Bloomberg News

British-American of Kenya Hits Record Low: Nairobi Mover

February 14, 2012

Feb. 13 (Bloomberg) -- British-American Investments Co., a Kenyan financial-services group, headed for a record low on investors’ concern over the extent of the drop in its profits.

The stock dropped as much as 2.5 percent before ending the day 1.2 percent lower at 4 shillings in Nairobi, the capital, the lowest since the shares began trading on Sept. 9, according to data compiled by Bloomberg. The reporting season in Kenya begins this month for financials.

“What investors are not really sure about is whether it is just going to break even or is it really bad news,” Eric Musau, a research analyst at Nairobi-based Standard Investment Bank Ltd., said by phone today. “We are seeing negative sentiment around the insurance sector because they rely a lot on investment income.”

Over 65 percent of British-American’s earnings is attributable to its investment income, Renaldo d’Souza, a research analyst with Genghis Capital Ltd., said by phone from Nairobi on Feb. 10. Income the company generates from all its investments is expected to plunge to below 14 percent in 2011 from 41 percent a year earlier, d’Souza said.

The Kenyan financial services group said Jan. 10 its annual profit is expected to fall at least 25 percent after the value of its equity portfolio dropped. Stock is down 20 percent since the announcement.

Kenyan stocks plunged 30 percent in 2011, the second-worst performing in Africa, according to data compiled by Bloomberg. Egypt fell the most, down 49 percent. The local stock market is up 0.8 percent so far this year.

--Editors: Ash Kumar, Peter Branton

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net


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