Capital Markets

High demand lifts KenolKobil share price

kobil

A KenolKobil station in Nairobi: Analysts said the company’s stock is expected to peak at Sh12 in the next few days. File

Foreign investors have driven KenolKobil’s share price up 20 per cent in one month creating Sh2.7 billion in shareholder wealth at a time when most counters are reversing gains.

The share price has risen from Sh9.15 in May to Sh11.10 by closing of trading yesterday on increased demand spurred by expectations for higher earnings.

Analysts said the company’s projections of goods earnings this year has helped spur investor interest increasing demand thereby driving up the share price. “This follows an earlier announcement that the company is set to record more than 50 per cent growth in earnings helped by high oil prices,” said Francis Mwangi, an analyst at African Alliance.

Peak at Sh12

Oil marketers are set for increased gains this year on the back of high fuel prices at a time when many Kenyancompanies are feeling the threat of high inflation on their sales and when agricultural and banks stocks are losing with the weakening of the shilling.

Analysts said KenolKobil stock is expected to peak at Sh12 in the next few days before plummeting.

“Demand is very strong, we expect investors to start taking profits on the stock in the next few days, a move that could see the stock dropping quite significantly,” said George Bodo, an analyst with Apex Africa Capital.

Mr Bodo said about 86 per cent of the movements in the stock is being driven by foreign investors adding that the rise in the share price is very temporary. Oil prices have been soaring in the last six months. Crude oil prices rose 30 per cent to trade at more than $120 per barrel from $95 in January this year. Petrol prices have risen from Sh94 per litre in January this year to Sh114 in June, according to the Petroleum Institute of East Africa (PIEA).

Other industry players such as Total Kenya, National Oil Cooperation, Shell Kenya are also expected to reap higher earnings this year.

The share price gains comes at a time when the oil marketer is gaining marketshare as its rival Total lost.

The reduced use of fuel-driven power generators and price controls have prompted fresh realignments in the oil market with Total Kenya being the biggest loser and KenolKobil emerging as the biggest winner, thanks to the even spread of its fuel stations throughout the country.

Data from PIEA shows that Total’s marketshare dropped to 24.1 per cent in March compared to 31.1 per cent in the same period last year. Its rivals, KenolKobil, gained 4.8 per cent to 23.5 per cent, Shell (0.7 per cent to 18.5 per cent) and Libya Oil (0.5 per cent to 12.2 per cent).

“KenolKobil had regulatory problems in 2010 and they raised prices which cost them marketshare but the price controls introduced in December have leveled the playing field and eased the viscous price war,”said Mr Mwendia Nyaga, a petroleum consultant at the Energy ministry in an earlier interview.

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