Safaricom overtakes EABL as the most valuable company in East Africa.

East African Breweries Limited (EABL) has lost its place as the NSE’s most valuable firm to Safaricom, following successive weeks of share price decline.

EABL, whose share was trading at Sh351 Thursday having opened at Sh358, now has a market capitalisation of Sh278 billion compared to Safaricom’s Sh294 billion.
Safaricom was trading at Sh7.35 per share Thursday, having remained above the Sh7 per share since the beginning of May.
Analysts say the EABL share has dropped due to a mixture of profit-taking and the adoption of a
wait-and-see attitude by investors eyeing the June budget month.
Beer has traditionally been one of the consumer items that the Treasury targets for tax increases in the annual budget.

“The EABL share is expensive as it is. With the tax uncertainties ahead of the budget, with some expectations of a tax increase on alcoholic drinks, investors have taken a wait-and-see attitude towards the stock,” said ABC Capital Stockbrokers general manager Samwel Kiraka.

EABL hit an all time high valuation of Sh336 billion when the share closed the day’s trading on May 22 at Sh423, having touched its all time high of Sh426 during the day’s trading.

Since then, it has dropped in price by 16 per cent to Sh358 at the close of Wednesday's trading.
Mr Kiraka said that on the other hand, Safaricom, which is more liquid due to its lower price per share, is still likely to continue attracting good demand as investors look to get into the stock ahead of its book closure for a dividend of 31 cents per share.

“The dividend window is not closed yet for Safaricom, so it is still an attractive stock. After the closure of the books in September then it might drop,” said Mr Kiraka. EABL and Safaricom have been exchanging top spot in the valuation stakes at the NSE this year, although the mobile services firm has been more stable in the rise and fall of its valuation in the last one month.

The Safaricom stock has had a valuation of between Sh272 billion and Sh294 billion since the beginning of May, while in the same period, EABL has seen its value fluctuate between Sh241 billion and Sh334 billion.

Source: Business Daily.

Posted in: Business News