Safaricom hits Sh8.25 as investors eye dividend pay

Safaricom touched an all-time high trading price of Sh8.25 per share in Monday’s trading at the Nairobi Securities Exchange, taking the telecommunication firm’s market valuation to a record Sh326 billion.

The share closed the day at a new average high of Sh8.15 per share following sustained demand from both local and foreign investors, ranging between a high of Sh8.25 and a low of Sh8.

Analysts said that investors are attracted by the prospect of a higher dividend cheque from the company next year given its strong profit growth, as well as having an eye on the September 12 closure of books on a 31 cents dividend payout, the highest ever by the company.

“The company is projected to have a free cash flow of between Sh18 billion and Sh20 billion in the next financial year, with dividends consequently expected to flow by about 20 per cent.

“We saw some profit-taking during this bullish run that dropped the share back to Sh6.50, but investors are now ploughing back in with some aggressive demand,” said Kestrel Capital markets analyst Kuria Kamau.

The counter moved some 22.2 million shares on Monday, which accounted for 70 per cent of the day’s total traded volume at the NSE.

Safaricom has the most improved share price in the past 12 months, having risen more than 117 per cent in the period.  

(READ: Shareholders’ joy as Safaricom’s share price soars)

The telecom company’s share performance had for the past five years remained disappointing for investors as the price held steadily below the IPO price of Sh5, at one point hitting a low of Sh2.50 in 2011.

Big gainers

The latest share price rally means investors who bought Safaricom shares at the lowest point have more than tripled their earnings. Some analysts expect the share price rally to continue in the near-term.

Safaricom valuation of Sh326 billion, is only Sh10 billion lower than the all-time high valuation achieved by EABL on May 22 when the brewer’s capitalisation rose to Sh336 billion on a trading price of Sh426 per share.

The telco’s counter is the only one now valued at more than Sh300 billion, with the second most valuable company EABL having dropped to Sh253 billion following its share’s slide to Sh321.

Safaricom’s high price and the recent rally in bank stocks during the half year results announcement period have driven up the NSE’s market capitalisation to a record Sh1.774 trillion.

Other big gainers in the market on Monday included TPS Eastern Africa, which went up by 2.6 per cent to Sh49.25, and Pan Africa Insurance which gained 2.5 per cent to stand at Sh61.50.

Olympia Capital recorded the day’s biggest drop to close 7.1 per cent down at Sh3.90.