KenGen Advances to 14-Month High on Buy Rating: Nairobi Mover

Kenya Electricity Generating Co., the East African nation’s biggest power producer, climbed to the highest in 14 months after Genghis Capital Ltd. started coverage on the stock with a buy recommendation.

The shares gained 6.9 percent to close at 10.10 shillings in Nairobi, the highest level since Nov. 7, 2011. It was the biggest one-day gain since October 2007 with about 1.13 million shares traded, or 225 percent of the three-month daily average.

Kenya’s utility industry has a “bullish outlook” brought about by increasing power demand due to an expanding population and customers, increase in per capita income and economic growth, according to Nairobi-based Genghis Capital. The country has an installed electricity capacity of 1,600 megawatts, with a peak power demand of 1,500 megawatts growing at an average rate of 8 percent a year. Kenya Electricity produces 1,232 megawatts, while four private companies generate the balance.

“We expect the manufacturing and tourism sectors to expand rapidly in the next five years therefore that will lead to an increase in power demand,” Moses Waireri, a research analyst at Genghis Capital, said in a phone interview today. “In addition the population is growing at three to four percent annually.”

Genghis Capital has a price target of 20.90 shillings on Kenya Electricity. The company has secured financing to build power plants, some of which are set to be commissioned by June 2013, it said in September.

“The price target is quite bullish,” Aly Khan Satchu, chief executive officer of Nairobi-based investment company Rich Management Ltd. a Nairobi-based adviser to companies and high net-worth individuals, said by phone. “In the last two years they have managed to raise capital through the bond market to bulk up the business so from an equity investor’s point of view the worst moments are behind.”

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