5

Daily Market Note

27 September 2012
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Bloomberg: GNCP <GO>

www.genghis-capital.com

Equities Slow and Steady The NSE 20 share index shot 29.63 points ahead to close at 3,980.53 with the other indices following suit. The NASI was up 0.76 points to 86.98 while the FTSE 15 and 25 indices closed 0.79% and 0.775 higher than the previous close. Foreign investors were active in the session remianing long with a net inflow value of Kes.106Mn. Foreigners accounted for 51% of todays turnover. Local investors replicated the trend boosting equity turnover to more than double yesterdays close at Kes.476Mn. We do expect this trend to be maintained on the last trading session of the week. Market Capitalisation was improved to Kes.1.15Tn. "We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely." - Warren Buffett The highlights of the days trading activity are listed below:
Table 1: NSE Performance Table 2: NSE Indices

Top Traders Equity Safaricom Ltd Equity Bank Ltd Kenya Power & lighting Co. Ltd Housing Finance Co. Kenya Ltd Mumias Sugar Co. Ltd Volume 7,483,900 3,644,300 1,443,100 956,800 956,200

Market Indices Summary

Index NASI NSE 20 Share FTSE NSE 15 FTSE NSE 25 Source: NSE

Previous 86.22 3950.90 114.34 116.80

Today 86.98 3980.53 115.24 117.70

% change 0.88% 0.75% 0.79% 0.77%

Gaining Stocks Equity Transcentury Ltd KenGen Co. Ltd Olympia Capital Holdings Mumias Sugar Co. Ltd EABL Price (KES) 22.75 8.85 3.70 6.55 229.00 % Change 7.06 5.99 5.71 4.80 3.62

The Advance/Decline ratio at the close of todays trading session stood at 22/13 with 22 stocks advancing in price and 13 shedding prices. Foreign investor participation marginally increased to 50.76% in todays trading compared to 43% at the close of yesterdays session. Todays session resulted in a net outflow of Kes.3.34Mn compared to a net inflow of Kes.32.2Mn at the close of the previous trading session. The highest foreign investor turnover was recorded on Equity Bank Ltd (NSE: EQTY)Kes.83.7Mn and British American Tobacco Ltd (NSE: BAT)Kes65.8Mn. The 2 counters accounted for 31.35% and 61.77% of the total NSE and total foreign activity respectively. Equity Bank Ltd (NSE: EQTY) recorded the highest net inflow of Kes.48Mn. The highest net outflow was recorded on Nation Media Group Ltd (NSE: NMG) atKes.2.7Mn.

Losing Stocks Equity EA Portland Cement CfC Stanbic Holdings Sasini Ltd Total Kenya Ltd Eaagads Ltd Price (KES) 52.00 40.00 11.50 15.00 49.75 % Change -5.45 -4.19 -2.13 -1.64 -1.49

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Table 3: NSE Summary

26th Sept 2012 Market Cap. (Kes.Bn) Equity T/O: (Kes.Mn) Local/Foreign Equity T/O: (%) Advance:Decline Ratio Bond T/O: (Kes.Mn) 1140.64 285.91 57.0/43.0 21:15 4233.45

27th Sept 2012 1150.62 476.86 49.24/50.76 22:13 4446.00 400.00 9.00%

% Change 0.88% 66.79% N/A N/A 5.02% N/A N/A

Sell/Buy Back Transactions T/O: 0.00 (Mn) Sell/Buy Back Transactions (% of 0.00% Total Bond T/O) Source: NSE & Genghis Capital Estimates

Table 4: Foreign Equity Turnover

Foreign Investor Equity Turnover 26th September 2012 Buys (Kes) 62,590,440.00 Net Inflow/(Outflow) Position Sales (Kes) 59,251,237.50 3,339,202.50 27th September 2012 Buys (Kes) 174,540,777.50 Net Inflow/(Outflow) Position Sales (Kes) 67,561,137.50 106,979,640.00

Source: NSE & Genghis Capital Dealers

The Investment sector was up 1.33% to retain the top spot, boosted by the performances of Transcentury Ltd (NSE: TCL) +7.06% to VWAP 22.75 trading 55,000 shares. The total index performance appreciated 0.57% on the back of greater influence in six segments. The Construction & Allied sector occupied the bottom spot losing 0.95% dragged down by E.A Portland Cement Ltd (NSE: PORT) which shed 5.45% to close at a VWAP of Kes.52.00.
Table 5: Daily Segmental Price Performance Analysis

Sector Investment Manufacturing & Allied Energy & Petroleum Telecommunication & Technology Insurance Automobiles & Accessories Commercial & Services Agricultural Banking Construction & Allied Total Index Source: NSE & Genghis Capital

Constituents 4 9 4 2 6 4 9 7 10 5 60

Price Performance (% Change) 3.30 1.38 1.17 0.62 0.40 0.33 0.25 -0.37 -0.38 -0.95 0.57

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Trading Ideas:
The table below shows the performance of selected stocks that Genghis Capital recommended in the year.
Table 6: Equity Picks (Fig in KES)
Company Centum Investments Ltd Equity Bank Limited KenolKobil Limited NIC Bank Limited EA Cables Ltd Athi River Mining Ltd Diamond Trust Bank Ltd KCB Group Ltd Uchumi Supermarkets Ltd Kenya Power & Lighting Co. Nation Media Group Ltd British American Investments Bamburi Cement Limited Cooperative Bank Limited Kenya Reinsurance Corp. KenGen Ltd Jubilee Holdings Ltd Housing Finance Ltd Scangroup Ltd Portfolio Return Source: Genghis Capital Ltd Price at Recommendation 14.55 15.80 9.80 26.50 11.80 156.00 88.50 18.50 7.20 15.85 153.00 4.00 168.00 11.55 10.05 8.30 163.00 13.65 49.25 12 Month Current Price Target Price 19.55 11.95 19.90 16.90 45.50 14.55 198.50 123.40 27.10 17.25 22.00 197.70 6.25 201.00 18.50 15.35 16.25 186.00 27.00 59.60 23.50 15.05 33.25 10.50 224.00 108.00 27.50 17.70 17.50 216.00 6.40 169.00 12.00 12.00 8.85 165.00 14.25 58.00 Upside Potential 38.87% -18.09% 10.95% 26.92% 27.84% -12.85% 12.48% -1.48% -2.61% 20.45% -9.26% -2.40% 15.92% 35.14% 21.82% 45.54% 11.29% 47.22% 2.68% Return to Date -17.87% 48.73% 53.57% 25.47% -11.02% 43.59% 22.03% 48.65% 145.83% 10.41% 41.18% 60.00% 0.60% 3.90% 19.40% 6.63% 1.23% 4.40% 17.77% 27.60% Recommendation

BUY SELL HOLD BUY BUY HOLD HOLD HOLD HOLD BUY HOLD HOLD HOLD BUY BUY BUY HOLD BUY HOLD

Fixed Income: Yields Uptick Realized! Money Markets: The CBK was active in todays session to mop up Kes.10Bn in excess liquidity through repurchase agreements and TADs as the interbank rate was up to 7.783%. Primary Markets: The 91-Day T-Bill was auctioned today and as expected its yield increased by 44.6 bps to 8.093%. The auction was undersubscribed at 31% with the regulator accepting all available bids valued at Kes.1.24Bn against a target of Kes.4Bn. This trend should be maintained in the coming weeks auction. Secondary Markets: A minimal decline in activity slipping 5.02% to Kes.4.45Bn. The 15-Yr GoK Fixed rate Bonds buoyed activity transacting Kes.2.63Bn; 59.1% of the total Bond Turnover.
Table 7: Short -Term Interest Rates, Treasury Notes & CDs

Tenor 91 Day 182 Day 1 Year 2 Year 5 Year 10 Year

Kenya 8.09% 9.27% 10.34% 11.11% 11.86% 12.71%

Uganda 10.02% 12.43% 12.01% 14.84% 15.39% 15.28%

Tanzania 12.45% 13.01% 13.76% 13.81% 14.49% 14.99%

U.S 0.10% 0.11% 0.18% 0.27% 0.68% 1.68%

LIBOR (USD) 0.41% 0.70% 1.03% ----

Source: CBK, BOU, BOT, US Treasury, BBA, Genghis Capital

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Currency: Rising Yields Cushion the KES Performance: The KES lost its grip as it weakened against all currencies in Table 8. The largest losses were 2.21% in the INR/KES pair and 1.51 against the TZS. Continuous liquidity mop up by the regulator and rising yields ease the pressure exerted on the KES. In Tanzania, less demand for dollars and a liquidity squeeze support the TZS.
Table 8: Currency Rate

Currency Pair USD/KES GBP/KES EUR/KES ZAR/KES KES/UGX KES/TZS INR/KES Source: Bloomberg 4.00pm E.A.T, Genghis Est.

26th Sept 2012 85.10 136.72 109.00 10.34 29.98 18.74 26 Sept 2012 27 Jan 2012
th th

27th Sept 2012 85.35 138.48 109.88 10.42 29.77 18.45 27 Sept 2012 30thJan 2012
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Technical Analysis and Outlook: The chart below shows the Bollinger Bands for the USDKES currency pair over the past year. The regulator has ensured little volatility in this currency Estimatespair through mopping up excess liquidity or selling USD directly in the open market.

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Genghis Index:

Table 9: Genghis Index Performance

Large-Cap Index

The index marginally improved 0.70% as Market Capitalisation improved to Kes.938Bn. The best performing counter in this segment was KenGen Ltd (NSE: KEGN) up 5.99%. Losing by the biggest margin in this segment was CfC Stanbic Holdings Ltd (NSE: CFC) shedding 4.19%.
Mid-Cap Index

The Index entered value territory up 0.21% over yesterdays close as Market Capitalisation was relatively flat at Kes.146Bn. This sections best performer was Transcentury Ltd (NSE: TCL) up 7.06%. Losing by the biggest margin was E.A Portland Cement Ltd (NSE: PORT) down 5.45%.
Small-Cap Index Source: Genghis Capital

Price performance improved 0.58% with market capitalization stable at Kes.13Bn. Gaining by the biggest margin was Olympia Capital Holdings Ltd (NSE: OCH) up 5.71%. Losing by the biggest margin was Eaagads Ltd (NSE: EGAD) shedding 1.49%.

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Daily Market Note

Contacts Report By: Moses Waireri,Research Analyst | Tel:+254 20 2774781 | Email: mwaireri@genghis-capital.com Report By: Evelyne Wanjiku, Research Analyst | Tel:+254 20 2774781 | Email: ewanjiku@genghis-capital.com Anthony Kimani, Research Analyst | Tel:+254 20 2774781 | Email: akimani@genghis-capital.com Report By: Kelvin Nyabando, Research Analyst | Tel:+25420 2774781 | Email: knyabando@genghis-capital.com George Guy,Fixed Income Dealer | Tel:+254 20 2774756| Mob: +254 727 142231 | Email: gguy@genghis-capital.com Nyawira Waithaka, Equity Dealer | Tel:+254 20 2774777 | Mob: +254 723 693481 | Email: nwaithaka@genghis-capital.com Andrew Maina, Senior Equity Dealer | Tel:+254 20 2774789 | Mob: +254 722 667936 | Email: amaina@genghis-capital.com
Disclaimer: The content provided on this document is provided as general information and does not constitute advice or recommendation by Genghis Capital Ltd and should not be relied upon for investment decisions or any other matter and that this document does not constitute a distribution recommending the purchase or sale of any security or portfolio. Please note that past performance is no indication of future results. The ideas expressed in the document are solely the opinions of the author at the time of publication and are subject to change without notice. Although the author has made every effort to provide accurate information at the date of publication all information available in this report is provided without any express or implied warranty of any kind as to its correctness. You should consult your own independent financial adviser to obtain professional advice before exercising any decisions based on the information present in this document. Any action that you take as a result of this information, analysis, or advertisement is ultimately your responsibility.

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