Kenya Reinsurance Corp., the state-owned reinsurer, rose to its highest level in almost seven weeks on bets its share price is undervalued compared with its peers.
The stock surged 7.1 percent to 12.15 shillings and pared the gains to 1.3 percent or 11.50 shillings by the 3:00 p.m. close in Nairobi, the highest level since Nov. 28. About 126,300 shares traded, 91 percent of the three-month daily average.
“In terms of book value Kenya Re is trading below its peers,” Brenda Kithinji, a research analyst at Nairobi-based Standard Investment Bank Ltd., said in a phone interview. “Investors are probably re-evaluating the stock before the earnings come up in March.”
Price-to-book is the ratio of a stock’s price divided by the book value per share. The company has a price-to-book value of 0.67 shillings compared to British American Investments Co. at 1.34, CIC Insurance Group Ltd. at 1.73, Pan Africa Insurance Holdings Ltd. at 1.80 and CFC Insurance Holdings Ltd. at 0.92, she said.
First-half profit climbed 36 percent as premiums and investment income increased. Net income grew to 1.15 billion shillings ($13.3 million) in the six months through June, from 845.8 million shillings a year earlier, the Nairobi-based company said in August.
The stock has climbed 7.5 percent this year, matching the 7 percent gain on the Nairobi Securities Exchange All-Share Index. In 2012, shares in the reinsurer rallied 73 percent, according to data compiled by Bloomberg.