Monday, March 26, 2007

TPS announce FY06, -ve momentum trading @ NSE

TPS announced impressive numbers for FY06, but only so far one can say given there are no comparatives for FY05. Reason is they are apparently difficult to do given changes from '05. Would have been handy though. TPS are the only tourism-type listed company so it would have been interesting to see just how well tourism is doing.
About momentum trading-this I believe is single biggest thing that is impacting the NSE apart from institutions shyness, Francis Thuo fiasco and speculators. Momentum trading is where investors flock to buy into a particular market just because everybody else is. When it comes to selling, they also sell at the same indiscriminate rate. This affects not just retail investors, but also institutions and is particularly acute in an economy like ours where they are not many liquid assets to invest in. It means that the NSE can go up and down like a yo-yo on even when the economy is heading upwards, companies are investing and seeing huge profits and money from the diaspora and the like is still pouring in.
The suggested OTC market, floating of longer-term bonds will help in mopping some of the latent liquidity in our economy that is just floating around looking for investment opportunities that give adequate returns. As will increased competition in the banking sector using price (account charges, interest offered and charged).

Friday, March 23, 2007

Pan Africa, Total announce FY06 results, City half yr

Pan Africa Assurance saw PAT humongously grow by 155% to ks450m, translating into an EPS of 9.38 (3.68) in FY05. Primarily driven by growth of associates and discontinued operations. DPS was 1.44. Total performance was hit by the increased financing requirements as KRA forced it and other oil cos to pay 50% of the fuel tax upfront. This has required borrowing thus raising financing costs. With a FY of the same to come, expect lower PAT for FY 2007. DPS of 2.50 will be paid. City Trust also announced half yr results showing PAT halved, though they expect better 2nd half. The company derives most of its income from investments.

Tuesday, March 20, 2007

SNO woes, KQ hits turbulence & the Aburiria Nation

The announcement that Reliance didn't make the deadline to buy the SNO licence is quite depressing on two fronts, its implications for growth of internet and the outsourcing business and an indictment of the govt's tender process. Even if the choosing the appropriate company to award the tender is tricky, one part of it should have been easy, if you require that all the bidders have to have a Kenyan partner-why not do separate tendering for potential Kenyan partners and then encourage the bidders to pick from the list?
Having travelled with Kenya Airways in the late 1990s and then more recently, last week's announcement of performance woes wasn't much of a surprise. In 1990s, KQ had great staff, great check-in, strawberry and cream, fair competitive price. Fastfwd to more recently, patchy food, nightmare lose of luggage, overbooked check-in from JKIA, some of the highest prices on the London-NBI route. KQ has ridden on that "Pride of Africa" for too long. Richard Branson is coming in not just to compete with BA for the Heathrow route, but with Emirates/Qatar for Asia routes and KQ for the African routes. Come on Titus!
Titus (Tajirika) features prominently in the Aburiria country, the "imaginary" country of Ngugi wa Thiongo's newish and lol Wizard of the Crow. Read it!

M-Pesa finds its way to the UK newspapers

Article was in the Guardian today, also has some nice facts. Its nice when we are making news even in the technology world by leading the way. How long before they do an article on Equity Bank? Will also be good publicity for Safaricom before their IPO later this year (?). I am assuming they or Vodafone have patented the technology otherwise Celtel, the big 3 banks will be on the bandwagon before long. I wonder why Safaricon chose obscure banks like Citibank to partner with?

Monday, March 19, 2007

Barclays in merger talks with ABN Amro

Barclays, the father/mother bank of BBK is in preliminary "white knight" talks to merge (effectively takeover), with the ABN Amro, the Dutch Bank. This is all tentative, but if it were to go ahead, would make it the 4th largest bank worldwide by market cap. It is however unlikely to impact BBK in the short-medium term.

Tuesday, March 13, 2007

Of IPOs, OFDs, HFCK & Bears

Kimunya confirmed NSE's worst kept secret, Kenya Re won't happen in March but May and KenGen's 19% offload is being brought forward to next month. Kenya Re will most likely be the equivalent of the grocer who hides rotten oranges at the bottom (why are they taking on KNAC's assets at this stage of the game?), but at 60m shares will still be oversubscribed. KenGen's offload is a few months late or 1 year too early i.e. the timing is wrong. Reason-the tariff fiasco with the govt having realised too late that it had created a rod for its own back by committing on a prospectus to pay KenGen their real cost of production. So far, Treasury is covering the gap between what KPLC can profitably pay to KenGen and the amount KenGen needs to profitably continue to produce electricity. Govt is in such a mess that they paid a consultant to tell them that yes, you'll have to ask consumers to pay for the real and higher cost of producing electricity-many could have told the govt that without charging them! Without some confirmation of this, investors should stay away from the offload and buy the shares at k10-15 in the secondary market later this year.
HFCK announced their
FY06 results, PBT was up 56% primarily on lower staff costs (does that mean its not growing any more?) and lower loan loss provisions (good-HFCK nearly went bankrupt from carrying too much of the stuff). So not driven by revenue growth (1% up on FY05) and there was no dividend. There is still confusion over strategy. HFCK now wants to fund construction of properties. So it will be carrying two types of risks in its books-property not sold and then when its sold, it'll obviously have the more conventional lending risks. This is a market that KCB seems to be way ahead in so this investor doesn't see how HFCK will survive as a standalone entity to see out Frank Ireri's 5yr strategy. The strategy will require financing of around k13bn which I am not sure the proposed rights issue will bridge-perhaps a better idea would be to float a 25 year bond.
The current correction/bearish sentiment at the NSE is a perfect opportunity for the long-term stock investors most who will say its a necessary rite of passage that imparts important lessons for one to be successful. There is sympathy for those that were hoping to use the NSE bull run to raise short-term funds which there is quite a few in the current investor population, but not for the get-rich-quick crowd. For the rest, use this period to accumulate in stocks you believe will grow your capital in the medium to long-term.

Kenya Bankers Association revealed that Ksh20bn of the bad debts in the banking system is held by 100 defaulters-shouldn't they be letting all financial institutions know who they are?

Friday, March 09, 2007

Another good kenyan stocks site


ARM presents good opportunity for growth in the future despite not paying an interim dividend for year 2006 this may change come 2007/2009 with the expansion into fertilisers and setting up of a sodium Silicate Plant in South Africa. Also considering the increased demand for all of the Company’s products both in Kenya and in the COMESA region markets.

NSE must copy Brazil's Novo Mercado

Much has been made of the speculative effect of hot money (emerging market funds of US/UK Investment Banks) on the NSE. Part of the reason such funds only deal with the NSE on a speculative basis is the lack of clear governance by CMA/NSE. For the NSE and the rest of the Kenyan economy to benefit from more permanent investment from such funds, we will have to improve our stock markets in a lot of areas not least reporting standards. The effect of such improvements is clear if you look at the the success of Brazil newest stock market.

Ethanol oil-the future of Kenya's Sugar Industry?

While previewing Bush's visit to Brazil last night, some TV programme mentioned that one of the reasons is going their will be to sign an agreement with Brazil for export more its oil to US as part of his push to get American's into green economics.
In the '70s faced by high oil prices (Brazil was a large oil importer) and wanting to keep its industrialisation at full steam, Brazil's military junta discovered that the solution lay in its vast sugar cane plantations. They invested in, researched and refined the ethanol oil idea and then in the late 90s, left the private sector to run with it. As of yesterday’s TV programme, GM’s car plants in Brazil are 98% driven with flexi-power engines (can use oil or ethanol); flex-power cars are now outselling oil only cars and Brazil is now exporting ethanol oil to other countries not to mention the idea especially to its BRIC partners (India and China). Ethanol oil production and recent offshore oil discoveries mean that Brazil is now independent of oil imports.
Apart from Mumias, the rest of our sugar companies face an almighty survival challenge from 2008 onwards. So how about getting them to abandon sugar production and investing in ethanol oil production instead? We can then over time generate enough oil to at least fuel 50% of our economy making us less exposed to oil price movements and the multiplier effect that has on daily consumables.


Thursday, March 08, 2007

Standard Group reports for FY06

Standard changed its financial year end to Dec so its hard to compare the announced numbers to prior yr suffice to say that media group is doing better. The group has announced a 1 for 8 bonus issue and ksh1 dps. As with other media-type groups, the group should benefit from the election year spending.

Wednesday, March 07, 2007

Kenya's new Business Daily

The Business Daily Africa was launched yesterday. It will be published by NMG stable in partnership with Wall Street Journal-one of the most renowned business newspapers in the world-though I personally think it has some way to go before it can match the FT.
I actually like the idea of such a paper as it shows that Kenyans are finally focusing on things that really matter to their lives namely their economic well-being. For the Diaspora, its hoped the paper will go behind the business news and bring us in-depth articles on the NSE-listed companies, sector analysis, developments in business as well as opportunities arising from our growing economy. It would also be good for it to focus on ideas, policies, business developments elsewhere in Africa and beyond that enrich the Kenyan economy.

Tuesday, March 06, 2007

Limuru Tea, Unilever announce FY06 results

Limuru went with the trend for all tea companies with and saw PAT double from FY05 due to the drought in that year that affected the tea crop. To celebrate the turnaround-shareholders (Unilever is the majority shareholder) will get ksh10 per dividend, 2nd only to BAT for the FY06. Unilever saw a fall in PAT (profit after tax ) due to a high restructuring cost. Excluding this, the company saw PBT double for the year.

Monday, March 05, 2007

KCB not doing bad after all

Kenya Commercial Bank (KCB) Group yesterday announced a 63 per cent growth in pre-tax profits moving up from Sh1.9 billion in 2005 to Sh3.2 billion in 2006.

A dividend payment of Sh6 per ordinary share which is a 50 per cent increase over the Sh4 dividend paid out in 2005.

Gross non-performing loans reduced from Sh13.25 billion in 2005 to Sh12.09 billion in 2006.

Capital standing at Sh11.6 billion up from Sh10 billion in 2005, making KCB the second strongest bank in East Africa.

Share price increased from Sh113 at the end of 2005 to over Sh220 in 2007.

Recommended a 10:1 share split

Branch expansion at least 5 to 10 branches annually for the next 5 years

Looking into expanding further in the region apart from Sudan, UG and TZ

C E O Terry Davidson has done a marvellous job and hopefully will continue after his exist later this year.

Friday, March 02, 2007

SCB FY2006 results-9% on FY05

Seems like SCB's train is slowly coming into the station. Flat growth in the loan book (my own opinion is that a bank should look to grow this by th equivalent of the economy growth rate) means SCB saw minimum growth in interest income and if you see that all fee types (apart from those on loans) fell, you know these guys must be having different ideas about their Kenyan business. Maybe China, Middle East, India and South East Asia generally will now become their areas of focus. The corporate world in Kenya will become even more fiercely competitive with Stanbic (or is it Stanbic CFC) looking at the same. Anyway, for shareholders still in with them by 4th April, they'll pay you the highest DPS so far at Ksh 4.10. So not all bad.

Thursday, March 01, 2007

More business opportunities

Business registration in Kenya

This site offers steps on how to go about registering your business in kenya.

Business opportunities in kenya

This link highlights various business opportunities available in kenya.

Investment opportunities in U.K

Below company is offering potential investors an opportunity to invest in growth company which are pre-IPO, please refer to the blog disclaimer in making your investment decision.

Pyramid/Ponzi schemes; avoid them like plague

They promise high returns and present themselves as genuine investment companies, some people do actually make money out of the majorities misery. Read the links below about their sophisicated way of making money. In the early 90's they actually brought down the Albian government, as many of its citizens had invested and lost their money through such schemes in turn blaming their government for not having protected them. These schemes have become a big business in Kenya due to the thirst and hunger for investment opportunities by kenyans.
However, remember that if a deal is too good think twice.

Is Kimunya doing/talking enough or pussyfooting

If the situation at CMA continues unabated it is likely to impact onthe investors confidence in the long-term. In terms of CMA legislative framework, i feel the government can and should do more to enhance what is already in place to close the loop holes.

CMA attitude and approach is similar to that of KACA which with all the powers/duties, they are unable to match their words and actions.