Buy Kenya Re and Housing Finance, monitor Safaricom

Safaricom: Last Friday, the Nairobi Securities Exchange hit a new high with Sh2.14 billion turnover of the day’s trading alone. Safaricom recorded Sh1.58 billion turnover.

This made the telecom the biggest firm in East Africa by market capitalisation with around Sh512 billion. The stock touched a high of Sh13 per share trading 123.20 million shares.

However, Dyer and Blair’s head of risk compliance Daniel Waweru says short-term to medium-term investors should treat Safaricom cautiously.

“Foreign buyers were at Sh1.4 billion and foreign sellers were at Sh1.5 billion. This means that the stock was a net sell-off for the day,” he says. “An investor should note that the foreign investors may have been re-balancing their portfolio.”

Interestingly, despite the high demand, the stock stood at Sh12.75, its trading price the previous day.

Kenya Reinsurance: The re-insurer posted Sh1.19 billion profit in the half-year results announced last year compared to Sh1.15 billion the previous year. At the time, Kenya Re traded at Sh16.90 per share. On Friday last week, the firm closed at Sh19 per share. The company is planning to expand to Botswana, Mozambique, Zambia, and Zimbabwe as it seeks to cut its reliance on the local market.

Investax Capital boss Ndindi Nyoro says Kenya Re has a p.e ratio of below five while other insurers are trading with a p.e ratio of above 10. “Stocks with a low p.e ratio have always proved to be strong for investors to make entries. Kenya Re is one such stock,” he says. On Monday the stock opened at Sh18.80 per share.

Housing Finance (HFCK): According to Mr Nyoro, HFCK is beckoning to medium to long-term investors to make entries. In February, the firm posted Sh995.2 million after-tax profit, up from Sh743 million recorded the previous year — a 33.9 per cent rise.

“It is the only company that offers interim and final dividend,” adds Mr Nyoro. Having offered Sh1.75 dividend, up from Sh1.40 per unit held, the company is gearing to start trading ex-dividend, which will be a suitable position for investors to play.

Last month, the lender introduced new housing designs that will see buyers get homes for as low as Sh1.6 million to woo middle class buyers.
On Monday, the stock opened at Sh35.50 per share. According to Mr Nyoro, current investors should hold on while new interests on the counter should make entries at between Sh35 and Sh36 per share.