Centum Half-Year Results
Centum releases its HY 2021/2022 results.
Welcome to the Baobab Weekly by Mwango Capital, a newsletter that brings you a succinct summary of key capital market and business news items from East Africa.
This week, we cover Centum’s HY 2021/2022 results. We also conclude our coverage of the banking sector Q3 2021 results with I&M Group.
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Centum: Income Grows, Impairments Eat into Profit
Increased investment income grew 38% to KES 1B driven by dividend payment by portfolio companies. This resulted in a 348% growth in operating profit to KES 425M.
Finance costs declined 24% in line with the company’s current Centum 4.0 strategy of deleveraging the balance sheet.
Reduced profit: KES 413M impairment provision booked on the income statement resulting in an 87% decrease in profit after tax to KES 12M.
Other highlights:
Its KES 7.9B marketable securities portfolio earned 15% annualized net return with 90% of the portfolio allocated to fixed income and cash.
KES 4.8B cash distribution by Centum RE to Centum Investments Company as at 30 Sept 2021, representing 62% of total capital invested.
KES 180M investment made in Sidian Bank’s rights issue.
NAV per share remained flat at KES 62.1 from Sept 2021.
More: We also hosted the CEO on our Twitter spaces this week. The raw audio recording is available via the Twitter app here.
Here are links to the investor briefing and the results.
This interview by Business Redefined host Julians Amboko with Centum CEO Dr. James Mworia is also worth listening to.
I&M Q3 21: Prudence in Provisioning, Cashing in on Treasuries
Steady balance sheet growth: Total assets grew 16% to KES 399B on the back of a 12% growth in loans and advances and 34% growth in investments in government securities. Customer deposits grew 14% in the period.
Income growth: Operating income grew by 20% to KES 20B on account of a 16% growth in total interest income to KES 22.8B. Interest income from government securities grew by 76% compared to a 3% growth in interest income from loans.
Increased provisioning: Loan loss provisions increased 31% to KES 2.8B as gross non-performing loans rose 4% to KES 22.9B. I&M Group is one of the three listed banks that increased provisions in Q3 2021.
Other highlights:
Net interest income +35%
Non-interest income -4%
Operating expenses +29%
EPS -38% to KES 3.29
Profit after tax +25% to KES 5.7B
Full results here.
MTN Uganda IPO Results
Results: The MTN Uganda IPO was undersubscribed managing to raise UGX 535.9B against a targeted UGX 895.6B. This is the largest amount ever raised in Uganda from an IPO.
Impact: During the MTN Uganda IPO period, 34,000 SCD accounts were opened, almost doubling the 38,000 accounts there before the offering.
Listing: The issued shares will be listed on the Main Investment Market Segment of the USE on Monday, December 6th, 2021. This is the shareholding structure after allocation of shares but prior to listing, with the NSSF Uganda taking the lion’s share of what was on offer:
Fun Facts:
The last IPO in Uganda was by Cipla which raised UGX 166B with a 98.8% allotment rate. 90% of this allotment went to institutional investors.
According to data compiled by Bloomberg, the MTN IPO is the biggest since Umeme Ltd. floated 622.378m shares (38.6% of the company’s issued share capital) at UGX 275 in 2012.
African Markets this Week
East Africa: Kenya recorded a 2.88% drop in the Nairobi Securities Exchange All Share Index. The index closed the week at 160.03, down from last week’s 164.77. Tanzania’s DSE ASI was down 0.56% to close at 1,846.88 while Uganda’s USE ASI recorded a 4.14% drop to close at 1,372.43.
Across Africa: The Namibian Stock Exchange Overall Index recorded a 3.36% rise to close at 1,449.83.
Charts of the Week:
A KES vs USD roller-coaster:
Kenya listed banks’ Non-Interest Income as a % of Operating Income:
What Else Happened This Week?
November 2021 MPC meeting: The Kenyan Central Bank Rate (CBR) was retained at 7% [Central Bank of Kenya].
Here are a few notes from the press briefing with CBK Governor Dr. Patrick Njoroge.
November 2021 inflation: Kenya’s inflation rate eased to 5.8% from 6.5% in October [Central Bank of Kenya +KNBS].
KCB ends its pursuit of Tanzania’s BancABC: The listed lender had planned a 100% acquisition of BancABC but has failed to receive regulatory approvals within the prescribed time [KCB Group].
“As announced, completion of the transaction was subject to certain conditions...including receipt of all regulatory approvals. As of the date hereof, certain regulatory approvals have not been received within the prescribed timeframe specified in the Agreement. As a result, without further agreement by the parties to extend the long-stop date, the agreement has been terminated and, accordingly, the parties will not proceed to complete the transaction as previously envisaged.”
Kenya Corporate Debt Market: CMA approved a KES 3.9B MTN programme by Urban Housing Renewal Development aimed at facilitating affordable housing [Capital Markets Authority].
“The Medium-Term Note Programme, which has a KES 600 million green-shoe option, and an 18-month tenor is a restricted public offer for sophisticated investors. It will be offered at an interest rate of 11%. The proceeds will support an affordable housing project in Pangani in Nairobi, comprising 1,562 housing units is a partnership with the Nairobi County Government”
ESG: Nairobi Securities Exchange unveiled Environmental, Social, and Governance (ESG) Disclosures Guidance Manual [NSE]. The reception to this manual has been positive.
"The ESG disclosure guidelines will help companies navigate, comply and stay ahead of regulations that require disclosure of ESG information. In addition, they will assist in addressing the growing demand for ESG information" - NSE Group CEO Geoffrey Odundo
CMA v Cytonn: The latest round saw the High Court dismiss a petition by Cytonn Asset Managers seeking to quash a directive by CMA limiting investment in Cytonn related projects to 10% [Business Daily].
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