Strong BATU half-year results spur share price

Aug 26, 2012

ACTIVITY on the bourse is steadily picking up as headline inflation and yields on government paper start to fall from last year’s peak

By Samuel Sanya

ACTIVITY on the bourse is steadily picking up as headline inflation and yields on government paper start to fall from last year’s peak.

The release of half-year results has had a positive effect on volumes traded. 

Strong results by the British American Tobacco Uganda (BATU) have increased demand on its counter, raising its shareprice.

The cigarrete manufacturer recorded a sh8.1b after tax profit at the end of June, from sh7.7b in June last year as sales went up despite lower leaf shipments.

“We have seen a spike in demand on the BATU counter and we expect its share price to rally upwards in the immediate term. The challenge remains the low supply of shares on the market,” said Arthur Nsiko, a securities trader with African Alliance.

The firm was trading at an improved sh2,140 per share by close of business on Tuesday, from sh1,950 on Friday.

Outstanding bids had risen to 2,898, from 14 as outstanding supply remains nil.

Shareholders are also destined for a sh141 interim dividend per share, the same as last year though the earnings per share have increased to sh166, from sh157, and this may induce higher demand.

Andrew Muhimbise, a BATU shareholder, says leaf exports may increase during the latter part of the year to deliver higher end-of-year profits.

dfcu Bank has also released its half-year financial results, indicating higher after tax profits of sh15.9b, from sh14.2b in June last year. 

Analysts say the increase in earnings per share to sh64.23, from sh57.32, may not be sufficient to sway investors.

“I do not expect much change in the dfcu share price because the earnings per share are comparably lower than recent years. The share price may not be affected much by the results,” Nsiko said.

The bank’s share price remained pegged at the sh1,000 per share level on Tuesday as total volumes traded rose to 493, 427, from 137,501 on Friday.

Investors traded equity worth sh70m, up from sh3.5m, as Bank of Baroda dominated proceedings to record sh58m turnover, a high on the day.

Stanbic Bank, Uganda Clays, New Vision, National Insurance Corporation and dfcu counters recorded activity on the day, with some cross listed counters such as Centum, Equity Bank, Jubilee Holdings, and Kenya Airways recording higher share prices.

A large number of outstanding offers on the Stanbic Bank counter (2.6 million), with outstanding bids remaining at nil, may peg its share price at sh25 for the remainder of August.

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