stocksmaster wrote:stocksmaster wrote:The recent cabinet appointments have brought in two former bank CEOs making it unlikely for radical cabinet policy decisions that may rock the banking sector.
The Executive is also heavily invested in banking and would not create an unfavorable environment for banks. These highlights the banking sector as one of the sectors to watch at least for the next 5 years.
The following Banking stocks are worth a closer focus:
1. COOP BANK
EPS of Ksh 0.62 for Q1 2013 was a 33.5% rise as compared to Q1 2013 and a 29.2% rise as compared to Q4 2012. This was the highest growth in EPS for the Tier 1 banks that have so far reported.
Its merits as I indicated in post no.1 of this thread support my BUY recommendation on this share.
The share is also trading cum dividend (Dividend of Ksh 0.50) until 23rd of May. It will be interesting to see whether the share can touch the Ksh 18 price before books close next week Thursday.
In the next 3 months and as the Tier 1 banks trailing P/E approaches 11; the share price for Coop Bank should approach the Ksh 20 price especially if the half year earnings are as positive as the Q1 results.
My price target (next 10 months) is a price of Ksh 28.00 (65% upside potential) based on an estimated EPS of Ksh 2.70 for year ending December 2013 (The Q1 2013 EPS OF Ksh 0.62 supports my revised estimated EPS of 2.70 for the full year).
2. EQUITY BANK
The EPS of Ksh 0.87 for Q1 2013 was a 21.9% y/y increase.
The banks’ loan book is expected to rise over the remaining part of the year based on more stable macroeconomic conditions.
The bank has a ROE of 29.5% against a sector average of 26.3% (KCB ROE is 23%)
My price target for Equity Bank over the next 12 months is Ksh 48 (EPS of Ksh 4, at a P/E of 12).
3. CFC STANBIC BANK
Despite the poor ROE of 11%, it is currently trading at a P/E of 7.90 (if you factor in the rights issue shares).
It is a share that am holding purely as a short term speculative play awaiting the Q1 2013 results which if they mirror that of the other tier 1 banks, may easily push the share price to the Ksh 70 levels.
Short term Exit Price: Ksh 70
Happy Hunting.
CFC has wonderfully surprised........a 12 months target price of Ksh 100 is in order based on a 2013 EPS of about Ksh 11 and a P/E of about 9.
Happy Hunting.
1. CFC STANBIC
This share has wonderfully surprised and delivered impressive results and capital gains. A Q3 52% rise in PAT means my target price of Ksh 100 may materialise by April 2014. I am however yet to look at the quarter by quarter results trend.
2. Coop Bank
The bank reported Q3 EPS of Ksh 1.66 hence a full year EPS of about Ksh 2.16 is expected. At a P/E of 10, thats a target price of about Ksh 21.6 by April 2014.
The diminishing profitability from a quarter by quarter trend perspective is however worrying considering that: Q1 was EPS of Ksh 0.62; Q2 was 0.50; Q3 was 0.53. At this rate, the results for Q1 2014 compared to Q1 2013 may return flat or negative growth. Based on this worrying trend, I have started booking the profits as prices approach Ksh 19.
3. Equity Bank
The bank reported Q3 EPS for 2013 of Ksh 2.40. This annualizes to EPS of Ksh 3.10 - 3.20 for 2013. The quarter on quarter trend for Equity is more worrying than for Coop Bank. Q1 EPS of Ksh 0.87; Q2 EPS was 0.83; Q3 EPS was 0.70. The Q3 EPS were almost 20% lower than Q1. If this trend does not reverse in Q4 2013, the bank may report negative growth in Q1 2014 as compared to Q1 2013. I have been divesting from this counter since the Q3 results were announced.
Going forward, I am currently booking profits before the traditional low market activity that characterises the NSE in December.
I intend to undertake a more aggressive trading next year and will launch a reloaded 'Playing the Market' thread at the start of 2014 to run this time for 2-3 years.
Find below the links to the previous 'Playing the Market' threads which i hope to benchmark on.
In 2010 (Playing the Market - A Newyear Resolution):
http://wazua.co.ke/forum.aspx?g=posts&t=5551
In 2011 (Playing the Market-2011 Resolution):
http://www.wazua.co.ke/f...spx?g=posts&t=10373
In 2012 (10% Dividend Yield....my new yardstick in NSE stock picking):
http://partners2.wazua.c...sts&t=16435&p=1 Happy Hunting.
x handle: @stocksmaster79