The East Africa & Mauritius Top 30 Equities Valuation Report (quarterly) APRIL 2021 PREPARED BY [email protected] Address: 1 High Silver, Loughton, Essex IG10 4EL, UK Hartland-Peel Web site: www.hartland-peel.com Africa Equity Research E-mail: [email protected] (Established 1990) Telephone: +44 (0) 20 35 36 35 84 Mobile: +44 (0) 7780 70 5000 EAST AFRICA & MAURITIUS TOP 30 COMPANIES: MARCH 2021 April 27, 2021 Prepared by: Christopher W. Hartland-Peel This report as of March 2020 covers the Top 30 companies in West Africa by market capitalisation. Key highlights: Mkt cap US$bn P/E Price/book ROE Big Cap (10 companies) $22.6bn 25.4 7.90 34.3% Mid Cap (20 companies) $5.6bn 7.8 1.29 13.7% $28.2bn 21.9 6.59 30.2% Excluding Safaricom (29 companies) $14.9bn 23.4 3.49 12.9% Safaricom’s US$13.3bn market capitalisation accounts for 47% of market capitalisation of the Top 30 companies but its weighting skews the data. We believe the summary for 29 companies is more representative regarding regional corporate valuations and performance. Company share price movements are set out on page 4 and US$ share price graphs on pages 9-13. Big cap stocks are far more profitable than small cap stocks with ROE’s of 34% vs 14%. Of the Top 30 stocks, Kenya has 15, Mauritius 7, Tanzania 6, Uganda one and Rwanda one. Banks account for 17 stocks, manufacturing 6 stocks, telecoms two, and power and others five. EAST AFRICA & MAURITIUS - TOP 30 COMPANIES 31-Mar-21 (Ranked by market capitalisation) L/C Issued Market capitalisation P/E Price ROE Dec March Country Share shares US$ % of Trailing --- Dividend -- to book last 12 20 21 listed price million millions total 12 months yield cover value months BIG CAP 1 1 Safaricom KEN 36.25 40,065 13,282 47.1% 20.3 5.1% 0.97 10.06 49.6% 3 2 Tanzania Breweries TAN 10,900 295 1,387 4.9% 22.4 6.2% 0.72 5.83 26.0% 2 3 MCB MAU 219.50 250 1,347 4.8% 8.6 0.0% n.a. 0.88 10.2% 4 4 Equity Bank KEN 37.95 3,703 1,285 4.6% 7.1 0.0% n.a. 1.01 14.3% 5 5 KCB Bank KEN 41.30 3,209 1,212 4.3% 6.8 2.4% 6.11 0.93 13.8% 6 6 East African Breweries KEN 158.00 791 1,143 4.1% 179.9 0.0% n.a. 19.77 11.0% 8 7 Vodacom Tanzania TAN 770.00 2,240 744 2.6% loss 3.2% n.a. 1.37 -0.1% 7 8 Ireland Blyth MAU 44.50 680 742 2.6% loss 1.4% n.a. 2.15 -8.6% 9 9 Tanzania Cigarette TAN 17,000 100 733 2.6% 47.3 3.2% 0.65 9.89 20.9% 10 10 Co-op Bank KEN 13.20 5,867 708 2.5% 6.7 7.6% 1.98 0.85 12.8% $22,583 77.6% 25.4 4.0% 1.02 7.90 34.3% MID CAP 11 11 Nat Microfinance Bank TAN 2,340.00 500 505 1.8% 5.7 2.8% 6.27 1.04 18.3% 13 12 StanChart Kenya KEN 141.75 344 445 1.6% 9.2 7.4% 1.46 1.10 11.9% 12 13 ABSA Kenya KEN 8.82 5,432 438 1.6% 11.5 0.0% n.a. 1.03 8.9% 16 14 BAT Kenya KEN 475.00 100 434 1.5% 8.7 9.5% 1.22 4.01 46.3% 15 15 I & M Holding KEN 50.00 827 378 1.3% 5.1 4.5% 4.34 0.64 12.6% 17 16 Stanbic Uganda UGA 26.50 51,189 370 1.3% 5.6 7.0% 2.54 1.10 19.6% 14 17 NCBA Bank KEN 25.15 1,498 344 1.2% 8.2 6.0% 2.04 0.52 6.3% 18 18 Stanbic Kenya KEN 81.25 395 294 1.0% 6.2 3.8% 4.27 0.62 10.0% 19 19 Kenya Generating KEN 4.55 6,595 274 1.0% 2.0 6.6% 7.71 0.14 7.2% 22 20 CRDB Bank TAN 230.00 2,612 259 0.9% 3.6 7.4% 3.72 0.59 16.3% 20 21 Phoenix Beverages MAU 597.00 16 241 0.9% 22.0 2.1% 2.12 2.22 10.1% 21 22 SBM MAU 3.50 2,582 221 0.8% 8.9 0.0% n.a. 0.30 3.4% 23 23 Bank of Kigali RWA 233.00 890 210 0.7% 5.4 6.2% 3.00 0.80 14.8% 24 24 Tanzania Portland Cement TAN 2,500.00 180 194 0.7% 6.6 11.6% 1.31 1.94 29.6% 26 25 Jubilee Holdings KEN 270.50 72 179 0.6% 5.5 3.3% 5.48 0.69 12.7% 29 26 Vivo Energy MAU 226.75 29 163 0.6% 38.4 2.9% 0.91 7.62 19.8% 27 27 Britam Holdings KEN 7.02 2,523 162 0.6% loss 3.6% n.a. 0.60 -2.6% 25 28 Diamond Trust Bank KEN 62.75 280 160 0.6% 5.4 0.0% n.a. 0.28 5.2% 28 29 Alteo MAU 20.55 318 160 0.6% loss 2.6% n.a. 0.41 -0.6% 30 30 Ciel MAU 3.94 1,645 159 0.6% loss 0.0% n.a. 0.58 -19.5% $5,592 97.5% 7.8 4.7% 2.59 1.29 13.7% Total/weighted average $28,175 100.0% 21.9 4.1% 1.33 6.59 30.2% = P/E <10.0, Dividend yield > 5.0%, Price/Book < 1.50, ROE > 25% Sources: Country stock exchanges, company annual and earnings reports. Exchange rates from the Financial Times, London 1 Address: 1 High Silver, Loughton, Essex IG10 4EL, UK Hartland-Peel Web site: www.hartland-peel.com Africa Equity Research E-mail: [email protected] (Established 1990) Telephone: +44 (0) 20 35 36 35 84 Mobile: +44 (0) 7780 70 5000 EAST AFRICAN & MAURITIUS STOCK MARKETS: 2000-2021 EAST AFRICA & MAURITIUS STOCK MARKETS US$ INDEX 2000 = 100 1,400 1,200 1,000 800 600 <---Tanzania 400 <-- Kenya, Mauritius 200 & Uganda Rwanda opened 2011 <---Rwanda 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 TANZANIA UGANDA KENYA MAURITIUS RWANDA Sources: Country stock exchanges. Exchange rates Financial Times, London. EAST AFRICA, MAURITIUS & SEYCHELLES - STOCK MARKETS: MARCH 2021 --- Market cap ---- P/E ---- Dividend ---- Price/ Market ------------------------------- US$ returns ---------------------------- Mar-21 US$ bn % Historic yield cover book ROE 2021 Q1 2021 2020 2019 2018 2017 2016 Kenya 21.6 67.6% 24.8 4.5% 1.50 7.57 35.4% 4.1% 4.1% (15.2%) 17.8% (15.9%) 27.4% (7.8%) Mauritius 4.7 14.8% 17.4 1.6% 0.53 1.50 2.4% (5.5%) (5.5%) (30.7%) (7.1%) (1.0%) 29.7% (0.5%) Tanzania 3.9 12.3% 18.1 4.9% 1.52 4.44 18.0% 1.0% 1.0% 0.7% (7.1%) (8.4%) 4.6% (20.1%) Uganda 1.2 3.7% 7.8 4.8% 1.71 0.71 23.1% 2.0% 2.0% (3.7%) (12.8%) (2.3%) (2.0%) (13.0%) Rwanda 0.5 1.4% 14.2 5.8% 2.19 1.41 14.5% (4.5%) (4.5%) (21.8%) (7.6%) (8.2%) 13.0% (24.9%) Seychelles 0.1 0.2% 12.3 4.0% 2.63 2.27 20.0% 0.1% 0.1% (30.1%) (6.6%) 12.9% 1.6% (33.3%) E. Africa & IO Islands 31.9 100.0% 22.1 4.1% 1.38 5.94 2.0% 2.0% (16.0%) 7.5% (11.7%) 23.6% (8.9%) P/E < 10.0 times, Dividend yield > 5%, Price/book < 1.5 times > 20% US$ return in year EAST AFRICA & IO ISLAND STOCK MARKETS US$ RETURNS: YTD MARCH 2021 5% 4.1% 4% 3% 2.0% 2.0% 2% 1.0% 1% 0.1% 0% -1% -2% -3% -4% -5% (4.5%) -6% (5.5%) -7% Sources: Country stock exchanges. Exchange rates Financial Times, London. 2 Address: 1 High Silver, Loughton, Essex IG10 4EL, UK Hartland-Peel Web site: www.hartland-peel.com Africa Equity Research E-mail: [email protected] (Established 1990) Telephone: +44 (0) 20 35 36 35 84 Mobile: +44 (0) 7780 70 5000 EAST AFRICA & MAURITIUS: TOP 30 COMPANIES VALUATIONS: PRICE/BOOK vs ROE ROE’s generally exceed the cost of capital and inflation Higher ROE’s are rewarded with higher valuations EAST AFRICA & MAURTIUS TOP 30 COMPANIES - FINANCIAL ROE vs PRICE/BOOK East Africa & Mauritius: (ROE'S BASED ON LAST 12 MONTHS EARNINGS) Banks & Finance Investors reward high ROE’s handsomely with a strong correlation ABSA Kenya Nat Microfinance Bank of ROE and Price/Book value. 1.00 StanChart Kenya Co-op Bank Stanbic Uganda Our observations regarding outliers: KCB Bank MCB Bank of Kigali Jubilee Holdings ABSA Kenya looks expensive but investors should bear in mind that I & M Holding Stanbic Kenya Britam Holdings NCBA Bank 2020 earnings have been reduced CRDB Bank by restructuring charges.