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EQUITY vs KCB
earthvoice
#1 Posted : Thursday, June 09, 2011 1:05:36 AM
Rank: Member


Joined: 1/29/2011
Posts: 257
I've been following the duel between Equity and KCB for a while now, at least in terms of share prices, and there doesn't seem to be much between them. For example, Equity is currently trading at ~ KSh25.00 while KCB is at ~ KSh25.50-25.75, as opposed to earlier in the year when Equity peaked at KSh 30.00 and KCB was at KSh 23.50-24.00.

My questions are:

- in your opinion, between Equity and KCB, which is the better bet for medium to long-term investment?

- following the conclusion of the prolonged sell-off by the foreign investor(s) that led to the price dip seen in recent weeks, is Equity expected to recover its pre-dividend price of KSh 27.00-28.00 any time soon?
d'oh! d'oh!
"All intelligent investing is value investing -- acquiring more than you are paying for. You must value the business in order to value the stock." - Charlie Munger.
the deal
#2 Posted : Thursday, June 09, 2011 2:11:33 AM
Rank: Elder


Joined: 9/25/2009
Posts: 4,527
Location: Windhoek/Nairobbery
Eqty Bank profits will embarass KCB...i expect profits to be between Sh 11-12 B...Equity is making a kill in SS...UG will contribute more billions this year about 7.5% of profits...huge transaction volumes from mkesho and agency banking...wait for a report on Equity on my blog soon.
Cde Monomotapa
#3 Posted : Thursday, June 09, 2011 5:16:45 AM
Rank: Chief


Joined: 1/13/2011
Posts: 5,964
Not another beef Sad
guru267
#4 Posted : Thursday, June 09, 2011 6:46:41 AM
Rank: Elder


Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
the deal wrote:
Eqty Bank profits will embarass KCB...i expect profits to be between Sh 11-12 B...Equity is making a kill in SS...UG will contribute more billions this year about 7.5% of profits...huge transaction volumes from mkesho and agency banking...wait for a report on Equity on my blog soon.


@the deal equity and KCB have for the past years had similar profits and 2011 will be no different..
I also forecast 11billion profits for KCB in 2011 meaning that KCB's EPS will likely embarass that of equity bank so why would I buy equity over KCB??

I think KCB's strategy to reduce cost to income ratio from 67% to 50% and boost return on assets to 5% in just 2 years is a ver ambitious plan but if it carries through it will boost the profit growth trajectory beyond equity bank..
These ratios provided by KCB therefore project 2012 profits before taxto come in at 15.5billion..
@the deal you forget to mention that KCB's regional subsidiaries are also in profits as of q1 2011..

In terms of quality, value and growth KCB share at current prices currently trumps equity hands down as will soon be reflected in the two share prices.
Mark 12:29
Deuteronomy 4:16
QW25071985
#5 Posted : Thursday, June 09, 2011 7:23:38 AM
Rank: Veteran


Joined: 3/25/2011
Posts: 946
@ earthvoice . if its a price rally you are asking for forget it.Large institutional traders who drive up the price arent there since the begining of the year..Mostly the selling we saw on equity the last couple of weeks was just profit taking.Hence the stagnating price w/ huge volumes.
i believe if you have money and can stomach the uncertainity of 2012 you shld buy equity bank...all time high for the price is at 30.00 and you bet if we cross that price it will skyrocket !!!!!!!!!!!!!!!!!!!
the deal
#6 Posted : Thursday, June 09, 2011 7:53:25 AM
Rank: Elder


Joined: 9/25/2009
Posts: 4,527
Location: Windhoek/Nairobbery
@Guru in SS Eqty is making almost the same profit as KCB from 3 branches vs KCB's 11...when JM says they will match last years perfomance believe him...in 2011 20% of profits are coming outside Kenya...he has a road map for the region and all i'm saying is watch out...
Cde Monomotapa
#7 Posted : Thursday, June 09, 2011 8:06:54 AM
Rank: Chief


Joined: 1/13/2011
Posts: 5,964
He (JM) has a roadmap for the region.. KCB are already in the region! Exercise the mind on business cylces and it will answer the question of why the institutional & or foreign investor exodus out of Equity into KCB Group.
the deal
#8 Posted : Thursday, June 09, 2011 8:14:30 AM
Rank: Elder


Joined: 9/25/2009
Posts: 4,527
Location: Windhoek/Nairobbery
@cde there is a difference of being there and achieve nothing for several years and go there and outdo your rivals within 2 years...people exit counters for many reasons i.e somebody who bought KCB 3 yrs at 32 bob is still in losses today...while Eqty has created and will continue to create value...i think most underestimate the monster Eqty has become and profits of Sh 12B in 2011 will just confirm that...
Cde Monomotapa
#9 Posted : Thursday, June 09, 2011 8:17:47 AM
Rank: Chief


Joined: 1/13/2011
Posts: 5,964
..and a difference btwn Green field Operations (KCB) & over priced acquistions (EBL)
the deal
#10 Posted : Thursday, June 09, 2011 8:21:53 AM
Rank: Elder


Joined: 9/25/2009
Posts: 4,527
Location: Windhoek/Nairobbery
Cde Monomotapa wrote:
..and a difference btwn Green field Operations (KCB) & over priced acquistions (EBL)

Equity UG has turned within 3 years how long did it take KCB TZ to post meare profits? do you know the potential Eqty UG has? damn comparing Eqty to Kcb is a waaste of time.
Cde Monomotapa
#11 Posted : Thursday, June 09, 2011 8:25:47 AM
Rank: Chief


Joined: 1/13/2011
Posts: 5,964
Indeed & as my final submission I will concur that comparing KCB Group to Equity is a waste of time.
kenyainvesting.blogspot.com
#12 Posted : Thursday, June 09, 2011 8:30:59 AM
Rank: New-farer


Joined: 3/29/2011
Posts: 56
Location: Kenya
My very first blog post was between these 2 behemoths

LINK: KCB VS EQUITY

Granted, a lot has changed between that period.

Equity is on the edge of launching its Rwanda operations. Agency banking has also deeply taken root for the bank.

KCB meanwhile has been RUTHLESS in executing its restructuring process in what promises to unlock tremendous shareholder value. KCB is also planning an assault on the regional Real Estate market.

Using Q1 2011 Results as the basis, Equity has outperformed KCB on almost every metric possible, as can be see here.

LINK: COMPARATIVE ANALYSIS

A similar analysis is due when the Half Year 2011 results are out.

As Cde Monomotapa said before you can either choose to "buy weakness" as he calls it, or favour a strategy involving growth. Your call.

Either way, both WILL produce above average returns to its shareholders over the next 5 years.
MY BLOG: Kenya Investing
BE MY FRIEND ON FACEBOOK: Kenya Investing Facebook Page
TWITTER HANDLE: @kenyainvestor
Papa Investor
#13 Posted : Thursday, June 09, 2011 8:47:44 AM
Rank: New-farer


Joined: 6/3/2010
Posts: 96
the deal wrote:
Eqty Bank profits will embarass KCB...i expect profits to be between Sh 11-12 B...Equity is making a kill in SS...UG will contribute more billions this year about 7.5% of profits...huge transaction volumes from mkesho and agency banking...wait for a report on Equity on my blog soon.


Beware of the hype...Mkesho is dead and was a none starter...thats why both Safaricom and Equity are not investing any marketing to support the product...lets see how the agency banking works out in the long run...
the deal
#14 Posted : Thursday, June 09, 2011 8:48:24 AM
Rank: Elder


Joined: 9/25/2009
Posts: 4,527
Location: Windhoek/Nairobbery
Eqty Bank over 6.5 million customers so far in 2011. vs 5.8 million in 2010...customers bring in CASH...even the mama who sells mandazis knows that.
mlennyma
#15 Posted : Thursday, June 09, 2011 8:54:02 AM
Rank: Elder


Joined: 7/21/2010
Posts: 6,081
Location: nairobi
For the short term speculators equity has not done bad either,getting in at 24 and selling at 27.50 recently,now i got in again at 24.25 and am sure b4 1H i will see 28,what i cant do is getting out wholly,i have my speculative portion.
"Don't let the fear of losing be greater than the excitement of winning."
Burning Spear
#16 Posted : Thursday, June 09, 2011 9:28:59 AM
Rank: Veteran


Joined: 7/22/2008
Posts: 1,139
KCB the biggest bank by assets has very many idle assets compared to Equity bank.
Equity is more profitable than KCB.|The growth strategy for Equity is better than KCB
"You're not supposed to be so blind with patriotism that you can't face reality. Wrong is wrong, no matter who says it". Malcolm X
gmg
#17 Posted : Thursday, June 09, 2011 9:55:39 AM
Rank: Member


Joined: 3/17/2009
Posts: 201
Equity with 6.5 million customers will mean that agency banking will be very popular they only need to balance the number of agents to make the agency banking viable to both the investor and the equity bank. I foresee all equity agents also offering MPESA,AIRTEL MONEY and Orange money services. Please mark my words becoz 6.5 million customers almost all have phones.
The next thing that will make equity grow faster than KCB is its level of innovation. I expect JM to beat Otieno Odour on innovation. the bank to watch NI MEMBER, EQUITY.
Cde Monomotapa
#18 Posted : Thursday, June 09, 2011 10:42:42 AM
Rank: Chief


Joined: 1/13/2011
Posts: 5,964
Burning Spear wrote:
KCB the biggest bank by assets has very many idle assets compared to Equity bank.
Equity is more profitable than KCB.|The growth strategy for Equity is better than KCB

And then U should yourself why (KCB)? After getting the answer (which is all over the news) then you should proceed to ask yourself is the PROBLEM being addressed satisfactorily? To me the answer is a big YES! With every problem solved means more money for me Laughing out loudly
Aguytrying
#19 Posted : Thursday, June 09, 2011 11:32:29 AM
Rank: Elder


Joined: 7/11/2010
Posts: 5,032
Ha ha. I love this thread. It should be renamed 'equity and kcb' .i choose both. One has the excellent growth, the other untapped potential. Sign me up for both please. 50-50 down the middle.
The investor's chief problem - and even his worst enemy - is likely to be himself
Cde Monomotapa
#20 Posted : Thursday, June 09, 2011 11:41:35 AM
Rank: Chief


Joined: 1/13/2011
Posts: 5,964
Aguytrying wrote:
Ha ha. I love this thread. It should be renamed 'equity and kcb' .i choose both. One has the excellent growth, the other untapped potential. Sign me up for both please. 50-50 down the middle.

Wise guy lol! Cheers.
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