Safaricom's Earnings, The NSE Decline and Coffee Over the Finance Bill 2023.
Safaricom's Full Year 2022/2023 earnings were not pleasing causing and investor flee on the local markets. Kenya's Finance Bill 2023 has been out here and also, a touch of the markets.
Hey Hisa fan,
Anxiety picked investors as we highlighted last week on Safaricom’s earnings. Well the earnings were out and investors were not pleased at all. The Kenyan shilling on the other hand also continued its decline on the currency curve as the dollar gained traction against major currencies globally.
Moody’s Global Rating Agency on Friday, also cut Kenya's senior unsecured debt rating as well as long-term foreign-currency and local-currency issuer ratings to B3 from B2, stating that Kenya's domestic funding conditions have deteriorated considerably over the past two months, with very low net domestic issuance contributing to financing shortfalls and delays in government spending.
Key Earnings Brief.
Safaricom PLC [NSE: SCOM 0.00%↑] - East Africa’s largest company by market capitalisation posted a 22.2% decline in Profit After Tax (PAT) to KES.52.5Bn in what the company attributed to a 40.6% income tax expense of KES.35.9Bn.
Total Service Revenue rose 5.2% to KES.295.7Bn (FY22 - KES.281.1Bn)
Operating Expenses (OPEX) rose by 34.2% KES.74.1Bn (FY22 - KES.55.2Bn).
Capital Expenditure (Capex) for the period increased 93.1% to KES.96.1Bn (FY22 - KES.49.8Bn).
M-Pesa remained the biggest revenue earner of the group at KES.117.2Bn posting an 8.8% increase from KES.107.7Bn posted last year.
Voice was Safaricom’s second largest revenue driver contributing 28.7% of total service revenue down from 29.6% FY22.
Safaricom Ethiopia posted a KES.562.4Mn in service revenue with total revenue at KES.1.8Bn
The company declared a Final dividend of KES.0.62, having paid an interim dividend of KES.0.58 results earlier. (Total dividend FY23:KES.1.20).
Other Key Earnings Updates.
Stanbic Holdings Plc [NSE: SBIC] - Stanbic Holdings Plc became the first bank to release its 1Q23 earnings posting an After Tax Profit of KES.3.9Bn, this was equivalent to an 85.7% Year-on-year growth from the KES 2.1 Bn the company posted last year. Total Assets for the company rose 18.3% to KES.391.6Bn as the bank increased an uptake in government securities.
Loan and advances of the group posted an 11.5% growth to KES.230.3Bn, Non-Funded Income (NFI) was up 90% to KES.5.7Bn while the bank’s Gross Non-Performing Loan (NPL) Ratio increased to 11.3% from 10.6% and 10.7% Q1 2022 and FY2022 respectively.
Airbnb Inc. [Nasdaq: ABNB 0.00%↑] - Airbnb posted a net profit of $117 million, or 18 cents per share, from a net loss of $19 million, or 3 cents per share. Average daily rates remained flat at $168 in the first quarter while active listings on the platform increased 18% year over year. Airbnb said during its earnings brief that it plans to integrate artificial intelligence features, including GPT-4, into its platform in the near future.
Walt Disney Co [NYSE: DIS 0.00%↑ ] - Walt Disney missed expectations by 7.92% posting earnings of $0.93 per share on revenue of $21.82 billion for the fiscal second quarter ended March 2023. The consensus earnings estimate was $0.89 per share on revenue of $21.80 billion.
Paypal Inc. [NASDAQ: PYPL 0.00%↑ ] - For the quarter ended March 31, PayPal earnings rose 33% from a year earlier to $1.17 per share. The digital payments company said revenue climbed 9% to $7.04 billion, topping estimates by about 1%. PayPal payments volume on a forex-neutral basis came in at $354.5 billion in the first-quarter ended March 31, compared with $357.4 billion in the fourth-quarter ended Dec. 31, 2022.
Coffee Break.
Kenya’s Finance Bill 2023 has been out for two weeks now, the Bill proposes a raft of tax changes, geared towards expanding the tax base and raising revenues to meet the government’s ambitious budget of KES 3.6 trillion for the year 2023/2024.
Key proposals in the finance bill include:
Introduction of an export and investment promotion levy on specified imports and also an exemption of exported services from VAT.
Increase in the Value Added Tax (VAT) rate on petroleum products from 8% to 16%.
Rise to 35% tax rate for income above Kes 500,000 per month from 30%.
3% contribution by employees and employers respectively to the housing fund, a bid to finance affordable housing projects.
Increase of turnover tax from 1% to 3%
15% withholding tax on income earned by digital content creators.
Markets
U.S markets remained mixed during last week’s trading session. The Dow Jones Industrial Average [DJIA] fell 373.76 points, or 1.1%, to 33,300.62; the S&P 500 [SPX] lost 12.17 points, or 0.3%, to 4,124.08; and the Nasdaq Composite [IXIC] was however up by 49.33 points, or 0.40%, to close Friday at 12,284.74. The Nasdaq was lifted as Google parent Alphabet unveiled its new artificial intelligence-based search platform, Bard.
Local Markets
Last week, the Nairobi Securities Exchange (NSE) witnessed a mixed performance with increased volatility across various stocks and benchmark indices.
The benchmark index, the NSE All Share Index, started the week with stable but ended the week with a plummeting 9.47 points or 9.19% under to close the week at an all-time-low of 93.58.
Other benchmarks were equally lower, with the NSE 20 share index shaving off 62.26 points or 4.06% to settle at 1472.21. The NSE 25 share index equally significantly dropped 216.59 points or 7.96% to settle at 2504.77.
Among the notable decliners, Safaricom Plc hugely drag the market with a -15.87% decline, closing the week at KES 13.25 per share. Equity Group and KCB Group Plc were other notable decliners, shedding 10.43% and 9.81% respectively.
What Top Cowries are we collecting this week?
Nairobi Securities Exchange - After last week’s decline on the benchmark indices, this week will be a watch on the NSE if investor outflow will continue or we will notice a possible return to market stabilisation on the large cap stocks.
KES/USD Exchange - For a first time, we have a currency on our watchlist, the KES has been loosing ground against the shilling. With investor outflow from the local market, and the issuance of a downgrade by Moody’s last week, the demand of the dollar will be rising.
U.S Monthly Retail Sales and Earnings Reports - Earnings season continues in the week ahead with results due from companies including Walmart (NYSE:WMT 0.00%↑ ), Home Depot (NYSE: HD 0.00%↑ ) and Cisco Systems (NASDAQ: CSCO 0.00%↑ ).
U.S Retail Sales Data and Earnings - Data from retail companies will be in this week. Major earnings due from companies including Walmart (NYSE: WMT 0.00%↑ ), Home Depot [NYSE: HD 0.00%↑] and Cisco Systems [NASDAQ: CSCO 0.00%↑].
How about you, what stocks are you watching for the week? Let us know on Hisa App.
Disclaimer: The writer of this article owns SCOM 0.00 , HAFR , EQTY 0.72%↑ , NVDA -0.72%↓ & AAPL 2.08%↑ shares. This article does not constitute any investment recommendations. Investors and the general public are advised to do their own research before making any investment decision.