Global and local market conditions
Other key stock markets also rose in the week: The Nikkie(
NSE Movers
Top gainers
Unga Group +10.89%, KPLC +9.22%, Rea Vipingo +8.53%,
Top losers
Pan Africa -9.38%, -NIC Bank 6.38%, Access
Unga Group Limited
Unga Group reported a huge jump in profits in the half year to December 2009 compared to the same period in the previous year. Earnings per share rose from 1.32 to 0.35: a gain of 278%. The recent rally in this counter could be as a result of investors taking position in expectation of an announcement of strong full year results. Going forward the reinstatement of duty on maize by the government will have a positive impact on product prices. The recent global jump in wheat prices will also have a positive impact if Unga Group can pass the cost increases to its consumers in the regional export markets and is able keep a lid on the prices paid on inputs.
Unga has a very low PE ratio, 4.68 (on annualizing the December 2009 half year results) and an attractive price to book value of only 0.42. Factors which reduce the attractiveness of this counter include the company’s very low return on equity (8.9%), huge minority investor position (31% of total equity) and the volatility of agricultural commodities prices. Value investors should consider accumulating this share if the price dips.
Pan Africa
The sharp fall in the share price is a reflection of the little float available on this counter which increases the probability of wild price swings. The liquidity in Pan Africa is low hence it difficult to accumulate a meaningful position of the stock. Exiting could also be a challenge. The low valuation of the company is however hard to ignore; the Friday closing price of Kshs 72.50 translates into a PE of only 8.24 which is cheap for a company that has consistently grown revenues and assets over the past 10 years.
GSE Movers
Gainers
Unilever +13.64%,
Top losers
Aluworks -14.71%, HFC Bank -5.77%
Unilever
Unilever
Quote of the Week:
“There is no passion to be found playing small - in settling for a life that is less than the one you are capable of living”. Nelson Mandela