Safaricom Ltd (SCOM)
Recently Bob Collymore, Safaricom’s Chief Executive Officer announced a dividend of KES 0.20/share after the he announced SCOM’s KES 18.4 billion in profit before tax for the 2010/2011 financial year. The number was 12.4% short of last financial year’s performance but considering the price wars, it was not that bad a set of financials.
Internet data customers grew to 4.9 million, a 85.6% increase from last year. Internet penetration in Kenya is just a mere 10% and with the affordable internet enabled phones coming into the market (especially the new Kabambe Huawei U3100 3G which costs 4 000 or USD 46.50) internet data usage will grow exponentially and since Safaricom has more than 90% market share of the internet data market, they are in a very good position to continue profiting from this internet revolution in Kenya. In addition, Safaricom is now the biggest retailer of laptops. The Wezesha initiative in partnership with the government which allows students to buy subsidized laptops has been a boon to them.
Barclays Bank of Kenya (BBK)
Barclays’ pretax profit was KES 2.404 billion (USD 27.9 million) during the period, up from 2.003 billion a year earlier. Total income rose 2 % to KES 6.192 billion from KES 6.069 billion. The first quarter’s Earnings Per Share was KES 1.10 versus KES 1.0.
Kenya’s 5th biggest bank in terms of profitability lost its last year’s number 1 position due to a more competitive environment. Most of the growth in earnings was supported by shrewd cost management and a slight rise in revenue.
Going forward, the bank is currently engaging a mini price war in the mortgage front. We’ve all seen the energetic advertisement about how low Barclays can go with their rates and I think this will improve their earnings especially given the fact that there are less than 20 000 outstanding mortgages. BBK is also setting stage for a 4-1 share split which will definitely increase market demand and interest in the stock.
ScanGroup (SCAN)
Corporations and big business have in the recent months spent heavily on advertisement e.g. the expensive ‘Niko Na Safaricom’ Ad which up to today is aired in prime time and ScanGroup are the ones banking the benefits. This is seen in the 60% growth in profit after tax the reported the other day. Per share earnings stood at a solid KES 2.55 versus 1.81, a 40.88% spike from a similar period in the last financial year. The acquisition by Ogilvy also injected some nice expansion synergy which quickly trickled down to the bottom-line.
Going forward; the acquisition deal gives Scangroup an edge in the Ad-game especially Pan African wise and they seem to be in a good position to take advantage of the fast growth not only in the East African Community but also the wider fast changing Sub-Saharan Africa. As businesses expand, they will definitely increase their advertising budget; physical media or digital, to now the hottest, Mobile!
Sasini
Commonly known as a tea and coffee marketer, Sasini Ltd reported a 19.6% drop in first half year net profits. This was largely driven by poor rains affecting agribusiness generally in terms of low water table and rise in input and production costs. As much as the weak Kenyan Shilling improved earnings of net exporters, the burgeoning inflation seemed to have reversed those gains.
Earnings per share on normal operations fell to KES 0.87 compared with KES 1.08 a year ago. The company also clarified that they had retired the US dollar denominated, high-interest loan (last year the rate was 11.75% though this year will be 5%) – servicing this loan used to eat into Sasini’s profits but going forward, it seems, the future is bright for them.