VituVingiSana wrote:stocksmaster wrote:VituVingiSana wrote:stocksmaster wrote:stocksmaster wrote:VituVingiSana wrote:stocksmaster wrote:First Play 2024: Diamond Trust BankKey Statistics:Price: Ksh 49.30
Book Value per share: Ksh 256.80
Price to book value:0.19 (Industry Mean is 0.7)
P/E Ratio: 2.2 (Industry Mean is 3.5)
Dividend yield: 10.1% (Industry average: 10.7%)
Dividend pay out ratio (2022): 23.1% (Industry average: 40.3%)
Trailing Return on Equity(As at Q3, 2023): 10.02% versus industry average of 18.8%
Trailing Return on assets: 1.29% versus industry average of 2.6%
Non Performing Loans at 12.43% versus Industry average of 15%
Diamond Trust Bank is an undervalued sleeping giant trading at an incredibly low price to book value of below 0.2 (about ¼ of industry average). It is also trading at a P/E of about 2 which is almost half of the industry average. The undervaluation of the DTB share is partly due to its low return on assets and return on equity which is about half the industry average. The 2023 Q3 results however showed an improving picture on the two metrics which may signal the sleeping giant is starting to awaken.
The Q3 results also showed that the NPL for Diamond Trust Bank was lower than industry average (12.43% versus 15%) indicating more prudent lending by the bank.
Going forward and in anticipation of the 2023 Full Year Results, DTB can deliver above average results based on its Q3 results to a projected EPS of 25-28 for 2023. This would be just slightly lower than Stanbic Holdings (Ksh 30.75 for 2023 but trading at Ksh 119.50 showing just how undervalued the DTB share is suffering). The bank has had a conservative dividend pay out policy (about 21% in 2021 and 23% in 2022) but the DTB Chairman of the Board, Mr Linus Gitahi is quoted as stating that this dividend pay out will rise gradually as the bank balances between pay out and reinvestment into the business (the bank is investing in both branch expansion of 20 branches per year since 2022 and improving on its digital banking delivery).
If the growth in pay out continues on the same trajectory, a dividend pay out ratio of 25% for 2023 can be projected. That projects to a possible dividend payment of Ksh 6.25 – 7.00 for 2023.
Diamond Trust Bank can be both a short-term play with about 20-25% upside potential or a long term play as its ROA, ROE and Dividend Pay Out Ratio improves and starts approaching the market pricing of Stanbic Holdings. The expansion drive (40 branches in 2 years since 2022) and investment in technology is also anticipated to start bearing fruits from 2024 which may see sizeable growth in the bottom line.
Happy Hunting
Good call.
I have held onto this one for a while. I added a few at 45-50 but not enough to make a huge difference to my ABP.
DTB has a very low DPR (23%) but there is pressure on them to increase it.
With the GoK pushing for lower interest rates and largest global asset management fund choosing Kenya as one of its new sink for investment funds, the NSE Indexes have to recalibrate upwards.....my estimate is the NSE is trading on average at 60% of its fair value while DTB is at less than 50% of its fair value. It has a growth momentum on its side as it opens about 30 branches by end of 2024 (target of 100 branches by end of 2024). If it can improve on its poor RoE and RoA compared to industry average then it can easily double it's profitability (EPS of >KSH 50) within the next 4 years in the long term.
Short term, the upward ticking PEs for all banks will also propel it upwards to at least a conservative P/E of 3 or PBV of 0.4 which means at least a 50% short term upside potential (depending on the 2023 EPS, DPS and dividend pay out ratio (I expect about 25-30% pay out ratio).
Happy Hunting
2023 Results are in:
EPS Ksh 24.6 (2022: Ksh 21.68)
DPS Ksh 6.00 (2022: Ksh 5.00)
Dividend pay out ratio: 24.4% (2022: 23.1%)
The dividend per share is a good predictor of target short term price with the market seeming to price most shares currently at about 10 times current/total DPS (See CooP, Stanbic, ABSA).....that places short term DTB share price target at about Ksh 60.
Happy Hunting
More like 9x (11% DY)
ABSA 14 v 1.55
NCBA 44 v 4.75
DTB 55 v 6.00
I&M 22 v 2.55
Equity 49 v 4.00
Coop 15 v 1.50 [smack 10x]
SCBK 195 v 29 [an outlier at 15%]
The RoE for DTB is awful vs peers. Everyone is above 15% while DTB is 9%.
Also the lowest DPR (excl HF and KCB)
https://kahawatungu.com/...ization-to-spur-growth/
DTB Board have realised the need for new blood at the helm having had same CEO for over 2 decades.....hope the new DTBK Country CEO is in the mould of Oigara to improve the efficiencies (ROA,ROE) of this bank which trail the competition.
Happy Hunting
CEO has been promoted to her level of competence
and is hopefully looking at retiring sooner than later!
I hope the new CEO (KE) is savvy and can pull DTB out the rut.
Yes,The Peter Principle is at play here. But am liking the thinking of the current Board of Directors led by Mr Linus Gitahi. The vision is to be a fintech with a banking license. To execute this vision, the bank has been on a branch expansion spree with 20 branches in the last 20 months (almost a branch a month) to tap into retail market for cheap money (which every bank now seems to be targeting). But its the fintech part that is truly interesting. The bank has established an API platform called Astra API(
https://www.astraafrica.co/ ) and actively recruited local tech enabled companies i.e fintechs, edutechs and healthtechs (complete with an incubation/innovation hub at their DTB headoffice) and international fintechs to partner with the bank and utilise the Astra platform for partnerships. (Check some of these partnerships under the DTB tech arm DTBX):
https://techweez.com/202...processor,%2DService%20(CaaS)%20solution.
https://www.ukheshe.com/...ver-baas-in-east-africa
https://kenyanwallstreet...unch-virtual-visa-card/
https://dtbk.dtbafrica.c...s-for-Fintechs-in-Kenya
The DTB guy behind the DTB fintech idea Jamie Loden, Chief Operating Officer explains this in the youtube video (
https://youtu.be/OrNm6i6Rvrk?si=0u3m4LQpjGGHKksE) highlighting that they already have about 159 fintechs at play with 18 at various stages of approval and 13 in the sandbox.
Clearly, all these needed a change at the top so am expecting a DTB Kenya CEO thats very tech savvy. The Uganda subsidiary already got a new CEO last month (
https://nilepost.co.ug/b...amond%20Trust%20Bank%20(DTB)%20Uganda,is%20effective%20April%202%2C%202024. ) and it was only a matter of time before Kenya followed. Its interesting that the Tanzanian Subsidiary has double the number of customers as Kenya and its growing rapidly. Its also weird that DTB has a subsidiary in Burundi (that contributes 1% to bottom line) yet the group has not expanded to more lucrative Rwanda or DRC. The current Kenya CEO as the Group CEO should focus on such expansions.
The rapid Kenya branch expansion ensures and maintains the core business growth although the DTBX could be the real game changer if it works out. Reason why i might just hold onto this share for sometime to see how all this plays out.
Happy Hunting.
x handle: @stocksmaster79