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Morning brief: 20-July-2018

Hot off the press

  • BAT marks a 3.4% y/y increase in 1H18 net earnings to KES 2.0B
  • High Court suspends 'Robin Hood' tax on bank transfers above KES 500,000
  • Equity rebrands Congo subsidiary three years after acquisition
  • T-bill auction: Government accepts KES 35.8B out of KES 49.8B worth of bids received

BAT marks a 3.4% y/y increase in 1H18 net earnings to KES 2.0B
Gross Revenue: +1.9% y/y to KES 17.5B
Operating profit: +1.1% y/y to KES 3.0B
Finance costs: -21.9% y/y to KES 164M
Profit before tax: +2.8% y/y to KES 2.9B
Profit after tax: +3.4% y/y to KES 2.0B
Net cash from operating activities: a loss of KES 21M in FY18 from KES 733M in FY17.
Cash and cash equivalents at the end period: -25.9% to a loss of KES 2.5B
Basic and diluted EPS: +3.4% y/y to KES 20.14
Dividend: Interim Dividend of KES 3.50 per share
Books closure: 20th August 2018.
Payment of dividend: 21st September 2018
(Source: BAT company fillings)


High Court suspends 'Robin Hood' tax on bank transfers above KES 500,000
The High Court has suspended implementation of the 0.05% "Robin Hood" tax on transactions worth KES 500,000 and above. Justice Wilfrida Okwany observed that the implementation of excise duty on money transfer is an important issue that cannot be left to the guesswork of individual banks. The Kenya Bankers Association (KBA) had moved to court seeking to suspend the implementation of the tax, arguing that the "bank transfer" is vague and has not been defined by the Treasury. Read more (Source: Business Daily)

Our take
The Robin Hood Tax proposal has faced huge opposition from players in the finance sector with the general feeling that it discourages money transfer by investors and would also discourage foreign investments into the country.

Equity rebrands Congo subsidiary three years after acquisition
Equity Group’s Democratic Republic of Congo (DRC) subsidiary ProCredit bank has changed its name to Equity Bank Congo. The name change comes almost three years after Equity announced completion of acquisition of ProCredit Bank, an SME-focused lender in the DRC. “The expertise of the bank remains the same since 2015 and the staff also, only the name will change,” DRC subsidiary’s managing director Celestin Mukeba told the local media. Read more (Source: Business Daily)

Our take
In FY17, the subsidiary recorded a profit after tax of KES 0.3B (+63%). The bank has been investing heavily in its subsidiaries which saw double digit growth in profitability across all subsidiaries in FY17, as lending in Kenya remains slow due to the prevailing rate cap.
 

T-bill auction: Government accepts KES 35.8B out of KES 49.8B worth of bids received
This week the Central Bank of Kenya offered 91, 182 and 364 Days Treasury bills for a total of KES 24.0B. The total bids received were KES 49.8B, an oversubscription of the T-bills.
91-day: The Government accepted all the KES 4.2B worth of bids received. Weighted average decreased 4.5bps to 7.656%.
182-day: The Government accepted KES 10.2B of the KES 13.8B worth of bids received. Weighted average decreased 12.8bps to 9.194%.
364-day: The Government accepted KES 21.3B of the 31.8B worth of bids received. Weighted average rate decreased 14.3bps w/w to 10.238%. (Source: CBK)

Trading highlights

  • Safaricom led the movers after exchanging 10.0M shares. The telco closed trade up 25 cents to KES 29.25.
  • Uchumi traded 1.3M shares to close trade up 10 cents to KES 1.40.
  • Nairobi Securities Exchange traded 1.1M shares to close trade up 5 cents to KES 17.00.

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