Saturday, December 20, 2008

NSE Catch up: Pre CO-OP Listing

If you bought:
Centum on Monday-you'd have made 15%
Sasini (12%)
But
Rea Vipingo would have lost you 12%

Does this mean NSE recovery is underway? Well, maybe-ish (I know, i couldn't get more ambiguous than this). I have noticed a recent trend in IPOs that just before they are listed to trade, the NSE always goes up. Some of this upward trend might be circular trading which is meant to generate cash to allow investors to buy into the newly listed share. Fundamentals are also looking a bit more stable but only if we assume that recent gova moves of reducing banks cash reserve ratio and to contain inflation by lowering the cost of feeding on ugali and also lowering electricity costs will work meaning that investors can be a little bit more positive about 2009 earnings. Volumes remain patchy illustrating the fragile confidence of majority of investors.

Sasini posted very "good" numbers. Until you took a closer look and notice the biological assets pick-me-up. One of the reasons that many financials were/are against IAS39 is because by forcing them to mark to market various assets, your P&L goes up and down like yo-yo especially in the transition year from boom to bust as 2008 has done for Sasini. IAS41 which governs agriculture companies has a similar effect. The best solution would be to do the mark to market but put the appreciation in their revaluation account which has the same impact on capital anyway. Something in your financials has to reflect what you did for a given period and an asset revaluation doesn't.

Isn't it time KenGen stopped its annual whining about its ksh75m AGM costs and just emailed investors the annual reports?

Still don't understand why the Mpesa audit and court is happening now?

Co-op: Lands on Monday. Recalling Everready pre-Xmas IPO two years ago, I don't expect violent movements either way though sellers may try to force the issue. The interesting play will be when class B shareholders can immobilise their shares and start profit-taking in earnest...

Joint venture opportunity: I am looking for somebody with knowledge or working experience of doing credit ratings or credit scoring to work with on a joint venture. And you are currently based in East Africa.

7 comments:

coldtusker said...

1) Sales of shares before an IPO should LOWER the prices since the buyers know why the sellers are selling and have no incentive of offering higher prices. You have a flaw in your argument!

2) Co-op IPO was a 'failure' (though not a bad buy at 9.50) in that they didn't even achieve the lower end of the capital raise (6.7bn from 10bn).

3) I agree that IAS41 is a pain. The 'old' method was better since it allowed for results as well as capital/equity adjustments. Most firms will provide the EPS with & without IAS41 adjustments.

coldtusker said...

4) KenGen: Kenya's ARCHAIC Company Laws do not allow for e-mailed annual reports... Blame the idiotic MPs who refuse to pay attention to modern business practices.

5) KenGen: I have been an advocate for NO 'fancy' AGMs. What's with the goodie bags & lunches? KenGen could save money but cutting out the frivolities!

Ryan Shen-Hoover said...

MainaT,

You may want to check out www.conceptadvisoryservices.co.ke regarding the joint venture. It looks like the principal there used to work at the Credit Reference Bureau.

MainaT said...

CT, CT- Re-read what I said i.e. circular trading encourages peeps to think market is going up. The come in and buy just before the IPO. Once the IPO lands, the circular traders offload so us to pick up the IPO's shares...

MainaT said...

Tx Ryan

jack500 said...

i am interested in the joint venture h ow can we make contact

MainaT said...

Hi jack500. You can contactme at mainat@hotmail.com