Safaricom recovers as KenolKobil share price drops at NSE

Oil marketer KenolKobil’s share price declined further on Tuesday as Safaricom recouped to emerge from a losing streak.

The two counters have over the last three weeks faced reduced investor interest for the threats facing their business from regulatory risks in the case of KenolKobil and tariff wars in the case of Safaricom.

KenolKobil’s share, which has lost over 20 per cent in the last three weeks, stood at Sh8.85 on Tuesday from Sh9.20 on Monday on what analysts attributed to bad publicity despite good half-year profits that saw the company earn Sh1.17 billion.

On the other hand Safaricom’s share price reversed a fall on Tuesday to close at Sh4.85, compared to Sh4.70 on Monday, but remained below the psychological Sh5 IPO price.

“Court disputes between the marketer and the sector regulator have negatively affected the counter,” said Mr James Mose from the CFC Stanbic Financial Services.

KenolKobil is fighting to retain its distribution licences in Kenya’s retail market which the Energy Regulatory Commission revoked after the company breached a requirement that it processes 30 per cent of its products at the Kenya Petroleum Refineries in Mombasa.

The company was granted a stay against the withdrawal of its licence and sought arbitration to resolve a payments dispute that has seen KPRL stop processing it’s crude oil.

Safaricom has been struggling to shrug off the vicious wars in the telecoms sector that analysts expect to dent its profitability.

The dip from Sh5.60 on profit-taking is egging portfolio managers to urge investors to take advantage of the lower price earnings ratios.

“This is the time when people should be buying, especially Safaricom shares since they cost less, ” said Sammy Wachira of the Drummond Investment Bank.

The dip in the equities market has also been attributed to foreign investors restraint.

“Foreigners who play a significant role on the Safaricom counter had adopted a cautious attitude as they expected worse employment data than the ones released by the US government, we are therefore likely to see some improvement in the Safaricom share price” said Steve Lagat of CFC Stanbic Bank in an interview .

A bear market over the last three weeks has seen investors turn to the fixed Income Securities Market.

The turnover in the bond market increased to Sh13.6 billion last week from Sh5.2 billion traded in the previous week.