Bodo wrote:
We are neutral on KCB Ltd and recommend that investors look to HOLD their exposure to the stock based on our current valuation of the counter at Ksh.20.
Our view is further informed by the stock’s historical tendency to under-perform after a rights issue. We expect the following factors to influence the KCB share price going forward:
1. Significant Share overhang: After both the Government of Kenya (KCB’s single largest shareholder) and other institutional investors elected not to take up their rights on account of a combination of shareholder fatigue, regular equity based cash calls and disappointment with a business enhancement strategy which began 6 years ago, we believe this factor could represent as a much as 5% downside from current price levels.
2.Continuity in the government discount assigned to the stock by the market: the NSE has typically assigned a 36% discount to KCB relative to its peer group. We believe this will continue to be the case.
3.Weak relative performance: Our analytics suggest that KCB will continue to lag its peer group in terms of EPS growth going forward. Our forecast EPS growth of -5.4% due to a significant dilution remains at the tail end of our earnings growth league table for the banking sector...
This is a load of broker crap and was compiled before the details of the use of the rights issue proceeds...
As local brokers advise you sell foreigners are loading up...
Mark 12:29
Deuteronomy 4:16