While it seems that most companies' profits are declining during this period, here is a list of companies that are on the verge of making huge margins from it .
Baston Woodland, an advocate of the High Court of Kenya, compares the country's economic state in 2009 , after the Swine Flu epidemic, similar to what is happening today. Foreign investors have withdrawn from the stock market as they target other income sources, taking into consideration the economic environment of the country.
“Foreign investors have sold their shares in major blue chip companies. This has opened a window for local investors to acquire stakes in these profitable companies. ”
This provides an opportunity for local investors to double their profits as the government cites the urge to cushion the country's economy from hitting rock bottom. Most of the regulations put in place by the government target the banking sector, the manufacturing sector and the retail sector.
Banking Sector
The Central Bank has reduced the interest rate cap to 7.25% , down from 8.25%, meaning that all banks issuing out loans will have to do so at an interest rate of 7.25% or lower. The repayment date can be extended to a month more than the normal period, depending on the customer's agreement with the bank. Banks that have looked to tap into this are:
Equity Bank (33.15 p/s)
Kenya Commercial Bank (KCB) (34.95 p/s)
Co-operative Bank (12.50 p/s)
(p/s meas per share-price)
This sector may as well become the highest profiting sector due to the increase in liquidity in the market. This is not only from cashless transactions that might become the most common way of business but also following the government's decision to drop the Cash Reserve Ratio (CRR) from 5.25% to 4.25%, meaning that plenty of that 'caution money' will be flowing in and out of banks.
Manufacturing Sector
In the manufacturing industry, East Africa Breweries Limited - EABL (135.00 p/s) has diverted its source of income to provision of alcohol-based hand sanitizers as a way of balancing their business returns on expenditure. This comes after the government banned bars and social places from operating at night. They pose as one of the highest profit-making companies in the country due to the profits they make in alcoholic drinks. Investing in them is a major move one can do.
Retail Sector
In the retail sector, most companies are looking to improve their business stability by diverging more into home-based services such as home deliveries and work-from-home conditions to boost their gains.
The company that tops the list is Safaricom (26.00 p/s). The premium mobile and internet service provider has made money transfer cheaper by removing the transaction fee for Kshs. 1000 and below. They have also made it easier for one to take a loan through M-Shwari service payable without a penalty fee, including listed defaulters.
According to Patrick Alushula from Business Daily, supermarkets like Tuskys and Naivas deepen their links with logistics firms. Tuskys has partnered with Sendy while Naivas has joined hands with Glovo to enhance home deliveries. The deal allows customers to order goods via WhatsApp and have the shopping delivered at their doorsteps by the two firms.
Comments