END OF Q3 PORTFOLIO PERFORMANCE REPORTVALUE OF PORTFOLIO AS AT 30TH SEPTEMBER 2010:
KCB: 22,800 SHARES X KSH 20.75= KSH 473,100
SCBK: 2111 SHARES X KSH 276 = 582,636
TOTAL VALUE OF SHARES PORTFOLIO: KSH 1,055,736LESS 1.8% TRANSACTION COST ON SELLING: KSH 19,000
NET VALUE OF SHARES: KSH 1,036,736
ADD CASH IN HAND: KSH 1,295
TOTAL VALUE OF CASH AND SHARES: KSH 1,038,031
INITIAL CAPITAL(01/01/2010): KSH 527,850
NET PROFIT FOR THE NINE MONTHS ENDING 30TH SEPT 2010: KSH 510,181
NET PERCENTAGE PROFIT FOR NINE MONTHS: 96.7%The banking sector shares are on an upward trajectory, a situation that i anticipate to continue as the third quarter results are released.
Stanchart: The company conducted a successful rights issue and is expected to pay an interim dividend at the end of the third quarter results. I anticipate the share to trade at the Ksh 290 - 300 range by the end of October 2010 if an interim dividend is announced.
KCB:I am more bullish on KCB based on its current attractive valuations. Currently trading at a P/E of about 13.2, the share still has alot of upside bearing in mind that its contemporaries ie Backlays and SCBK are trading at P/E's of 15 - 16, while Equity and Co-op Bank are trading at the 21-22 range.
With an anticipated growth in profits of about 25% for 2010 (compared to below 15% for Backlays), I anticipate that KCB will soon (Oct-Nov period)be trading at a P/E 14.5 hence a target price range of Ksh 22.5 - 23.5 for the next 8 weeks. At the end of February 2011, with the release of Year 2010 results which i anticipate to approximate an EPS of Ksh 2 and dividends per share of Ksh 1, then the share price should approximate Ksh 26 - 28 (P/E of 13 - 14).
With the extra capital coming from the rights issue and strengthening of the S&L morgage unit, a 35% rise in profitability is possible for 2011. This may well push the share to the Ksh 30-32 range by August 2011 (Once the half year results for 2011 confirm my prediction.
BAT remains the other attractive counter for the period Oct 2010 - March 2011. The company, like SCBK most likely will pay Ksh 20 between now and March 2011 (Interim dividend in Nov 2010 and final dividend at the release of end of year results).
The three counters listed above are my top 3 picks for the next six months, with KCB ranking as my top pick since its upward trajectory is anticipated to hit a ceiling of Ksh 32 by August-September 2011.
Happy hunting
x handle: @stocksmaster79