Question

Assume you are an expert in financial analysis and an investor has approached you seeking advice on investing in the Nairobi securities exchange (NSE). The investor is considering investing in shares of any two companies but from abundance of caution, he has requested you to analyze any three companies listed in the NSE from which he will pick the best two. Based on the analysis approaches outlined in the case above, analyze any three NSE listed companies of your choice and advice the investor accordingly.

Answer 1

Nairobi Securities Exchange

Nairobi Securities Exchange (NSE) was established in 1954 as the Nairobi Stock Exchange, based in Nairobi the capital of Kenya. It was a voluntary association of stockbrokers in the European community registered under the Societies Act in British Kenya.

Best companies to buy shares in Kenya

1. Limuru tea. The stock of the 677 acre tea plantation has risen significantly over the past 10 or more years
2. Jubilee holdings

1.Limuru tea

Limuru Tea Company Limited is engaged in the growing of green leaf tea. The Company owns over approximately 677 acres of prime agricultural land, 4 kilometers east of Limuru town. The Limuru Tea Company Limited is an outgrower to Unilever Tea Kenya Limited. Unilever Tea Kenya acts as the Company's managing agent in the growing, manufacturing, sales and marketing of its teas. The tea estate green leaf is manufactured in the Unilever Tea Kenya Mabroukie factory from where it is sold mainly for export.

Listed tea companies have faced a tough operating environment in the recent past. Unpredictable weather, uncertain market demand and falling tea prices have significantly affected sales and profitability. Nevertheless their respective market prices have continued to defy the odds to register market beating returns.

Kapchorua Tea posted an 18.9% jump in profitability in 2013 to stand at KES 180 million from KES 78 million. Sales dropped marginally to KES 1.35 billion from KES 1.4 billion due to declining tea prices and increasing production in the period. Its stock price has remained robust, up 28% year-to-date and 132% since 2008.

The Limuru Tea Company Limited is a Kenyan company engaged in the growing of green leaf tea. The Company owns 275 hectares of tea land situated four kilometers to the east of Limuru Town. The Limuru Tea Company Limited is an outgrower to Unilever Tea Kenya Limited. Unilever Tea Kenya acts as the Company's managing agent in the growing, manufacturing, sales and marketing of its teas. The tea estate green leaf is manufactured in the Unilever Tea Kenya Mabroukie factory from where it is sold mainly for export.

Limuru Tea Company Limited

Last Trading Results	Growth & Valuation
Opening Price:	--	Earnings Per Share:	0.79
Day's Low Price:	400.00	Price/Earning Ratio:	506.33
Day's High Price:	400.00	Dividend Per Share:	--
Traded Volume:	200	Dividend Yield:	--
Number of Deals:	1	Shares Outstanding:	1.2m
Value/Turnover:	80,000.00	Market Capitalization:	480m

1. Principal activities The principal activity of the Company is growing green leaf tea.

2. Change of name Pursuant to section 53 of the Kenyan Companies Act, 2015, the Company changed its name from Limuru Tea Company Limited to Limuru Tea PLC on 4th July 2017.

3. Results The loss for the year of KShs 22,134,000 (2016: loss of KShs 19,074,000) has been added to retained earnings.

4. Dividends The directors do not recommend the payment of a dividend (2016 - Nil).

5. Directors The directors who held office during the year and to the date of this report are set out on page 6. Relevant audit information The Directors in office at the date of this report confirm that: - There is no relevant audit information of which the Company’s auditor is unaware; and - Each director has taken all the steps that they ought to have taken as a director so as to be aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.

7. Auditors The auditors, KPMG Kenya, have indicated their willingness to continue in office in accordance with the Kenyan Companies Act, 2015.

8. Business overview The Company’s business overview is contained in the   

statement set out on page 3.

9. Approval of financial statements The financial statements were approved and authorised for issue at a meeting of the directors held on 9 March 2018.

2.Jubilee Holdings

Jubilee Holdings was established in August 1937, as the first locally incorporated insurance Company. From humble beginnings in 1937, Jubilee Holdings has spread its sphere of influence throughout the region to become the largest multi-line insurer in East Africa, handling both long-term and short-term insurance.

Jubilee Holdings Limited is an investment holding company. The Company, through its subsidiaries, transacts all classes of general and long term insurance business. The Company's operating segments include Kenya, Uganda, Tanzania, Burundi and Mauritius within which there are three segments classified according to products and services, such as General, including Medical, Ordinary, Group Life & Pensions and Investments. Its classes of General Insurance include Engineering insurance, Fire insurance-domestic risks, Liability insurance and miscellaneous insurance, among others. Medical insurance means the business of effecting and carrying out contracts of insurance against costs of otherwise non-recoverable medical and surgical expenses incurred by a member as a direct result of sustaining accidental bodily injury. Its Ordinary & Group Life includes insurance business of classes, such as life assurance business, superannuation business and business incidental.

The Company has Investments in the energy sector, with its Tsavo Power and Bujagali subsidiaries as well as other infrastructure projects such as Seacom diversifying it's Investments. The Company is eyeing the Ethiopian and DRC market through a strategic Partnership with State-owned insurance company, the National Insurance Corporation (Sonas) to operate in the DRC as a result of high demand for medical and life cover products in DRC. The Company is focusing on growth through leveraging on Bancassurance and Micro-Insurance. The Company's key Strategic Initiatives for 2016 include Implementation of new IT Infrastructure and Systems, Innovation of new Products, Improved renewal retention, enhanced product mix and continued development of new agency networks.

Jubilee Insurance Company Limited – 100% Shareholding – Kenya – A general and long term insurance provider in Kenya

The Jubilee Insurance Company of Uganda Limited - 65% Shareholding - Uganda - A general insurance provider in Uganda.

Jubilee Life Insurance Company of Uganda Limited - 65% Shareholding - Uganda - A long term insurance provider in Uganda.

The Jubilee Insurance Company of Tanzania Limited - 51% Shareholding - Tanzania - A general insurance provider in Tanzania.

Jubilee Life Insurance Corporation of Tanzania Limited - 51% Shareholding - Tanzania - A long term insurance provider in Tanzania.

The Jubilee Insurance Company of Burundi S.A. - 70% Shareholding - Burundi - A general and long term insurance provider in Burundi. 20% of this venture is held by the group's sister company, The Diamond Trust Bank Group. The two have AKFED as a common shareholder.

Jubilee Insurance (Mauritius) Limited - 80% Shareholding - Mauritius - A general insurance provider in Mauritius.

Jubilee Financial Services Limited - 100% - Kenya - A fund management company in Kenya.

Jubilee Investments Company Limited - 100% Shareholding - Uganda - An investments holding company.

Jubilee Investments Tanzania Limited - 100% Shareholding - Tanzania - An investments holding company.

Jubilee Investments Burundi Limited - 100% Shareholding - Burundi - An investments holding company.

Jubilee Center Burundi - 80% Shareholding - Burundi - A property investment company.

As far as I know it is better to invest with any two companies.Which two companies are going to be the most developed now and then That is my assessment of a financial analyst