KA-INVESTOR

• Blaming Petrol Prices & Post Election Violence

  Posted: July 31, 2008, 9:26 pm by ka-investor

  KPLC thinks we are morons: In the late 90’s, during the frequent blackouts/power outages, KPLC used to give us flimsy excuses of how the water levels had fallen in the dams due to ‘drought’ even when it was raining heavily, or how sedimentation is reducing the level of power output (during Elnino) or any other thing they could come up with. Now they have just found another excuse, in the name of ‘high petrol prices’, to blame the high electricity bills on. Figure this out; you get a bill reading month consumption – Ksh.454 while the petrol charge is at Ksh.645. Does this mean you consumed more petrol than electricity? So what’s the benefit of using electricity?
  
  Sameer Africa (almost) sees red: Sameer Africa pre-tax profit dropped by a whooping 96% in their half year announcement. The company’s earnings dropped to Ksh.2.8 million compared to ksh.84.2 million in the same period last year. Once again this has been blamed on post election violence and increase in production cost due to high oil prices.
  
  Econet roll out deadline moved to September: it seems we will have to wait much longer for Econet to roll out their network as now their roll out deadline has been moved to September 30 from July 31, 2008. Once again it has been blamed on post election violence, but I have a strong feeling they will not be rolling out any time this year.
  
  To be launched on August 1^st
  

  • Celtel will officially changed its name to Zain
  • Nation Media New Radio station that will have Nyambane as its morning host is set to be launched tomorrow.

  Almost rhetoric: What’s the probability that Britak and Equity Bank directors won’t offload their stake in the bank after the lock in period is over?

• Equity Bank 2008 H1 Numbers: More Surprise!

  Posted: July 25, 2008, 12:58 pm by ka-investor

  Equity Bank has done it again! If you thought last years result were marvelous then this year’s result will be a great shocker. Though I expected such a performance due to the role the bank played in the Safaricom IPO, I still didn’t expect the bank to hit a near 200% profit increase (197% to be exact). The bank CEO, James Mwangi, attributes the jump to ‘a delicately balanced growth, profitability and good control systems’ (whatever that means)

  Summary of results:

  • Profitability tripled to Ksh.3.087 billion from Ksh,1.037 billion same period last year.
  • Total assets grew by 143%, from Ksh.29.9 billion to Ksh.72.5 billion
  • total operating income increased by 156% to Ksh.6.58 billion
  • Total overheads increased by 128% to Ksh.3.5 billion.
  • Consolidated loan book increased by 153% from Ksh.14.3 billion Ksh.36.2 billion (probably Ksh.15 billion from IPO loans)
  • Despite the post election violence non-performing loans only increased by 3%.
  • The bank has 2,456,982 deposit accounts (over 45% of all deposits accounts in the banking industry) and 510,768 loan accounts.
  • Equity still remains the biggest bank in terms of market capitalization.

• My Mid 2008 Green List

  Posted: July 24, 2008, 8:34 pm by ka-investor

  Mid 2008 Green List I’ve been procrastinating on this list for a while now. Of late I’ve been unsure of the future of the NSE and its listed stocks. The market has been on a slump. With one of the highest inflation rate of 29% (from 31% last month) in Kenya, a cash crunch from the Safaricom IPO and rising interest rates the market is facing one of the toughest times since the 2005/2006 bull-run. Some 'strong' counters such as KQ and Safaricom are proving to be anything but the darlings of the market.
  
  last years Green List performed far much better than the market average. In this year’s green list I will mainly focus on counters that show considerable prospect of growth and are undervalued in this respect. The following four stocks will form my 2008 green list, although I still hold my reservation on some:

  1. Equity

  Never say die for Equity bank. The bank has proved all its critics wrong and there’s not stopping now. At above Ksh300 and a PE of 44, it’s considered one of the most expensive company among the financial stocks on the NSE, followed by Housing Finance. But I still think there is room for this company to improve. The recent acquisition in Uganda and with a very innovative and aggressive expansion plan the bank has some more surprises to give. There have been some insightful analyses of this counter and a share split is more than eminent at Ksh.350. I expect a very impressive half year result announcement soon. Although the lock in period for Equity directors ends this August, a green light is still shining on this stock.

  1. KCB

  KCB has one of the most aggressive expansion strategies, almost similar to Equity but a little bit inefficient in their service delivery. Their operation in Rwanda was recently approved and the just ended rights issue is a sure over subscription. Although the additional new shares are small in number, I expect the share price to drop considerably once they start trading. Ksh.26 or anything below is a buy position for this counter. The share will be trading in mid 30’s by the end of the year and probably 40’s in the 1st quarter of next year.

  1. Safaricom

  Safaricom is no Eveready. The hyped IPO pulled in some very strange shareholders, especially the so called ‘foreign investors’. At the moment speculators and loan-investors who bought in this counter during the IPO are selling in panic that the share will drop further for them to make their quick gains. This has dampened the share price as supply is far much more than demand. But in a matter of a few months the speculators would have cashed out and the share will resort to its true value, which is Ksh.10 and above. This is the time to accumulate this share and in six to nine months time it will be a sweet story.

  I believe Safaricom is no penny stock. Even with the new entries of Econet and Telkom, safaricom’s market share will remain more than intact, if not increase from the new cheaper calling rates. Their 3G internet provision is a good addition although still plagued by their poor customer service. Safaricom is the price setter in this industry and it will take some years before its competitors catch up.

  1. Barclays Bank

  BBK has been hovering around ksh.68 for some time now. Despite their unimpressive Q1 results this company has great potential to perform. Any price at Ksh.70 and below is a bargain. I believe is just a matter of time before this counter move to mid 70’s and then into 80’s. Its one of the strongest long term counters I can ever advise a serious investor to buy. The sooner you get on board the better. The banks expansion strategy is a bit conservative but generally good. They have opened sales canters in almost all corners of Kenya and have some of the most aggressive sales and marketing agent in town.

  
  Others to watch:
  

  • National Bank
  • Total Kenya
  • Athi River Mining n Bamburi
    

  Disclaimer: the Green list is a personal list of my preferred stocks in the market. It does not indicate certainty

• New CEO for Celtel Kenya

  Posted: July 10, 2008, 9:27 pm by ka-investor

  Former Tigo-Tz CEO, Rene Meza, has been hired as the Managing Director (Not CEO) of Celtel Kenya after the recent exodus of Key staff from the mobile service company, including the former CEO who left in January. Rene brings to Celtel ten years of experience from Managing Tigo in Tanzania. Last year, before he left Tigo, he introduced the Tsh.1 per minute calling rate that revolutionized the mobile service in Tanzania.

  It’s now official that Celtel Kenya will change its name to Zain as from August.

  More from Bongo

  Tanzanians are planning to use the Kimunya saga in Kenya as yard stick against which their own grand corruption victims will be prosecuted.

  KCB Rwanda Approved

  KCB has been given a go ahead by Rwandan authorities to start operating the bank branch in the country. The bank plans to open at least five branches in the country.

  Tornado in Kenya?

  Apparently, according to this story, there was a tornado in Kenya and funds are being raised to support some victim in Mwamanga village. How come a tornado hit kenya and nobody told me?
  

• It’s not about Safaricom or Celtel

  Posted: July 5, 2008, 3:40 pm by ka-investor

  The mobile services wars in Kenya is getting hotter by the day, with Celtel introducing a ‘free’ call service and an internet service, while Safaricom are taking their customers by storm with their hot spot internet service (supported by 3G technology). However what seems to be tight rivalry for the market share between the two has little to do with competition. It’s all about the entry of Telkom (Orange) and Econet who are set to roll out their services by the end of this year.

  Even Celtel, whose customer base reduced by 23% last year, seem to be fighting for their share in the market (albeit a confused marketing strategy) and hoping to technically eat into Safaricom’s market share. I like what is happening since only the consumers stand to gain for all these reduced prices and new-better services. I want to believe that by time Econet and Telkom will be fully in business the highest calling rate will be Ksh.5 with the internet going for Ksh.1,000 p.m. lets wait and see.

  Even higher food prices:
  

  As if the 50% rise in food prices in Kenya is not enough, a law that all food products sold in Kenya should bear an approval mark from KEBS as from October, is going to increase food prices even higher. I appreciate the noble intentions of the regulation but the timing is so wrong. For a generation that was raised on substandard goods and services – where even the education system was compromised – the KEBS fee can wait for another day.

Blah blah blah

Fish cakes

Alas a fish cake.

Yet more fish cakes

Guess what ... yeah ... fish cakes.

The end of the fish cakes