6 November 2009

KESTREL CAPITAL
Member of the Nairobi Stock Exchange

Kenya weekly commentary

Kenya & Africa market summary

Local currency returns (%) USD returns (%) Volume
Description Level 1w 1m Ytd 12m 1w 1m Ytd 12m (USD m) Kestrel Capital E.A. Ltd.
ICEA Building, 5th Floor
Kenya NSE20 Index 3,089.44 0.19 2.28 -12.26 -23.22 0.51 2.41 -8.52 -21.89 -
Kenyatta Ave.
Kenya NASI 56.03 1.49 2.45 -9.66 -19.62 1.82 2.59 -5.80 -18.23 158 P.O. Box 40005
MSCI Frontier Mkts* 535.62 -1.20 -6.36 13.66 -9.89 -1.20 -6.36 13.66 -9.89 325,519 00100 Nairobi, Kenya
Botswana Index 7,304.66 4.19 6.17 3.83 -11.17 5.99 5.02 17.55 4.69 16
Tel: +254 20 2251758
Egypt Hermes Index 596.15 -6.48 -98.51 39.56 26.00 -6.29 -4.28 40.72 27.32 -
Fax: +254 20 2243264
Ghana Index 5,408.65 0.56 -12.15 -48.15 -49.59 0.52 -10.74 -53.89 -58.50 -
Mauritius Index 1,660.96 -1.07 0.04 40.43 24.24 -1.23 1.10 47.16 31.63 11 info@kestrelcapital.com
Morocco MADEX 8,642.45 -1.24 -1.53 -4.62 -14.02 -0.55 -0.94 0.61 -4.18 www.kestrelcapital.com
Namibia Index 721.94 -2.19 9.23 29.78 30.10 2.05 7.12 62.30 74.25 6,995
Bloomberg
Nigeria Index 21,517.29 -1.32 -6.74 -31.58 -36.48 -1.77 -9.41 -36.94 -50.65 2,741 KEST <GO>
FTSE/JSE Index 25,933.45 -1.62 3.65 20.57 28.86 2.65 1.65 50.77 72.59 23,680
Tunis Tunindex 4,068.18 0.19 0.13 40.65 33.19 0.69 0.35 43.32 42.48 149 Equity Sales & Trading
Samuel Wachira
samuelw@kestrelcapital.com
Against USD Against EUR Against GBP Against ZAR
Foreign exchange Spot 1w 12m Spot 1w 12m Spot 1w 12m Spot 1w 12m Christine Kuria
Kenyan shilling 74.36 -1.12 -2.48 110.41 -0.25 13.86 123.54 -0.14 3.70 9.87 2.60 33.15 christinek@kestrelcapital.com
Botswana pula 6.68 -1.34 -15.01 9.91 -0.85 -0.94 11.09 -0.73 -9.77 0.89 1.99 15.86
Egyptian pound 5.47 -0.22 -0.92 8.12 0.65 15.68 9.08 0.76 5.36 0.73 3.47 35.23 Joseph Thiga
New Ghanaian cedi 1.43 0.03 21.47 2.12 0.91 41.84 2.38 1.02 29.17 0.19 3.77 65.85 josepht@kestrelcapital.com
Mauritian rupee 30.30 0.16 -5.61 44.99 1.03 8.83 50.33 1.15 -0.87 4.02 3.93 27.26
Research
Moroccan dirham 7.68 -0.65 -11.52 11.40 0.32 3.35 12.76 0.34 -5.87 1.02 3.06 20.86 Snehal Shah
Namibian dollar 7.54 -3.57 -26.73 11.19 -2.73 -14.53 12.52 -2.64 -22.11 1.00 0.00 0.00 snehals@kestrelcapital.com
Nigerian naira 151.59 0.46 28.73 225.07 1.33 50.29 251.83 1.45 36.89 20.12 4.23 75.76
South African rand 7.54 -3.57 -26.73 11.19 -2.73 -14.53 12.52 -2.64 -22.11 1.00 0.00 0.00 Wycliffe Masinde
wycliffem@kestrelcapital.com
Tunisian dinar 1.29 -0.79 -6.71 1.91 0.04 8.86 2.14 0.21 -0.80 0.17 2.92 27.36
Source: Bloomberg, NSE, *The Namibian dollar is pegged to the South African rand. Gregory Waweru
gregoryw@kestrelcapital.com
Company announcements Fixed Income & Operations
• Safaricom 1H10 net earnings up 17.8% y-o-y to KES 6.6bn Andrew Mwangangi
andrewm@kestrelcapital.com
• StanChart Bank 3Q09 net earnings up 44.8% y-o-y to KES 3.7bn
• National Bank 3Q09 net earnings up 8.9% y-o-y to KES 972.9m Abraham Too
abrahamt@kestrelcapital.com
Notable events Corporate Advisory
• The Kenya National Bureau of Statistics introduces new method for computing inflation Vera Mungai
• October inflation decelerates to 6.6% y-o-y veram@kestrelcapital.com

Equity market commentary Executive Director

Andre DeSimone
• NSE 20 Index down 12.3% ytd to 3,089.44 adesimone@africaonline.co.ke
• NASI down 7.2% ytd to 68.12
• Volumes traded at KES 974.0m for the week

Debt market commentary

• 91-day Treasury Bill down 3.2bp to 7.232%
• Volumes traded at KES 1.5bn for the week
 Kenya weekly commentary KESTREL CAPITAL
Week ending 6 November 2009

Safaricom
Un-Audited income statement for the period ended 31 September 2009
y-o-y y-o-y h-o-h
Income Statement (KES m) FY08 FY09 % ch 1H09 2H09 1H10 %ch % ch
Share statistics
Revenue 61,369 70,480 14.8 345,08 35,972 40,661 17.8 13.0
Price (KES) 4.00 Operating expenditure 26,066 32,788 25.8 15,309 17,479 18,871 23.3 8.0
Issued shares (m) 40,000 Gross Profit 35,303 37,692 6.8 191,99 18,493 21,790 13.5 17.8
SGA costs 7,156 9,741 36.1 4194 5,547 5,281 25.9 -4.8
Market Cap (USD m) 2,133 EBITDA 28,148 27,951 -0.7 15,005 12,946 16,517 10.1 27.6
Year end Mar Depreciation & Amortization 8,764 11,776 34.4 5,432 6,344 6,655 22.5 4.9
High (KES) 4.05 Operating Profit 19,384 16,175 -16.6 9,573 6,602 9,898 3.4 49.9
Low (KES) 2.55 Finance costs -491 -871 77.4 -597 -274 -7,64 28 178.8
Extra ordinary items 1,048 - - -
Pre tax profit 19,945 15,304 -23.3 8,976 6,328 9,134 1.8 44.3
Price return Taxation -5182 -6,092 17.6 -2759 -2008 -25,02 -9.3 24.6
Profit after tax 13,853 10,537 -23.9 6,217 4320 6,632 6.7 53.5
P/E ratio 14.6x
Dividend yield 2.5% EPS (KES) 0.35 0.26 -23.9 0.16 0.11 0.17 8.1 55.6
DPS (KES) 0.05 0.1 100 - 0.1 -
P/B ratio 3.0x
Source: Company

Safaricom Ltd released 1H10 results, posting a 6.7 % y-o-y and 53.5% h-o-h rise in net earnings
to KES 6.6bn, attributable to a 17.8% y-o-y acceleration in revenues to KES 40.7bn. The
following are the highlights from the results:

• Revenues were driven by a 93.6% growth in data and M-Pesa revenues to KES 7.2bn. Data
revenues constituted 17.7% of total revenues (compared to 10.8% in 1H09). Voice revenues
were up 6.2% to KES 31.6bn. Revenue market share was reported at 83% while subscriber
market share was at 77.0%, down from 79.1% in March 2009.
• The blended ARPU contracted 7.1% y-o-y to KES 466.50, spurred by increased mobile
penetration to rural areas and lower tariffs across the industry. Subscriber churn remains
below industry average but increased to a blended churn of 27.6% compared to 24.3% in
March 2009.
• EBITDA increased 10.1% y-o-y and 27.6% h-o-h to KES 16.5bn. The EBITDA margin was
down 286bp to 40.6%. This was attributed to rising opex, (due to increased network costs as
a result of increased network roll out and fuel costs, customer acquisition costs and higher
interconnection costs) as well as a steep increase in SGA costs, which grew 44.4% y-o-y.
• Depreciation and amortisation costs grew 22.5% to KES 6.7bn. Consequently, the operating
margin declined by 340bp to 24.3%. Financing costs were reported at KES 764m, up 28%
from the previous year.
• Shareholders’ funds grew 14.8% to KES 53.8bn while total assets grew 21.5% to KES
97.1bn. Net borrowings increased to KES 11.9bn, up from KES 3.1bn in 1H09. Conse-
quently, the debt to equity ratio increased to 29.6% compared to 19.0% in 1H09.
Kenya weekly commentary KESTREL CAPITAL
Week ending 6 November 2009

Safaricom’s key earnings drivers

KES m 1H08 2H08 1H09 2H09 1H10

Subscribers (m) 7,956 10,200 11,956 13,363 14,510
Blended ARPU (monthly) 665 616 503 475 467
Revenue from voice 25,384 28,819 29,716 29,079 31,553
Revenue (SMS & other data) 2,112 2,390 3,720 5,377 7,203
Revenue from acq. and other 873 942 1,072 1,516 1,554
Total revenue 28,650 32,614 34,508 35,972 40,661
Opex 12,128 13,938 15,309 17,479 18,871
SGA costs 3,541 3,614 4,197 5,547 5,281
EBITDA 12,981 15,062 15,005 12,946 16,517
Depreciation 3,861 4,473 5,432 6,344 6,655
Amortisation 163 267 - - -
Operating Profit 8,957 10,322 9,573 6,602 9,898
Source: Company

• Cash generated from operations (KES 7.5bn) was 22.3% lower compared to the previous
year due to working capital movements relating to outstanding capital creditor payments.
• Going forward, we expect the voice market to remain highly competitive, which will also be
exacerbated by the introduction of number portability. However, we expect the benefits of
increased data uptake following the fibre optic connectivity to culminate to accelerated data
revenues, offsetting the declining voice ARPU’s. We note that the distinct data users have
grown significantly to 1.8m (compared to 1.5m in March 2009).
• Safaricom recorded a 21.4% y-o-y subscriber growth to 14.5m, with the country’s mobile
penetration rate at 47%. Further, M-Pesa continues to exhibit a high success rate with the
subscribers numbers hitting 8.0m in September 2009 compared to 6.5m reported in March
2009. Indeed, M-Pesa revenues grew 247.5% within the period and we expect this revenue
segment to drive revenue growth in FY10.
• Data services to corporate customers is also a key initiative being pursued with the recent
acquisition of Packet Stream Ltd and the joint venture with Jamii Telecom, which will
enable Safaricom to provide such services through a multiplicity of platforms (3G, Wimax
and fibre).
• The company used KES 8.5bn in capex during the year, increasing their 2G base stations to
1,972 from 1,741 in the previous year. Safaricom also increased 3G enabled base stations to
384. Total capex since inception now stands at KES 128.3bn. The company is raising KES
12bn in local currency medium term notes to fund expansions over the next year.
 Kenya weekly commentary KESTREL CAPITAL
Week ending 6 November 2009

StanChart Bank
Audited income statement for the period ended 31 July 2009
q-o-q y-o-y
Share statistics KES m 9M08 4Q09 1Q09 2Q09 1H08 1H09 3Q08 9M09 % ch % ch
Interest income 5,522 2,165 2,074 2,331 3,567 4,405 2,436 6,841 4.5 23.9
Price (KES) 147.00
Loans and advances 3,395 1,405 1,321 1,444 2,127 2,765 1,470 4,235 1.8 24.8
Issued shares 533.1m
Govt securities 1,690 556 566 645 1,153 1,210 840 2,050 30.2 21.3
Market Cap (USD m) 151.4
Other income 72 22 19 11 70 30 9 39 (13.9) (45.4)
Year end Dec
Deposits & bals from banks 366 182 168 232 217 400 116 516 (49.9) 41.2
High (KES) 179.00
Interest expense 1,126 443 393 465 737 858 482 1,340 3.6 19.0
Low (KES) 129.00
Customers deposits 950 416 371 442 631 813 442 1,255 (0.0) 32.0
Deposits &bals due to banks 175 27 21 24 105 45 40 85 65.3 (51.7)
Price return Net interest income 4,397 1,722 1,681 1,866 2,830 3,547 1,954 5,501 4.7 25.1
P/E ratio 9.1x Fees & commission income 1,577 5,795 5,133 6,778 10,009 11,911 (10,128) 1,783 (249.4) 13.1
Dividend yield 6.8% Net forex income 1,428 346 465 466 912 931 457 1,388 (1.8) (2.8)
P/B ratio 3.1x Other operating income 106 221 612 2,359 437 2,972 (2,427) 545 (202.9) 413.9
Total other operating income 3,111 947 1,039 1,380 1,956 2,419 1,297 3,716 (6.0) 19.5
Total operating income 7,508 2,669 2,720 3,246 4,786 5,966 3,251 9,217 0.2 22.8
Operating expenses 3,526 1,499 1,151 1,309 2,317 2,460 1,256 3,716 (4.0) 5.4
Net op income before provs 3,982 1,170 1,570 1,936 2,470 3,506 1,995 5,501 3.1 38.1
Bad and doubtful debts 291 141 76 95 148 170 129 299 35.6 2.7
Net operating income 3,691 1,029 1,494 1,841 2,321 3,336 1,866 5,202 1.4 40.9
Taxation (1,152) (317) (460) (538) (727) (998) (527) (1,525) (2.0) 32.5
Net income 2,539 711 1,035 1,303 1,594 2,338 1,339 3,677 2.8 44.8
Source: Company

Standard Chartered Bank of Kenya (‘Stanchart Bank’) experienced significant growth despite the
current weak economic environment and exceeded consensus estimates by far with y-o-y earn-
ings growth of 44.8%.

This was driven by increased activity in most business segments and steady asset growth in
2008. Net interest income was up 25.1% to KES 5.5bn y-o-y driven by interest income from
loans and advances. The bank’s net loan book was up 17.8% to KES 48.4bn during the period
under review. Non interest income was up 19.5% y-o-y to KES 9.2bn which was due to a steep
rise in other operating income. The bank’s operating costs went up 5.4% and the cost to income
ratio was 40.3% (compared to 47.0% in the previous year)

As with previous years, Stanchart Kenya’s loan loss provision was minimal at KES 298.8m with
a minor decrement in total NPL’s (from KES 580.6m in 9M08 to 576.6m in 9M09). StanChart’s
conservative lending policy in the past appears to have cushioned it from a significant increase in
default rates.
 Kenya weekly commentary KESTREL CAPITAL
Week ending 6 November 2009

National Bank
Un-Audited income statement for the period ended September 2009
q-o-q y-o-y
Share statistics KES m 9M08 1Q09 2Q09 3Q09 9M09 % ch % ch
Interest income 2,929 1,033 1,097 1,148 3,278 4.7 11.9
Price (KES) 32.75
Loans and advances 785 335 407 428 1,170 5.3 48.9
Issued shares 200.0m
Total Government Securities 2,022 686 681 704 2,072 3.4 2.5
Market Cap (USD m) 129.7
Deposits and balances from banks 122 12 9 16 37 74.8 (69.9)
Year end Dec
Interest expense 605 224 223 342 790 53.5 30.5
High (KES) 46.25
Customers deposits 585 219 209 338 766 62.0 30.8
Low (KES) 28.00
Deposits and balances due to banks 20 5 14 5 24 (68.9) 20.2
Net interest income 2,324 809 874 806 2,488 (7.8) 7.1
Price return Fees and commission income 927 337 346 306 989 (11.5) 6.7
P/E ratio 5.0x Net income from forex activities 230 74 87 69 229 (20.7) (0.1)
Dividend yield 0% Other operating income 407 94 186 99 379 (47.0) (6.9)
P/B ratio 1.1x Total other operating income 1,563 505 619 473 1,597 (23.5) 2.1
Total operating income 3,887 1,313 1,493 1,279 4,085 (14.3) 5.1
Staff expenses 1,328 469 556 (911) 114 (264.0) (91.4)
Occupancy expenses 41 27 16 18 61 9.0 50.0
Depreciation on property and equipment 130 50 50 50 151 (0.0) 15.8
Other expenses 677 240 245 282 767 14.8 13.3
Operating expenses 2,175 824 852 864 2,541 1.4 16.8
Net operating income before provisions 1,712 489 640 415 1,544 (35.1) (9.8)
Bad and doubtful debts (358) (51) (76) 13 (114) (117.1) (68.2)
Net operating income 1,354 438 564 428 1,431 (24.1) 5.7
Taxation (460) (131) (169) (157) (458) (7.2) (0.6)
Profit after tax and exceptional items 894 307 395 271 973 (31.3) 8.9
Source: Company

National Bank of Kenya (‘NBK’) released its 3Q09 results in which the bank posted an 8.9%
increase in net profits to KES 972.9m y-o-y. This however represented a 31.3% decline q-o-
q. Interest income for the nine months grew 11.9% to KES 3.3bn, a 4.7% increase q-o-q. The
bank’s loan book grew by 48.9% to KES 12.02bn y-o-y. Customer deposits also went up 30% to
KES 41.4bn during the same period.

Total operating income increased 5.1% to KES 4.1bn as operating expenses went up by 16.8% to
KES 2.5bn. Net interest income was up 7.1% to KES 2.5bn. NBK which has been on a steady
recovery after loss incurred in the 1990’s hopes to start paying dividends from next year after
clearing the accumulated losses by the end of this year. Plans by the government to divest further
have been delayed as the matter is still pending with the Privatization Commission. In total, the
Government owns a 70.55% stake in the bank (22.5% through Treasury and 48.05% through
National Social Security Fund). The plan was to sell off a 25% stake to a strategic investor be-
fore floating more shares to the public through the stock exchange.
Kenya weekly commentary KESTREL CAPITAL
Week ending 6 November 2009

Notable events
The Kenya National Bureau of Statistics introduces new method for computing inflation

The Kenya National Kenya Bureau of Statistics (‘KNBS’) has introduced a new method for com-
puting inflation. Previously, the CPI and inflation figures were computed based on arithmetic
mean, which has been replaced with a geometric mean approach. The argument for changing
the method is based on the fact that the previous method tends to exaggerate upward movements
in inflation and disproportionately depicts reversals in inflation rate. This is because the method
is influenced by outliers, thus introducing an upward bias in the CPI. However, the CPI weights
are based on the same basket of goods obtained during the 1994 Household budget survey . The
KNBS intends to release new CPI figures from February 2010 based on the new weights and
baskets from the 1995 Kenya Integrated Household Budget Survey which depicted a shift in con-
sumer spending patterns. Consequently, the number of items in the CPI commodity basket is set
to increase from 216 to 234 and the weights will change as follows:

Category Current Weights (%)* New weights (%)

Food & non-alcoholic drinks 50.5 40.3
Alcohol & Tobacco 2.8 2.0
Clothing& Footwear 9.0 7.3
Housing costs 11.7 13.7
Fuel and power 4.2 6.9
House-hold goods & services 5.8 4.1
Medical goods & services 1.6 3.1
Transport & communication 5.8 12.7
Recreation and education 6.1 5.7
Personal goods 2.5 4.2
Source: KNBS, * Rounded to nearest 0.1%

October inflation decelerates to 6.6% y-o-y

The Consumer Price Index (CPI) and inflation figures for the month October 2009 using a geo-
metric computation method show that y-o-y overall inflation rate has decreased to 6.6% from
6.7% in month of September 2009. The previous arithmetic mean method would have given an
inflation rate of 17.9%, down from 17.9% in September. The CPI increased by 0.5% from
140.51 points in September to 345.03 points in October. The food and non-alcoholic index in-
creased 0.6% in October to 158.15 points compared to the previous month. The index, which
constitutes 50.5% of the CPI, is up 25.2% from the previous year. The fuel and power index
increased 1.0%, mainly due to a 12.6% rise in the cost of electricity.
 Kenya weekly commentary KESTREL CAPITAL
Week ending 6 November 2009

Top Gainers (w-o-w %)

Equity market trading commentary
Company Gainers %
Carbacid 106.6
Jubilee Insurance 6.0 The market was on a slow paced upward trend with the NSE 20 index gaining a 0.19% to close
StanChart Bank 3.5 at 3,089.44. Turnover for the week stood at KES 974.0m with trading characterized by strong
BAT Kenya 2.9 local institutional presence particularly on Bamburi Cement, Kenya Power, EA Breweries and
Centum Investments 2.8
British American Tobacco . There was heavy foreign buying on EA Breweries and Safaricom
while mild buying took place on Equity Bank and Kenya Airways.
Top Losers (w-o-w %)
Company Losers %
BOC (K) -7.5 Carbacid soared 106.6% supported by heavy demand after the counter commenced trading on
Car & General -4.8 Wednesday after the long standing suspension was rescinded. The company had earlier an-
Olympia Capital -4.6
nounced a bonus of 2:1 , final dividend of KES 5.00 and a special dividend of KES 5.00.
Rea Vipingo -4.2
Total Kenya -3.4
Safaricom remained unchanged at the KES 4.00 level, supported by continued foreign demand
Top Traders for the stock as earnings were in line with expectations. StanChart Bank was up 3.5% to KES
Company KES m 147 after investors responded positively to buoyant 3Q09 earnings, which were far ahead of
Safaricom 180.3 peers.
EA Breweries 142.6
Athi River Mining 120.3
Kenya Power 106.1 The cement stocks witnessed increased appetite, with high foreign demand for Athi River Min-
Equity Bank 98.5 ing while Bamburi Cement drew interest from local investors. Athi River Mining traded flat at
Bamburi 56.8 KES 98.50 while Bamburi Cement edged up 1.9% to KES 165.00.
BAT Kenya 56.7
Mumias Sugar 36.2
KCB Bank 29.1 Market performance over the past 12 months
Kenya Airways 21.4
NSE 20 Index
4,500 
Top Gainers (ytd %)
4,000 
Company Gainers%
Carbacid 106.6 3,500 

Williamson Tea 50.4 3,000 

Kakuzi 41.3 2,500 

BAT Kenya 37.4 2,000 

Kapchorua 17.6 1,500 

1,000 

Top Losers (ytd %) 500 

Company Losers % ‐
Eaagads -45.2 7‐Nov‐08 6‐Feb‐09 8‐May‐09 7‐Aug‐09 6‐Nov‐09

Centum Investments -41.9

Unga -40.8
Olympia Capital -37.5 Source: NSE
CMC Motors -37.2

Source: NSE
Kenya weekly commentary KESTREL CAPITAL
Week ending 6 November 2009

Debt market trading commentary

The Central Bank offered the 91 day T-Bill, which registered a subscription rate of 219%. The
91-day T-Bill rate stood at 7.232%, an increase of 3.2bp from the previous auction. The Govern-
ment had offered Treasury bills worth KES 2.5 and received bids totaling to KES 5.5bn. The
average rate per KES 100 nominal was KES 98.229. The Kenyan debt market will mark
a milestone in the coming week with the introduction of automated bond trading at the
NSE . The KenGen bond will be the first bond to trade on the system.

Kenya government debt yield curve Historical 91-day T-bill rate

Yield Curve: 07 November 2008 Yield Curve: 06 November 2009 9.0%
17
16
8.5%
15
14
13 8.0%
12
11 7.5%
10
9
7.0%
8
7
6 6.5%

0.3 1.5 2.8 4.0 5.3 6.5 7.8 9.0 10.3 11.5 12.8 14.0 15.3 16.5 17.8 19.0 Nov-08 Feb-09 May-09 Aug-09 Nov-09

YEARS

Trades for the week ending 6 Nov 2009

Date Amt (KES m) Price % Issue Cpn % Mat. date Yrs YTM %
2-Nov-09 10.0 94.0972 FXD1/2009/10Yr 10.75 15-Apr-19 9.5 11.80
100.0 93.3263 FXD1/2009/15Yr 12.50 7-Oct-24 15.0 13.55
3-Nov-09 0.1 94.4296 FXD 1/2009/5Yr 9.50 15-Sep-14 4.9 11.00
300.0 93.0286 FXD1/2009/15Yr 12.50 7-Oct-24 15.0 13.60
12.0 93.3292 FXD1/2009/15Yr 12.50 7-Oct-24 15.0 13.55
100.0 93.0263 FXD1/2009/15Yr 12.50 7-Oct-24 15.0 13.60
4-Nov-09 200.0 96.6135 FXD 3/2008/5Yr 9.50 19-Aug-13 3.8 10.60
200.0 93.0268 FXD1/2009/15Yr 12.50 7-Oct-24 15.0 13.60
15.0 93.3286 FXD1/2009/15Yr 12.50 7-Oct-24 15.0 13.55
2.2 102.3678 IFB 1/2009/12Yr 12.50 8-Feb-21 11.3 12.00
15.0 93.6268 IFB 1/2009/12Yr 12.50 8-Feb-21 11.3 13.50
20.0 101.6360 IFB 1/2009/12Yr 12.50 8-Feb-21 11.3 12.15
5-Nov-09 8.4 94.0983 FXD1/2009/10Yr 10.75 15-Apr-19 9.5 11.80
4.0 96.8842 FXD3/2007/15Yr( 12.50 7-Nov-22 13.0 13.00
200.0 93.0253 FXD1/2009/15Yr 12.50 7-Oct-24 15.0 13.60
30.0 93.7148 FXD1/2009/15Yr 12.50 7-Oct-24 15.0 13.58
100.0 93.0269 FXD1/2009/15Yr 12.50 7-Oct-24 15.0 13.60
0.5 93.9282 FXD1/2009/15Yr 12.50 7-Oct-24 15.0 13.45
6-Nov-09 0.2 98.3788 FXD1/2008/15Yr 12.50 13-Mar-23 13.4 12.75
20.0 93.1743 FXD1/2009/15Yr 12.50 7-Oct-24 15.0 13.58
Total 1,537.3
Source: NSE

Key interest rates (%) 30-Oct-09 06-Nov-09

Average Base Lending Rate (Key banks) 14.76 14.76
Inter-Bank Overnight Range 3.20 7.33
3-Month Treasury Bill Rate 7.26 7.23
3-Month KES Deposit Rate 5.00 5.00
Central Bank of Kenya Rate (CBR) 7.75 7.75
Source: CBK
 Kenya weekly commentary KESTREL CAPITAL
Week ending 6 November 2009

Government bond statistics

Issue Years to Mkt Val Accrued Modified Macaulay
ISIN Description Date Maturity KES m Price Interest YTM Duration Duration Convexity
KE1000000941 FXD1/2005/5Yr KENGB 12 1/2 06/14/10 6/20/2005 0.60 1,963 102.56 4.88 8.07 0.55 0.58 0.00
KE1000001063 FXD2/2004/6Yr KENGB 6 3/4 07/19/10 7/26/2004 0.70 2,514 99.10 1.98 8.07 0.67 0.69 0.01
KE1000001530 FXD3/2008/2Yr KENGB 8 3/4 08/23/10 8/25/2008 0.80 3,668 100.29 1.73 8.34 0.75 0.78 0.01
KE1000001121 FXD2/2003/7Yr KENGB 6 1/2 10/18/10 10/27/2003 0.95 3,055 98.34 0.29 8.34 0.91 0.94 0.01
KE1000000958 FXD2/2005/5Yr KENGB 13 11/22/10 11/28/2005 1.05 6,544 104.33 5.82 8.60 0.91 0.94 0.01
KE1000001619 FXD4/2008/2Yr KENGB 8 3/4 12/27/10 12/29/2008 1.14 3,190 100.14 3.08 8.60 1.04 1.07 0.01
KE1000001139 FXD1/2004/7Yr KENGB 6 3/4 01/17/11 1/26/2004 1.20 2,574 97.91 1.98 8.60 1.11 1.15 0.01
KE1000000891 FXD1/2007/4Yr KENGB 11 02/21/11 2/26/2007 1.30 3,548 102.66 2.18 8.77 1.17 1.21 0.01
KE1000001647 FXD1/2008/20Yr KENGB 8 3/4 03/21/11 3/23/2009 1.37 8,582 99.96 1.01 8.77 1.26 1.30 0.02
KE1000001188 FXD1/2003/8Yr KENGB 12 1/2 04/18/11 4/28/2003 1.45 4,212 104.99 0.55 8.77 1.30 1.35 0.02
KE1000001668 FXD2/2009/2Yr KENGB 8 3/4 05/23/11 5/25/2009 1.55 6,137 99.72 3.92 8.94 1.37 1.39 0.02
KE1000000966 FXD1/2006/5Yr KENGB 11 3/4 05/23/11 5/29/2006 1.55 2,049 103.98 5.26 8.94 1.33 1.34 0.02
KE1000000974 FXD2/2006/5Yr KENGB 11 1/4 07/25/11 7/31/2006 1.72 2,815 103.59 3.03 8.94 1.50 1.53 0.02
KE1000001147 FXD2/2004/7Yr KENGB 7 08/15/11 8/23/2004 1.78 1,692 96.59 1.52 9.11 1.62 1.65 0.03
KE1000001196 FXD2/2003/8Yr KENGB 7 09/19/11 9/29/2003 1.87 4,942 96.42 0.85 9.11 1.71 1.75 0.03
KE1000001071 FXD1/2005/6Yr KENGB 13 12/19/11 12/26/2005 2.12 8,284 107.02 4.82 9.28 1.75 1.74 0.03
KE1000000982 FXD1/2007/5Yr KENGB 11 1/4 01/23/12 1/29/2007 2.22 2,944 103.86 3.09 9.28 1.88 1.89 0.03
KE1000001204 FXD1/2004/8Yr KENGB 7 1/2 03/12/12 3/22/2004 2.35 2,856 95.85 1.05 9.49 2.09 2.12 0.04
KE1000001238 FXD1/2003/9Yr KENGB 12 3/4 05/14/12 5/26/2003 2.53 2,700 106.67 5.88 9.71 2.02 1.96 0.04
KE1000001089 FXD1/2006/6Yr KENGB 11 3/4 06/18/12 6/26/2006 2.62 6,552 104.60 4.36 9.71 2.13 2.10 0.04
KE1000001246 FXD2/2003/9Yr KENGB 9 1/2 07/16/12 7/28/2003 2.70 8,189 99.48 2.79 9.71 2.28 2.26 0.05
KE1000000990 FXD2/2007/5Yr KENGB 9 1/2 08/20/12 8/27/2007 2.80 4,565 98.94 1.88 9.93 2.37 2.36 0.05
KE1000001006 FXD3/2007/5Yr KENGB 9 1/2 09/17/12 9/24/2007 2.87 9,006 98.92 1.15 9.93 2.44 2.44 0.06
KE1000001097 FXD2/2006/6Yr KENGB 11 1/2 11/19/12 11/27/2006 3.05 6,186 103.46 5.15 10.15 2.41 2.32 0.06
KE1000001394 FXD1/2008/5Yr KENGB 9 1/2 01/21/13 1/28/2008 3.22 7,058 98.22 2.61 10.15 2.65 2.61 0.07
KE1000001154 FXD1/2006/7Yr KENGB 13 1/4 01/21/13 1/30/2006 3.22 3,622 108.31 3.64 10.15 2.50 2.41 0.06
KE1000001436 FXD 2/2008/5Yr KENGB 9 1/2 04/22/13 4/28/2008 3.47 3,756 97.88 0.23 10.24 2.89 2.86 0.08
KE1000001105 FXD1/2007/6Yr KENGB 11 1/2 04/22/13 4/30/2007 3.47 6,234 103.61 0.28 10.24 2.81 2.76 0.08
KE1000001261 FXD1/2003/10Yr KENGB 13 1/4 06/10/13 6/23/2003 3.60 3,413 108.60 5.17 10.33 2.70 2.54 0.07
KE1000001279 FXD2/2003/10Yr KENGB 8 1/2 08/12/13 8/25/2003 3.78 6,051 94.12 1.84 10.41 3.10 3.04 0.09
KE1000001544 FXD 3/2008/5Yr KENGB 9 1/2 08/19/13 8/25/2008 3.80 14,000 97.17 1.88 10.41 3.06 2.99 0.09
KE1000001578 FXD 4/2008/5Yr KENGB 9 1/2 10/21/13 10/27/2008 3.97 3,971 97.08 0.23 10.41 3.23 3.17 0.10
KE1000001162 FXD2/2006/7Yr KENGB 12 12/16/13 12/25/2006 4.12 2,473 104.89 4.45 10.50 3.07 2.87 0.09
KE1000001212 FXD1/2006/8Yr KENGB 13 1/4 02/17/14 2/27/2006 4.30 3,575 109.02 2.62 10.58 3.17 2.96 0.09
KE1000001170 FXD1/2007/7Yr KENGB 9 3/4 07/21/14 7/30/2007 4.72 7,950 96.69 2.68 10.65 3.61 3.41 0.13
KE1000001220 FXD1/2007/8Yr KENGB 12 3/4 02/16/15 2/26/2007 5.30 2,877 107.47 2.52 10.85 3.73 3.39 0.13
KE1000001253 FXD1/2006/9Yr KENGB 13 1/2 04/13/15 4/24/2006 5.45 3,389 110.69 0.59 10.85 3.82 3.47 0.13
KE1000001287 FXD1/2006/8Yr KENGB 14 03/14/16 3/27/2006 6.37 3,866 113.22 1.69 11.05 4.16 3.62 0.15
KE1000001287 FXD1/2006/10Yr KENGB 14 03/14/16 3/27/2006 6.37 3,866 113.22 1.69 11.05 4.16 3.62 0.15
KE1000001295 FXD2/2006/10Yr KENGB 14 05/16/16 5/29/2006 6.55 6,080 113.24 6.27 11.10 4.06 3.39 0.15
KE1000001311 FXD1/2006/11Yr KENGB 13 3/4 09/11/17 9/25/2006 7.87 4,454 112.25 1.66 11.35 4.76 3.97 0.20
KE1000001303 FXD1/2007/10Yr KENGB 10 3/4 10/16/17 10/29/2007 7.97 8,745 96.90 0.27 11.35 5.23 4.62 0.26
KE1000001313 FXD1/2008/10Yr KENGB 10 3/4 02/12/18 2/25/2008 8.30 2,858 96.28 2.13 11.45 5.26 4.56 0.26
KE1000001527 FXD2/2008/10Yr KENGB 10 3/4 07/16/18 7/28/2008 8.72 838 95.90 2.95 11.50 5.37 4.59 0.27
KE1000001329 FXD1/2006/12Yr KENGB 14 08/13/18 8/28/2006 8.80 4,437 113.27 2.77 11.55 4.99 3.99 0.21
KE1000001555 FXD3/2008/10Yr KENGB 10 3/4 09/17/18 9/29/2008 8.89 3,782 95.60 1.09 11.55 5.54 4.78 0.29
KE1000001656 FXD1/2009/10Yr KENGB 10 3/4 04/15/19 4/27/2009 9.47 4,462 94.91 0.27 11.65 5.78 4.96 0.31
KE1000001337 FXD1/2007/12Yr KENGB 13 05/13/19 5/28/2007 9.55 5,658 107.34 5.82 11.70 5.18 4.06 0.23
KE1000001345 FXD1/2007/15Yr KENGB 14 1/2 03/07/22 3/26/2007 12.37 8,029 113.15 1.75 12.39 5.79 4.24 0.26
KE1000001352 FXD2/2007/15Yr KENGB 13 1/2 06/06/22 6/25/2007 12.62 8,347 106.28 5.01 12.49 5.81 4.25 0.28
KE1000001360 FXD3/2007/15Yr KENGB 12 1/2 11/07/22 11/26/2007 13.05 17,684 98.72 5.60 12.70 6.00 4.48 0.31
KE1000001428 FXD1/2008/15Yr KENGB 12 1/2 03/13/23 3/31/2008 13.39 6,943 97.91 1.27 12.83 6.31 4.84 0.34
KE1000001493 FXD1/2008/20Yr KENGB 13 3/4 06/05/28 6/30/2008 18.64 1,866 99.29 4.84 13.85 6.35 4.32 0.31
Source: Bloomberg
 Kenya weekly commentary KESTREL CAPITAL
Week ending 6 November 2009

Top 32 counters by market capitalization

Year 12M 12m Mkt cap P/E Div P/B Daily
Company Sector End High Low Price YTD % (USD) EPS DPS NAV ratio yld % Ratio ROE vol**
Safaricom Telecom Mar 4.05 2.55 4.00 11.1 2,133 0.27 0.10 1.34 14.6 2.5 3.0 20.4 376,142
EA Breweries Breweries Jun 151 98 142 -1.4 1,497 9.55 8.05 26.08 14.9 5.7 5.4 36.6 435,993
Bamburi Cement Cement Dec 185 110 165 0.0 799 12.51 3.70 47.52 13.2 2.2 3.5 26.3 49,861
Barclays Bank Banking Dec 58 36 44 -13.9 788 4.23 2.00 16.05 10.3 4.6 2.7 26.3 52,868
Equity Bank Banking Dec 19 12 14 -17.9 713 1.05 0.30 6.06 13.7 2.1 2.4 17.4 360,550
KCB Bank Banking Dec 24 15 20 -15.1 590 1.77 1.00 10.01 11.3 5.0 2.0 17.7 182,482
Stanchart Bank Banking Dec 179 129 147 -8.1 533 16.14 10.00 48.11 9.1 6.8 3.1 33.5 50,019
Co-operative Bank Banking Dec 10.35 6.05 8.60 -18.9 417 0.71 0.10 4.05 12.1 1.2 2.1 17.6 62,724
KenGen Power Jun 18 10 11 -32.8 312 0.94 0.50 30.62 11.3 4.7 0.3 3.1 38,968
British American TobaccoTobacco Dec 182 128 180 37.4 240 17.69 17.00 45.02 10.2 9.4 4.0 39.3 40,477
Nation Media Media Dec 145 113 124 -13.9 236 9.03 5.50 30.35 13.7 4.4 4.1 29.7 23,114
CFC Stanbic Bank Banking Dec 84 46 51 -15.0 186 3.17 0.28 70.18 16.1 0.6 0.7 4.5 7,196
Kenya Airways Airlines Mar 30 17 25 -13.2 152 (8.58) 1.00 41.98 - 4.0 0.6 (20.4) 24,094
Diamond Trust Bank Banking Dec 77 45 70 1.5 151 6.60 1.40 37.89 10.5 2.0 1.8 17.4 16,900
Kenya Power & Lighting Power Jun 169 100 142 4.4 150 40.76 8.00 318.19 3.5 5.6 0.4 12.8 51,217
Mumias Sugar Sugar Jun 8.20 3.45 6.80 0.7 139 1.05 0.40 6.56 6.5 5.9 1.0 16.0 61,666
Athi River Mining Cement Dec 103 60 99 8.8 130 5.37 1.17 24.47 18.3 1.2 4.0 22.0 327,718
NIC Bank Banking Dec 50 29 29 -33.9 125 3.38 0.65 18.14 8.5 2.3 1.6 18.6 19,324
KenolKobil Oil Dec 87 30 49 -25.4 97 1.58 8.59 65.95 31.2 17.4 0.7 2.4 2,986
EA Portland Cement Cement Jun 90 69 80 0.6 96 20.38 1.30 67.94 3.9 1.6 1.2 30.0 2,547
National Bank of Kenya Banking Dec 46 28 33 -23.8 87 6.60 - 29.30 5.0 - 1.1 22.5 8,232
Kenya Re Insurance Dec 14 8 10 -20.8 81 2.52 0.50 14.56 4.0 5.0 0.7 17.3 18,674
Centum Investments Finance Mar 19 9 11 -41.9 80 0.57 - 14.69 19.1 - 0.7 3.9 7,784
Jubilee Insurance Insurance Dec 136 84 106 -13.8 80 14.18 4.25 53.13 7.5 4.0 2.0 21.4 6,475
Total Oil Oil Dec 35 28 29 -10.9 67 0.42 2.50 26.37 67.5 8.8 1.1 1.6 6,362
CMC Motors Motors Sept 18 9 10 -37.2 65 1.41 0.45 9.14 7.1 4.5 1.1 18.5 10,597
TPSEA Serena Hotels Tourism Dec 65 26 41 -22.4 58 2.54 1.25 36.98 16.0 3.1 1.1 6.9 5,835
AccessKenya Group IT Dec 26 14 20 -4.1 55 0.90 0.40 5.34 22.1 2.0 3.7 16.6 45,200
EA Cables Manufac. Dec 31 15 20 -25.5 53 2.06 1.50 5.54 9.5 7.7 3.5 37.2 5,368
Scangroup Advertising Media Dec 29 16 25 -5.8 52 1.62 0.54 12.97 15.1 2.2 1.9 17.3 83,650
Housing Finance Banking Dec 20 13 15 -25.3 44 0.82 0.30 15.98 17.8 2.1 0.9 5.1 8,764
Carbacid Gases July 283 137 283 106.6 43 22.63 10.00 94.33 12.5 3.5 3.0 24.0 3,084
Market Cap Weighted average mean, ** 3 month daily average, ***Total Daily Trading Volume 12.9 3.9 2.9 22.1 2,424,788
Kenya weekly commentary KESTREL CAPITAL
Week ending 6 November 2009

Disclaimer
Note: Readers should be aware that Kestrel Capital (EA) Ltd does and seeks to do business with companies covered in its research
reports. Consequently, a conflict of interest may arise that could affect the objectivity of this report. This document should only be
considered a single factor used by investors in making their investment decisions. The reader should independently evaluate the
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The opinions and information portrayed in this report may change without prior notice to investors. This publication may not be distrib-
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to either buy or sell and as such the investor should determine for themselves the applicability of this recommendation.

This document does not constitute an offer, or the solicitation of an offer, for the sale or purchase of any security. Whilst every care
has been taken in preparing this document, no representation, warranty or undertaking (express or implied) is given and no responsi-
bility or liability is accepted by Kestrel Capital or any employee of Kestrel Capital as to the accuracy of the information contained and
opinions expressed herein.