Batu, Bank of Kigali are top gainers in first quarter of 2014

High dividend payouts and bonus issues announced with last year’s results have increased the demand for many of the counters in the region, driving up share prices. 

By DAVID MUGWE Special Correspondent

In Summary

• High dividend payouts and bonus issues announced with last year’s results have increased the demand for many of the counters in the region, driving up share prices.

British American Tobacco Uganda (BATU) is East Africa’s best performing stock for the first three months of this year, followed by Bank of Kigali (BoK), whose rally helped the Rwanda Stock Exchange (RSE) take the top position among the region’s four bourses.

The Ugandan cigarette maker and distributor’s share rallied 60.49 per cent to close at Ush6,500 ($2.55) as at the close of trading last Monday.

Last month, Batu, whose shares trade on the Uganda Securities Exchange (USE) said that it would pay out Ush141 ($0.056) per share in dividends for the period ended December 2013, the same figure as in the previous year.

This is despite an 11.37 per cent drop in profit after tax to Ush10.81 billion ($4.3 million) from Ush12.19 billion ($4.57 million) for the period ended December 2012.

Rwanda’s largest bank’s share rallied 36.25 per cent to close at Rwf327 ($0.48) after the lender said it would pay out Rwf11.10 ($0.02) per share in dividends following stellar results that saw its profits for the period ended December 2013 jump by more than a quarter.

Shareholders of BoK, whose policy is to pay out half of its net income in dividends, will be getting 25.71 per cent more than 2012’s payout of Rwf8.83 ($0.01) per share.

READ: Bank of Kigali raises dividend payout by 71pc

BoK posted a 25.4 per cent increase in net income to Rwf14.8 billion ($22 million) for the year ended December 2013, from Rwf11.8 billion ($18.7 million) in the year ended December 2012, driven by a strong loan book growth.

As a result of the lender’s rally in this year’s first quarter, the RSE Local Share Index, which tracks the bourse’s two local stocks, closed at 262.53 points — 12.95 per cent higher than its closing level of 232.42 as at the end of 2013.

The Nairobi Securities Exchange (NSE) All Share Index, which tracks price changes of the 63 stocks that trade on the region’s largest bourse, closed at 143.89 points on the last day of trading of the first quarter of this year, up 5.3 per cent from its closing level of 136.65 points on the last day of 2013.

High dividend payouts and bonus issues announced with last year’s results have increased the demand for many of the counters in the region, driving up share prices.

“Good profit growth and better return on equity for the year 2013 have been the crucial factors. Future expansion plans in the region and expected returns on investment have also been the driving factors for the share price increase,” said Vimal Parmar, head of research for sub-Saharan Africa at Nairobi-based Burbidge Capital.

Mr Parmar said that new listings and capital-raising by the existing listed firms will buoy interest in the market for the rest of the year, adding that the challenge for most fund managers with increased inflows has been where to invest the money, which stocks to invest in.

Rwanda stocks

“For example, in Rwanda, we have seen activity in only very few stocks. Getting blocks of illiquid stocks has also been a key challenge, since most investors hold on to them for the long-term, effectively reducing the free float,” said Mr Parmar.