Housing Finance
Stockbroker of the year: Genghis Capital
Fund manager of the year: Genesis Kenya
Legal transaction advisors: Hamilton Harrison & Matthews
Unit trust: British American (which was launched 5 years ago)
Research team: Kestrel capital
Lead transaction advisor: Dyer & Blair
Investment bank of the year: Dyer & Blair

D & B director Jimnah Mbaru mentioned that they had used Hamilton Harris & Matthew in most of their deals, and had been represented in several deals including NIC (Uganda), Bralirwa (Rwanda), CRDB (Tanzania) and the largest was KPLC in Kenya which was a complex deal. He added that its not just technical know-how that wins them deals (everyone had talented transaction employees) but it's a more about relationship management and understanding people, politics, social economic (and that many runners up had recruited staff from D&B). But he also spent 5 minutes telling what looked like it was going to be a very funny accounting or golf joke, only that it turned out to be one everyone knows as it ends with a lawyer answering 'how much do you want 2 + 2 to add up to?'

The CMA awards were mostly deserved, but there are a few glitches that were evident:

- The organizers insisting on presenting awards (best performing NSE company won by British American Tobacco) that were not voted or verified by the auditors (who stated this before the award was given)
- Some categories listed had no entries (IPO of year, Chairman of year, PR transaction advisor), or two winners in same category (CEO of the year shared by Nasim Devji and Martin Oduor Otieno) and some prizes winners not showing up.

Other Awards up for grabs
- Poptech: Nominate a Poptech Social Innovation Fellow
- Property Awards: Organized by Property Expo Kenya, these take place on February 24 at Sarit centre and will award property developer of the year, real estate agency of the year, mortgage company of the year and real estate journalist of the year

Other Media Awards include
- Diageo Africa Business Reporting Awards
- East African media awards by East Africa Business Council

Motoring Moment: Ugly Cars, Overlappers, Thika Road

Overlappers are one of the most irritating nuisances of driving on Nairobi. Over-lappers are drivers who are too impatient to wait their turn in traffic, so they swerve into the lane for oncoming traffic or onto pavements & footpaths, and speed away, only to nudge/cut-in/force/beg for their way back into their assigned lane when they run out of road or meet another car. The habit is believed to have started with Matatu (minibus) drivers who used to be acknowledged as the worst drivers in Nairobi, but has spread to other including ordinary drivers, taxis, buses, governments & diplomatic vehicles.

So we’ve started a new site - Overlap.co.ke ( #overlapKE ) - to rank serial over-lappers and point out over-lapping hot-spots for over-lapping . The police may not be anywhere or have an interest in the reckless road behaviour of some motorists, but there are ordinary motorist who are fed up with the impunity that is symbolized by over-lapping and can send in reports to identity the worst offenders.

Car Use Verification: Odometer tampering is suspected to be a not rare occurrence employed to increase the value or enable the importation of the 5 to 8 cars brought in to Kenya from Japan, Singapore, and Dubai.

However for vehicles shipped from Japan, @Karuoro of Huduma Bora points to the JEVIC(Japanese Vehicle Inspection) site which wary drivers can use to confirm the details of the vehicle they are about to buy, including identification/serial numbers and odometer readings at the time they left Japan.

Road Rage incidents are thankfully still only isolated incidents despite, the build up of traffic gridlock. The use of Police Officers to control traffic is both praised and loathed in different measure. - and a few weeks ago, a truck driver got involved in a major fist fight (longer than several boxing matches) with a traffic policemen.

It was captured on camera (above), and when played on TV caused some debate with different viewers siding with the policeman and others with the driver who was later charged in court.

Thika Road: It's transformation to a super-highway courtesy of engineers from China continues, and they are changing the landscape from Nairobi to Thika - going by the changes at Museum Hill, University of Nairobi, and Globe roundabout. You can follow the changes with this useful Thika Road Blog.

Ugly Cars: via @diasporadical comes two lists of ugly cars that may be less desirable than the controversial Toyota Vitz which is equally loved and loathed around Nairobi. My (least) favorite, it’s the Toyota Will V1, of which there a few around Nairobi, but this odd shaped car does not appear to have an (too embarassed?) manufacturer’s badge.

How developers can make money with Safaricom - Part II

One of the unintended effects of Airtel’s price wars with Safaricom in Kenya is that it has made Safaricom more responsive to Kenyan developers in terms of collaboration on products, services, platforms etc.

This has long been a peeve of local developers that’s Safaricom has not been, leading to the company coming up with a mooted innovation board as a forum to improve the interaction process with local developers.

And if you do get the chance remember it’s a two year money-making cycle of boom and bust with Safaricom.

DABRA 2011

The 2011 Diageo Africa Business Reporting Awards - DABRA were launched today in Nairobi, Kenya and entries are invited from all African countries for the winners to be announced in London later this year.

The 2011 DABRA's will feature entries for blogs, podcasts, online content, print, radio and TV entries, published or broadcast between 18 April 2010 and 20 March 2011. Entries can be submitted in eleven categories - ICT feature, finance feature, infrastructure feature, agribusiness / environment feature, tourism feature, use of new media in a story, business news story, business feature story, newcomer, media of the year and journalist of the year and the deadline is March 21 2011.

The 2010 awards attracted 750 entries that were narrowed down to the finalists including this post.