Thursday, February 28, 2008
BBK announced frankly disappointing looking numbers and will be the worst among the listed banks (blog on this later). However, if one adjusts for the Ksh1bn spent on new branches and increasing ATMs, the numbers look okish. Apart from bad debts in 2008, the other is issue of concern is that potentially, there will be continually higher staff costs from the additional 4,000 staff.
StanChart has pleasantly surprised with a 32% rise from 2006 driven by FX and Other commissions. Moreover, its been a great year if you are a shareholder of StanChart because adjusting for the shareprice differences, it has a superior div yield and its share price appreciation
is similar to BBK's . Even better for us NIC shareholders. NIC hit 63% rise.
Bamburi saw very strong results on 34% rise in turnover but had Ksh2m wiped of its cashflow due to clinker expenses. It paid a very good dividend for the yr though at Ksh6.
Also announcing interim and others were KPLC, EA Portland (54% down on costs from Clinker), KRe got hit by higher claims but saw 9% rise in PAT due to lower tax rate ; KPLC saw flat turnover and hence slight PAT rise (4%).
I pray these two fellas won't have to be dialoguing/mediating/conferencing et al whenever they need to agree on policy, ministerial posts, ambassador postings. I pray that after almost 6 yrs of confrontations, guys like akina Martha and Raila will agree to drive Kenya forward jointly. Its a good day for Kenya, but a thousand steps start but by one step...
I know there is such a saying as "while in Rome do as the Romans do", but it's a worry how many Kenyans in the Diaspora are passing away like the natives- either horribly or alone. Finally, wikileaks lives on at -lakini its sad to note that Kenyans are carrying their asinine rumour-mongering there too.
Before the current disaster, I was a skeptical East African and Central province investor. No more. Macharia Gaitho is one of the few balanced (which apparently makes him pro-PNU) columnists around.
Tuesday, February 26, 2008
What think ye?
I must admit I am disappointed that despite having some very good minds in both camps, PNU and ODM haven't been able to agree on the way forward. Looking coldy at the issues, PNU should be aware that ODM want power and ODM should be aware that PNU want to stay in power and are already in power. So why not show flexibility so both sides get to live another day? I think our politicians are cursed by an almost uniquely African politics problem-you can't succeed unless you lack morals and principles.
Monday, February 25, 2008
As for the NSE, the positions I've taken so far this yr have either been based on companies with long-term prospects or for defensive reasons. By defensive I mean averaging. I haven't sold anything yet this yr because apart from Equity, the others haven't reached fruition and I believe they'll.
TPS- Because despite the tourism issues and the fact that 67% of its revenue is from Kenya, nobody does hospitality better in the whole of East, Central and Upper Southern Africa than Serena.
Athi River because it has a good base to go forward. And its not exclusively dependant on revenues from cement.
EA Cables, because Mugo the CEO is not yet 40 and has plenty of good ideas
- Fibre-optic to take advantage of TEAMS, SEACOM and other under-sea cable projects coming online from 2009 onwards. And of-course, copper is expensive
- Regional expansion. Most of its turnover growth for 2007 came from outside Kenya
- Linchpin of Transcentury, therefore has strong shreholder support
- Any price below Ksh40 is a buying ooportunity for this stockDiamond Trust because trust me its going places.
few weeks back. EABL for the dividend tu.
On my watchlist remain AccessKenya and KCB.
Friday, February 22, 2008
constitutions will tell you that they are based on principles rather dealing with every minutiae. After spending Ksh10bn+ last time, one would have thought that we'd have a more rational approach to constitutional issues. Let’s ask ourselves:
- Is the current constitution wholly bad? If it is, then lets look at whether we can write the sections that are deemed most important first.
- Is it certain sections that offend? I think this is the more likely scenario with the executive section being the main one. In which case, we can have a focused debate between the so-called activists and Parliament and a committee of eminent legal and public minds and come up with well structure 3-pillar executive.
- Is it only one section? In which the debate would even be better focused.
- Can we change the constitution through minimum incremental reforms? Most definitely.
Wednesday, February 20, 2008
of their countires. Beware m-o-1 and your corrupt Kenyan pals.
Obama looks like he is edging his way into the Democratic seat, but there is some way to go. However, should he win the dirt from the Republicans will be one which will make you want to bust a move on your TV. Should he have Hilary as his VP? Personally I don't think so because the republicans would have her for dinner, breakfast and lunch.
As I expected, Barclays announced poor results for 2007-in the context of an economy that grew at almost 8%. A 24% rise in its income was wiped out by an almost equal increase in costs although some of the costs were one-off costs in re-opening branches and setting up some new ones. However, rather than take the opportunity to legitimately increase provisioning for bad debts to anticipate this year’s inevitable rise, it actually reduced provisioning! Incredible.
Tuesday, February 19, 2008
are likely losing it money. I have posted before on its pre-crisis issues. I passionately believe in KQ, but we now need a change of leadership, because that is where
the buck stops. Let it get someone who can steer it through the next year operationally so it'll be ready as the economy takes off.
For every Francis Thuo and Nyaga stockbrokers, there is a D&B and CFC, two brokers that though not on the straight and narrow take home some serious revenue from buying and selling yours and my shares. Stockbroking should be the one business in Kenya that should bankable year on year if you don't do anything stupid. Truly, IF is a big word.
It’s pleasantly surprising to see that Rutleys still plans to go ahead with its property fund and may even list as a REIT
if and when CMA wakes up from its slumber and decides to allow them. Bora Capital another property fund venture has gone quite despite interest from
many including in the Diaspora.
As a farmer, I'll continue to earn some crust but for how long if we can't get ourselves in order as a country?
As an investor, I've continued to take positions in stocks that I think will weather any change in conditions for the next couple of years. For reference purposes, I've looked at stocks that existed pre-2002 and how they performed. I've also taken positions in stocks that i think are worth a risk based on how agile they are strategically. I can do both strategies because I have a 5-year outlook. Viewed very realistically, I can't see how a grand coalition will work. In my humble
opinion, the worst thing that Kibaki has done since 2003 is to trash that MOU because that would have ushered coalition politics into Kenya. They are the future, because
not even a dictator can rule Kenya and ensure economic growth.
Friday, February 15, 2008
- its the results season and bumper dividends, bonus issues and even rights issues are expected to be announced
- other longer-types of investments are on-hold because of the ethnic cleansingthe NSE should bounce back to its 5,500 level IF a mutually agreeable position is found next week.
EA Cable announced 41% rise in its PBT, against a background of rising copper prices and increased finance costs due to its loan for its new plant in Industrail Area. At current share price, there is an instant 10% gain to be made over the next month not to mention a DPS of 90 cents. Fibre optics will be here next yr, so its also worth it for medium and long-term investors.
Unga announced yet another earnings warning, no surprise given the RV upheavals.
Sassini is begging the CMA not to fine it for being late with its annual results. Kwani? Its as if it didn't know that year end had arrived...
Due to looming slowflation (i.e. slowing economic growth vs. rising inflation), we’ll probably end up with two more interest cuts in 2008 rather than the three I expected.
An interesting spat is going on between M7 and one of his opposition MPs, Beti Kamya. She called him an non Ugandan, which is the Kenyan equivalent of saying Wambui is Kibz second wife.
Are the thousands who were internally displaced part of the current jaw-wagging between the protagonists in Kenya? What can we do to stop this dichotomy in believe between “there is a nation called Kenya”, but “this area is for my tribe thank you very much”? Why should we all as Kenyans bear the costs of resettling them? Shouldn’t it be the case that those who displace should bear the costs via their CDFs?
After all, respect for private property and seller vs. buyer rights are at the heart of a functioning economy.
Monday, February 11, 2008
A few things would make sure that brokers/listed stocks never fail. We now have a CDSC and a WAN network which means data gathering is an easy IT affair as it should be. With this in mind, CMA should base its most of its broker monitoring around daily returns from each broker of:
- Trades done by volume, stock, value.
- Trades for a 1,000 or more shares or Ksh50,000+ in value
- Cash balances in and out
- Settled and unsettled trades
- New accounts opened and closed
- quarterly earnings update must be adhered to
- firms must give a rough estimate of their forecast earnings for the forthcoming yr
- earnings warnings update must be done if a stock is going to see a 10%+ downward deviation from its earnings forecast
- a quarterly update of any changes in its principal shareholders must be done
- persistent downward fall in share price (10% in two days) must also be explained.
I have started a thread at stockskenya to generate some ideas on how we can help our economy get back on track. And even ideas on reforming the economy.
Please put some non political ideas on the thread as an investor or a positive Kenyan and we can send them to the finance ministry. They may not take notice at the ministry, but its also a way bringing us back to being part of the +ve solution.
Thursday, February 07, 2008
Babatunde Soyoye, the MD was also MD for TPG Europe. Tope Lawani also worked with him.
Main Investors in Hellios:
CDC with $50m repreent the UK interest; OPIC also with $50 represents the US and IFC with $20m represents world Bank. Others with undisclosed
sums are Soros Fund; TPG and our own Transcentury with 1% holding. Its total funds under mansgement
are circa $300m
Investment in First Monument Bank of Nigeria
JV with Portugal Telecom
Sold its joint holding with Actis in Flamingo to James Finlay
Took 25% stake in Equity to be disposed off no earlier than 2014.
So apart from the fact that its a Nigerian-led outfit, what are the issues?
An attempt on Kimendeero? Wonders never cease.
Over the last two or so years, we've seen lots of money swirling in the economy with the main impact being inflation of;
- consumer goods
- the price of assets such as real estate and stocks
At the NSE, this manifested itself in higher market cap as well as high P/Es for good to very good stocks. A lot of the liquidity came from two sources, namely
- Banks throwing money like confetti at borrowers
- Diaspora rushing in to invest into the growing economy
The good thing is that with the exception of hot money brought in by foreign stock investors, little of this cash has left the country. Some will hopefully be used to help the displaced. Some will be used to absorb the higher cost of living (mainly supply-driven). The rest is waiting for these two knuckleheads to make peace so we can go on and invest.
Wednesday, February 06, 2008
With 44% of our population classed as being below the poverty line (i.e. earning less than a dollar a day), the urgency of getting our economy growing constistently for like 10 + yrs, means that if a complete overhaul of the constitution is what it'll take to avoid the 5yr need to slaughter the "outsider" communities, lets get it done pronto. I was speaking to a friend who is in the insurance industry back home. On a normal month, he'd expect to write between ksh1-2m of new business. In Dec, he actually had one or two contracts of around that amount ready to sign in Jan. As it is, he hasn't written anything in January. Which is ironic given the prevailing situation where many businesses in Eldoret and other towns west of it are finding that the only way of redeeming their investments is to go for the Ksh1bn thatKibz announced. Reason? Many didn't insure their businesses. Tell me,when you have a business perhaps transacting ksh1m per month or more, shouldn'thave insurance especially where you have stock?
The bourse continues to sway back and forth and is now reflecting the fears and uncertainties about the direction Kenya's economy will take should are solution not be found. What remains on my stockwatch: AK, EABL/BBK ( for defensive purposes), EA Cables (who is its competitor for the fibre optic market?) and as always Equity should it breach KSh120.
As an aside, changes in the NSE matters to different people in different ways (an oxymoron I know). As an investor, when you want to know the value of your portfolio, you don't pay attention to the index movements, but to what you hold. Hence, I tend to follow the market cap number more closely than the index itself. For stockbrokers, market turnover matters most because that is what dictates their commission. For pension funds and unit trusts, it's the index. For hedge funds it's the volatility of the index. To gauge market sentiment, have a look at the volumes being traded (although its better to look at bid vs. ask). Long-term prospects are another matter.
Anyway, in my etravels, I picked up three articles worth a read. By the way, I think it's true what they say, if you repeat a lie enough times,it become a truth. Sample George Bush and weapons of mass distraction in Iraq; the myths about who dominates who in Kenya. In all this I forgot that out of Kenya's 44 yrs of independence, m-o-1 ruled 24 of them...
Tuesday, February 05, 2008
Meanwhile, there are now Equity-esque type rumors that EA Cables, in which 75% of TC's investment is in, is facing a liquidity crunch. Cables invested Ksh1bn to build its new factory and HQ in Industrial Area and apparently it’s the financing for this that has led to the liquidity crunch. I might be wrong, but the facts don't stuck up.
Why would you be looking to list when your largest investment which happens to be publicly listed stock is in financial trouble? Bottom-line: Should they as its suggested list before June, this would be a shot in the arm for our bruised NSE. TC's returns in the last two or so years have been phenomeno.
Friday, February 01, 2008
Check this though, according to the FT;
- Check this though, according to the FT;
- Kerviel’s positions' loss before being discovered ($1.5bn)
- SocGen's loss due to sub-prime write-offs ($2.0bn)
- SocGen's loss due to unwinding of Kerviel 's positions ($3.4bn)
- So who should be fired and in the dock?
Here is a paradox, I keep hearing that Nation's balanced approach to politics is unpopular and has led to lower sales, yet every time there is a breaking story you can't get into its website? Que?
Speaking to Nak-based cousins last weekend, I was worried by how fatalistic they sounded about the wars in their backyard. Both are businessmen so I really thought things were done for our economy. Lakini something tells me we may have turned the corner after we stayed at the abyss and didn't like what we saw. In which case, this was a prime buying week at the NSE. Imagine BBK at Ksh64!
EasyCoach's cancellation of its service to Western Kenya and resultant job losses, makes me question the whole barricade brigade. Who will suffer most if you can't get goods or services into your region?