Stocks to look out for in 2015

Centum, Kenol Kobil, Equity Bank, Mumias Sugar as well as the cement industry, insurance and Information Technology is a list of firms and sectors that will be the most closely watched this year.

This is according to a report by ABC Capital Ltd, an investment banking firm and a member of the Nairobi Securities Exchange (NSE).

Other than Rea Vipingo and Lamu coal power deal, it will be interesting to see whether Centum ventures into another mammoth project. The firm recently announced it will invest over Sh100 million to acquire an extra three per cent stake in Almasi Beverages.

“The transaction will give it control of the Coca-Cola bottlers’ holding company. With this, Centum’s stake will rise to 50.95 per cent of the issued share capital of the company and resulting in Almasi becoming a subsidiary of Centum,” said Joshua Otiende-Research Analyst, ABC Capital Ltd.

“Almasi is a holding company of three Coca-Cola bottling firms - Mount Kenya Bottlers, Rift Valley Bottlers and Kisii Bottlers.”

With the introduction of the thin slim Sim cards, this year is positioned to be a big period for Equity Bank Group, who announced it will charge a maximum of Sh25 for any amount transacted, a move that could stir price wars.

Equity can leverage its massive customer base to adopt this - an easy way would be to offer it free to all customers with incentives for adoption. “It would, in the medium term, pose a serious threat to other mobile money transfer platforms.

All this depends on how Equity rolls out its services, and how acceptable to merchants it is, as well as how many money transfer agents it can roll out quickly,” said Otiende.

Crude price

Also on the watch list in 2015 will be Oil marketing firm Kenol Kobil, which has returned back to profitability. It is expected to benefit from lower international crude prices and not so low pump prices.

In the banking sector, while still experiencing sluggish growth, is expected to benefit from regional expansion, SME lending, infrastructure finance and the provision of online and mobile banking. “The list of banks on the strong growth path includes KCB, Equity Bank, NIC Bank and Diamond Trust.

Those banks with conservative business models, however, will continue to lose ground as we go forward,” said Otiende. One exception, however, is National Bank of Kenya which has re-branded, begun to clean up and grow their loan book, embarked on an ambitious expansion strategy and recruited a new executive team.

“The bank’s cash call will be really exciting to watch. I hope the Kenyan government dilutes its stake in the bank, freeing it up to be more growth-oriented,” said Otiende. The market is also expecting an Initial Public Offer for Family Bank which could signal a round of new listings at the NSE.

In the sugar sector, all eyes will be on how Kenya’s largest sugar miller, Mumias Sugar survives its financial troubles. Mumias was in June 2014 dropped from the list of 20 blue chip stocks making the NSE 20 Share index.

The miller remains at risk due to corporate governance issues, which threaten the company’s cash flow and revenue. The miller has seen its valuation at the NSE go down 42.4 per cent to become the cheapest share in the market - at Sh1.90 per unit.