Thursday, July 17, 2008

Thursday shorts

I guess the fact that she has been doing the job fairly competently (and anybody would be compared to Ntamani) should have and has given her a head start for the real position. Insiders will be happy because they are familiar with Stella Kilonzo, but for us investors, I think the preference would have been for an unconnected but knowledgeable individual to guide the markets to the next stage. In anycase, its good to have a lady at the top and I hope she positively surprises...

I thought KQ would tank in its full year PAT given the problems its had (accident, customer service, Virgin), higher oil prices and so forth. Lakini, I think the stronger shilling in the 2nd half of the its financial year helped (I believe KQ normally hedges against a weakening shilling) as did its oil-hedging (fuel expenditure was flat yoy). If you take into account 30% flight occupancy for the Jan and some of Feb, the numbers are very good.

Safaricom continues to find its way downwards. A strong case of not letting in FFIs who think 20% in three months is excellent return and bolt as soon as they get it. I still haven't taken a position. I check bids/offers courtesy of rich.co.ke and they still don't make pretty reading. The price will get to a stage I just have to go in. Safcom has much better fundamentals than a whole slew of other counters. I still recall the fears many had about AK last year.

Fascinating story brewing here. ARM is the young soldier, the pick of the 3 cement counters. But Bamburi is the aging gorilla with 15% stake.

6 comments:

coldtusker said...

KQ's 4Q was a net loss while normally it is quite busy.

There was an extraordinary gain but you can offset it against 4Q and you come out ahead.

The fuel costs will rise in 2008 coz hedging costs have risen. KQ has increased their fuel surcharges but competition on the Europr routes remains heavy.

1Q 2008-9 was slower yoy but might pick up in the latter part of the year.

Strong KES hurts them more coz 90% of the revenue is in US$. A weak KES in 2Q 2008-9 will benefit them.

MainaT said...

CT-KQ hedges against the a weaker $ hence why its done ok in H2 of its financial year.

Ssembonge said...

Is Safaricom suffering from buyers remorse. investors who participated in the IPO feel like they were cheated and therefore are not keen to add to their positions.

MainaT said...

Ssem-considering its institutionals that move the market, I'd say they have one distincy advantage. They know who the sellers are (FFIs) and how much more they've got to sell and can thus wait them out and buy at under Ksh6.00.

As I've commented @bankelele, I think this IPO is a good lesson for all and will hopefully move the market in the right direction in terms of weeding out speculators who don't bother understanding the NSE and speculators from abroad.

coldtusker said...

Nope... KQ does not hedge US$ but does fuel...

MainaT said...

CT-You are right. Which makes the full perfomance very good. In effect, they were getting Ksh4 fewer on average in 2007/8.