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Coop Bank - Stocksmaster's 1st Play 2013
Rank: Member Joined: 9/26/2006 Posts: 410 Location: CENTRAL PROVINCE
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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.
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Rank: Elder Joined: 6/23/2009 Posts: 13,549 Location: nairobi
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@stocksmaster you are aware of the expansion coop bank is engaged in. the capex has been high in 2013 but coop bank is still raising its profits by higher margins than the other top 5. why on earth wld u expect lower profitability in 2014?
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Member Joined: 3/26/2012 Posts: 830
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One thing is clear, playing the market works in a bull market only. Dividend yield strategy works perfectly in a bottoming bear market. Shorting stocks works at the start of a bear market. Nse is to introduce shorting next year. I think they know thats when the bear will begin. A successful man is not he who gets the best, it is he who makes the best from what he gets.
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Rank: Member Joined: 9/26/2006 Posts: 410 Location: CENTRAL PROVINCE
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S.Mutaga III wrote:One thing is clear, playing the market works in a bull market only. Dividend yield strategy works perfectly in a bottoming bear market. Shorting stocks works at the start of a bear market. Nse is to introduce shorting next year. I think they know thats when the bear will begin. Theirs always a bull stock in the wilderness of a bear market......and a good dividend yielding stock even in a bull market. What it takes is a closer look and a firm believe in your enteric brain. Shorting stocks to me is the convergence of gambling with investing.....stakes become too high with shorting stocks. Imagine shorting stocks during the last elections on the basis of past performance of the NSE during election cycles...... Happy hunting.
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Rank: Member Joined: 9/26/2006 Posts: 410 Location: CENTRAL PROVINCE
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obiero wrote:@stocksmaster you are aware of the expansion coop bank is engaged in. the capex has been high in 2013 but coop bank is still raising its profits by higher margins than the other top 5. why on earth wld u expect lower profitability in 2014? The problem will be In April-May 2014 when Q1 results are announced and compared with Q1 2013. The new branches will take more than 6 months to contribute to the bottom line. In that intervening period, the share price may suffer. For long term investors however, its a perfect buy especially with the South Sudan play. Happy hunting.
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Rank: Elder Joined: 6/23/2009 Posts: 13,549 Location: nairobi
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assets as at 30.09.13 KCB: KES 385.2B COOP: KES 228.8B This to me is the most tell tale sign of trouble at KCB.. Explore the rate of balance sheet growth at COOP. Simply amazing. Only CFC Stanbic is comparable
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Member Joined: 10/8/2010 Posts: 446 Location: london
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obiero wrote:assets as at 30.09.13
KCB: KES 385.2B
COOP: KES 228.8B
This to me is the most tell tale sign of trouble at KCB.. Explore the rate of balance sheet growth at COOP. Simply amazing. Only CFC Stanbic is comparable But this Coop share never goes since two years ago
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Rank: Elder Joined: 6/23/2009 Posts: 13,549 Location: nairobi
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african coloner wrote:obiero wrote:assets as at 30.09.13
KCB: KES 385.2B
COOP: KES 228.8B
This to me is the most tell tale sign of trouble at KCB.. Explore the rate of balance sheet growth at COOP. Simply amazing. Only CFC Stanbic is comparable But this Coop share never goes since two years ago remember kcb was touched 14 and equity scraped 13 less than two years ago.. be patient
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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stocksmaster wrote:S.Mutaga III wrote:One thing is clear, playing the market works in a bull market only. Dividend yield strategy works perfectly in a bottoming bear market. Shorting stocks works at the start of a bear market. Nse is to introduce shorting next year. I think they know thats when the bear will begin. Theirs always a bull stock in the wilderness of a bear market......and a good dividend yielding stock even in a bull market. What it takes is a closer look and a firm believe in your enteric brain. Shorting stocks to me is the convergence of gambling with investing.....stakes become too high with shorting stocks. Imagine shorting stocks during the last elections on the basis of past performance of the NSE during election cycles...... Happy hunting. Election euphoria = a spectacular short squeeze or short sellers ulcers central...
Short selling is a good tool for resetting frothy prices backed by hype. However naked short selling is just fraud. $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Veteran Joined: 11/2/2006 Posts: 1,206 Location: Nairobi
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TODAY: Total DD 1,419,500 Vs Total SS 387,700 Formally employed people often live their employers' dream & forget about their own.
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Rank: Elder Joined: 6/23/2009 Posts: 13,549 Location: nairobi
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Coop Bank behaving well today :)
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Cde Monomotapa wrote:obiero wrote:Cde Monomotapa wrote:^We lead, others follow - ROOOARR!! (KCB - At consolidation stage)  KCB has underutilised strength and unlockin that has proved futile across change in management.. Meanwhile, banks with much lower asset base are angling for a kill! The lion is a CORPORATE bank that needed a connected captain, unfortunately the current one has shown no signs of being a master of these turbulent waters. There is a shift in the market where Coop will emerge second after Equity in next three years Well and good the competition and as I have said before, I invest in these companies, I don't work in them so business/investment reasoning & the numbers will continue to drive judgement. As for expansion, unless you're very lucky, you can't bake a cake & eat it at the same time simply because Capex is Capex, not revenue. On the retail side, I have the privilege of following KCB on twitter and every so often clients are happy with the new queue system, e-banking. mobile-banking and such like ICT driven initiatives/investments - KCB eating the cake. Need we talk of it being the true regional partner? I guess not as even the regional govts continue to agree. Watch what happens as a result of berth 19 and the 3 govts situated there...Lastly, by virtue of KCB's balance sheet, there are certain business that will naturally be drawn to KCB simply because it has the capacity. If I am correct not many banks can lend one client 5B but KCB can without a sweat. http://www.newtimes.co.r...php?i=15595&a=73505
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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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@cde I believe the top 7 banks [Equity, SCBK, etc] can lend upto KES 5bn without being in default of CBK guidelines. Perhaps even the likes of DTB and I&M [within the top 10] can do so on a regional basis. The problem, as I see it, with KCB is the NPLs & the net exposure to NPLs Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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"We lead, others follow.." ROOAARR!! English Point Marina and KCB Unveil English Point Marina https://www.facebook.com...618962271930&type=3
Englishpoint Marina puts Mombasa on property map http://www.businessdaily...6/-/5ms129z/-/index.html
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Rank: Member Joined: 9/16/2006 Posts: 229
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well managed bank.heading to 50 “I don’t regret the things I’ve done, I regret the things I didn’t do when I had the chance.”
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Rank: Elder Joined: 6/23/2009 Posts: 13,549 Location: nairobi
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VituVingiSana wrote:@cde I believe the top 7 banks [Equity, SCBK, etc] can lend upto KES 5bn without being in default of CBK guidelines. Perhaps even the likes of DTB and I&M [within the top 10] can do so on a regional basis.
The problem, as I see it, with KCB is the NPLs & the net exposure to NPLs Equity is also regional and can lend upto 5B to a single client, which they did in 2012 www.businessdailyafrica....6/-/4govolz/-/index.html
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Member Joined: 8/14/2007 Posts: 111
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Coop has to break the ever elusive 19bob by tomorrow friday . Each time it goes 18+ it hits a dead wall n heads south again Even In The Most Severe Drought In The Jungle Lions Will Never Feed On Grass.
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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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mypesa wrote:Coop has to break the ever elusive 19bob by tomorrow friday . Each time it goes 18+ it hits a dead wall n heads south again Let the results come out. They will have to write-down some, if not all, of the South Sudan investment! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 8/16/2011 Posts: 2,297
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VituVingiSana wrote:mypesa wrote:Coop has to break the ever elusive 19bob by tomorrow friday . Each time it goes 18+ it hits a dead wall n heads south again Let the results come out. They will have to rite-down some, if not all, of the South Sudan investment! Coop Bank may jump quickly from 18 to an average of 22 and may be at 26 before FY. What property is owned by Coop bank apart from banking services will determine its strength. land has become a key asset and Coop may show its muscle through the properties it holds.
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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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Realtreaty wrote:VituVingiSana wrote:mypesa wrote:Coop has to break the ever elusive 19bob by tomorrow friday . Each time it goes 18+ it hits a dead wall n heads south again Let the results come out. They will have to rite-down some, if not all, of the South Sudan investment! Coop Bank may jump quickly from 18 to an average of 22 and may be at 26 before FY. What property is owned by Coop bank apart from banking services will determine its strength. land has become a key asset and Coop may show its muscle through the properties it holds. I am not bearish on Co-op but it is good to be cautious especially when there was a lot of 'expansion' riding on South Sudan. The good news is that unlike KCB or Equity, the loss may be mitigated since it was a new operation. Prudence, however, dictates a write-off of the substantial investment in South Sudan. Furthermore, an audit of the SS operation may be difficult thus a write-off (or provision) is a prudent measure. That said, I believe the Kenya business should have grown substantially post-election. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Coop Bank - Stocksmaster's 1st Play 2013
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