Capital Markets

EABL share zooms past Equity on good results

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The Kenya Breweries Limited plant in Kisumu. FILE PHOTO | NMG

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Summary

  • On Thursday, the share closed trading at the Nairobi Securities Exchange at Sh213, 14.2 per cent or Sh26.50 higher than the weighted average price of Sh186.50 prior to release of results.
  • The share is trading at the highest level since August last year, pushing its market capitalisation to Sh168.43 billion compared to Equity’s Sh154.34 billion.
  • EABL booked 33 per cent growth in its half-year profits to Sh6.61 billion driven by strong performance across all segments and markets.

The East African Breweries Limited (EABL) #ticker:EABL share has hit a five-month high to race past Equity Bank #ticker:EQTY, becoming the bourse’s second most-valued stock after growing half-year profit by more than a third.

The market warmed to this performance as well as the board’s proposal of a Sh2.50 per share interim dividend, the highest interim payout since a similar one was made in 2012.

On Thursday, the share closed trading at the Nairobi Securities Exchange at Sh213, 14.2 per cent or Sh26.50 higher than the weighted average price of Sh186.50 prior to release of results.

The share is trading at the highest level since August last year, pushing its market capitalisation to Sh168.43 billion compared to Equity’s Sh154.34 billion.

EABL booked 33 per cent growth in its half-year profits to Sh6.61 billion driven by strong performance across all segments and markets. This was 91 per cent of the profit it attained in full year ended June 2018, placing it on a strong footing in 2019.

Genghis Capital, an investment bank, said the 25 per cent increase in interim dividend from Sh2 per share paid out in a similar period last year, offers a trailing dividend yield of 4.7 per cent.

“This indicates management is confident that the company will be able to sustain the higher pay-out going forward. The higher pay-out should give the price a strong momentum from its current levels of Sh170,” Genghis said on the day EABL released the results.

It added that the results were better than expected with the half year period being one of the company’s best in the last four years, following the recovery of beer sales which had stagnated.

“We are currently updating our valuation and recommendation, but so far, the reported numbers are ahead of previous estimates.”

Dyer & Blair Investment Bank issued an ‘overweight recommendation’ on the share meaning that it feels EABL stock has better value for money.

The bank expects EABL to sustain marketing campaigns in Kenya, especially in the mainstream beer segment, and also concentrate on innovation to strengthen beer growth recovery in Kenya and Tanzania.

“We expect Tanzania’s profitability stance to be sustained by organic growth of both mainstream and spirits segments, especially given the localisation of spirits production and strong marketing initiatives,” said the investment bank.