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Kplc restructure plan out
Rank: Elder Joined: 6/2/2008 Posts: 1,438
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guru267 wrote:If G.O.K plans to raise 8.795 billion from the NSE then that will be great for the share and I will up my stake....
This is better than was expected meaning i will use less money to take up rights....
with 1.734 billion shares the stock will be worth 34 bob after restructuring and the rights will only be at 18.5 which is like a 40% discount
@g267. How do you arrive at a valuation of 34 (post split) or today's equivalent of Kshs 272?
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Rank: Chief Joined: 1/3/2007 Posts: 18,215 Location: Nairobi
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So we are back to my dilemma... LOL... Since I like KPLC & I have the cash ready [well... working on it] I will keep the existing shares [might take a small hit] but ensure my 40% Rights [which I hope will explode in price]... 2009-10 had low levels of hydropower this KPLC sales were 'suppressed' according to KPLC. Since we have had rain so far in 2010-11... I hope the sales will increase substantially in 1H 2010-11. If thi happens then I can see a gain when 1H 2010-11 Results are out in Feb/Mar 2011. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 9/26/2006 Posts: 439 Location: CENTRAL PROVINCE
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The KPLC Circular has lead me to the following observations/conclusions:
1. The Offer price will most likely be below Ksh 20 (Ksh 18 + 5% Restructuring costs should give an offer price of Ksh 19).
2. This is a very enticing offer price and despite the size of the GoK free float, the offer will attract at least 20B (Thus a person using my prefered strategy of buying 100 rights and applying for additional shares will end up with about 40-50% of what is applied for).
3. It is still prudent to purchase the rights on the market rather than chase the share at current prices. the risk of significant price depreciation in the short term (period between now and end of rights) is very real. If the govt is getting KPLC at Ksh 207 why pay a 10% premium at current prices?
4. I anticipate the price will fall below Ksh 200(Ksh 25 post split) in the near future (I am surprised that the share is still trading at above Ksh 200 - This may however be an indication of the high level of interest on this share.)
Happy hunting
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Rank: Elder Joined: 2/10/2007 Posts: 1,587
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stocksmaster wrote:The KPLC Circular has lead me to the following observations/conclusions:
1. The Offer price will most likely be below Ksh 20 (Ksh 18 + 5% Restructuring costs should give an offer price of Ksh 19).
2. This is a very enticing offer price and despite the size of the GoK free float, the offer will attract at least 20B (Thus a person using my prefered strategy of buying 100 rights and applying for additional shares will end up with about 40-50% of what is applied for).
3. It is still prudent to purchase the rights on the market rather than chase the share at current prices. the risk of significant price depreciation in the short term (period between now and end of rights) is very real. If the govt is getting KPLC at Ksh 207 why pay a 10% premium at current prices?
4. I anticipate the price will fall below Ksh 200(Ksh 25 post split) in the near future (I am surprised that the share is still trading at above Ksh 200 - This may however be an indication of the high level of interest on this share.)
Happy hunting Well put SM I will use a two pronged approach, like I did with KCB. With my 100 shares, I will apply for a significant chunk of rights. The second set of funds will be for purchasing the rights in the market. My only dissapointment is that all these funds will go to gava and not to KPLC to grow the business...unlike KCB
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Rank: Member Joined: 12/8/2009 Posts: 274 Location: Ltktk
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@koli all the proceeds from the rights issue goes to kplc. ...things fall apart...the centre cannot hold..mere anarchy is loosed upon the world...w b yeats
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Rank: Chief Joined: 1/3/2007 Posts: 18,215 Location: Nairobi
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TUPAC wrote:@koli
all the proceeds from the rights issue goes to kplc. Except any premium for Rights... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,215 Location: Nairobi
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stocksmaster wrote:
2. This is a very enticing offer price and despite the size of the GoK free float, the offer will attract at least 20B (Thus a person using my prefered strategy of buying 100 rights and applying for additional shares will end up with about 40-50% of what is applied for)
Nope. If the total application is for 20bn [KPLC wants 10bn] then those with existing Rights are 'guaranteed' the shares. Let's say of the total Rights [incl GoK] of existing shareholders only 25% are taken = 2.5bn Another 25% are Rights bought in the market & exercised = 2.5bn That leaves 5bn (50% of Rights) to be shared among 15bn worth of applications = 33% allocation [best case. See below] I have a feeling that some firms/funds [pension funds, insurance firms, Foreign funds] will buy most of the Rights off the market. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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Does one need to be an existing shareholder, to buy the rights of the market? The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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Aguytrying wrote:Does one need to be an existing shareholder, to buy the rights of the market? No, you do not have to be.
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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VituVingiSana wrote:stocksmaster wrote:
2. This is a very enticing offer price and despite the size of the GoK free float, the offer will attract at least 20B (Thus a person using my prefered strategy of buying 100 rights and applying for additional shares will end up with about 40-50% of what is applied for)
Nope. If the total application is for 20bn [KPLC wants 10bn] then those with existing Rights are 'guaranteed' the shares. Let's say of the total Rights [incl GoK] of existing shareholders only 25% are taken = 2.5bn Another 25% are Rights bought in the market & exercised = 2.5bn That leaves 5bn (50% of Rights) to be shared among 15bn worth of applications = 33% allocation [best case. See below] I have a feeling that some firms/funds [pension funds, insurance firms, Foreign funds] will buy most of the Rights off the market. Actually, I think most existing shareholders other than Govt will take up their rights. Remember KPLC has a heavy institutional presence in their shareholder roll. Now if Govt finds a couple of well heeled institutions and sells them their rights (or a large chunk thereof) on the market, you will no longer have the anticipated massive free floating rights. If that happens and with my 100 rights I attempt to apply for say 50,000 (pre-split) shares. I can do this with the help of bank financing, chances are that I may not even get 20% of my desired quantity. I therefore simply have to buy the rights on the market and pay the premium. If the price of the share falls badly enough to the level cited by SM of below 25, say to 22-23, then I will also consider buying the actual share on the market. Remember during the KCB rights issue the share price fell to 18 or thereabouts. So, if KPLC falls it is a risk worth taking.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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Guys KPLC is currently trading at a trailing P/E of 13.47 and a trailing dividend yield of 3.4% Its peer in the market KENGEN is trading at a trailing P/E of 19.6 and a trailing dividend yield of 2.8% With this in mind and the fact that KPLC is a complete monopoly and Kengen is facing increased competition how can a person of sound mind think that KPLC will fall below 200bob???? The rights will be offered at 149 or 18.5 which is a trailing P/E of 8.7 and a trailing dividend yield of 5.4% making it the CHEAPEST or the most discounted rights issue on the NSE to date... How will the price fall???? HOW???? Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 9/23/2010 Posts: 2,221 Location: Sundowner,Amboseli
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It's no secret that most of the Institutional Investors will buy the rights off market and this is a big blow to those who'll buy 100 shares before th books close expecting to get the additional shares they have applied for. some seasoned,weathered investor in the NSE once told me of how investors felt cheated during the rights issue of Dunlop in the mid 90s. They had great plans of buying the rights in the mkt since they were heavily discounted,only to find that there were none on offer! I have a strong feeling the same will play out. A case of history repeating itself? @SufficientlyP
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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guru267 wrote:
The rights will be offered at 149 or 18.5 which is a trailing P/E of 8.7 and a trailing dividend yield of 5.4% making it the CHEAPEST or the most discounted rights issue on the NSE to date...
How will the price fall???? HOW????
Stranger things have happened. Market sentiment does not always follow logic, That's how we make our money. We will buy the shares off those who will be selling, but I will wait for it to the point of maximum pessimism or as near to it as I can get it and then strike. Believe you me, the price will fall and then next year when price will have recovered and shot up, folks will be wondering how they fell for it.
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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Actually the fall has began. Now Trading at 225.
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Rank: Elder Joined: 9/23/2010 Posts: 2,221 Location: Sundowner,Amboseli
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mwanahisa wrote:Actually the fall has began. Now Trading at 225. Me thinks today is the best day to buy for the following reasons: 1) No real demand for this stock, supply more than 7.5 times demand n it's always good to be when everyone is selling(Fearful, as Warren Buffet would have it) 2) Next week will be the last week the stock will be trading cum div and the AGM will be on 10th Nov and the trend is investors tend to stock up more in the run up to this day! 3) Expect more info on this stock before the AGM! @SufficientlyP
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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Now at 220 and falling fast......
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Rank: Member Joined: 8/17/2010 Posts: 116
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mwanahisa wrote:Now at 220 and falling fast...... I told you before two weeks ago. I had sold @ 238. Remaining with 100 shares. I will buy right & invest as much as possible. Now wait for falling up to 200.
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Rank: Member Joined: 9/26/2006 Posts: 439 Location: CENTRAL PROVINCE
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guru267 wrote:Guys KPLC is currently trading at a trailing P/E of 13.47 and a trailing dividend yield of 3.4%
Its peer in the market KENGEN is trading at a trailing P/E of 19.6 and a trailing dividend yield of 2.8%
With this in mind and the fact that KPLC is a complete monopoly and Kengen is facing increased competition how can a person of sound mind think that KPLC will fall below 200bob????
The rights will be offered at 149 or 18.5 which is a trailing P/E of 8.7 and a trailing dividend yield of 5.4% making it the CHEAPEST or the most discounted rights issue on the NSE to date...
How will the price fall???? HOW????
The issue is not KPLC fundamentals.......it is the rights issue which must be looked at as part and parcel of KPLC even at this stage. When i look at the KPLC share price as at yesterday (today it seems it is starting to obey logic), this is a price that is yet to factor the activity between now and end of December 2010. Within this period, there will be KPLC shares (that will rank pari passu) being offered at Ksh 19 (read Ksh 152) which will be available. Such shares will be accessible (even though for a small premium) and will be in plenty. Trust me guru267, the KPLC Share will soon be available at a price below Ksh 200 (post split Ksh 25). Post rights, i anticipate that the the share will go back to a P/E close to or equal to Kengen (Price target of Ksh 30 - 32). And just for the record, am of sound mind . Happy hunting.
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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stocksmaster wrote:guru267 wrote:Guys KPLC is currently trading at a trailing P/E of 13.47 and a trailing dividend yield of 3.4%
Its peer in the market KENGEN is trading at a trailing P/E of 19.6 and a trailing dividend yield of 2.8%
With this in mind and the fact that KPLC is a complete monopoly and Kengen is facing increased competition how can a person of sound mind think that KPLC will fall below 200bob????
The rights will be offered at 149 or 18.5 which is a trailing P/E of 8.7 and a trailing dividend yield of 5.4% making it the CHEAPEST or the most discounted rights issue on the NSE to date...
How will the price fall???? HOW????
The issue is not KPLC fundamentals.......it is the rights issue which must be looked at as part and parcel of KPLC even at this stage. When i look at the KPLC share price as at yesterday (today it seems it is starting to obey logic), this is a price that is yet to factor the activity between now and end of December 2010. Within this period, there will be KPLC shares (that will rank pari passu) being offered at Ksh 19 (read Ksh 152) which will be available. Such shares will be accessible (even though for a small premium) and will be in plenty. Trust me guru267, the KPLC Share will soon be available at a price below Ksh 200 (post split Ksh 25). Post rights, i anticipate that the the share will go back to a P/E close to or equal to Kengen (Price target of Ksh 30 - 32). And just for the record, am of sound mind . Happy hunting. The further it falls the bigger the profit that we shall make next year after the recovery. Should I also add that I am of sound mind - although perhaps my shrink might just disagree?
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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This will be crazy if this stock trades below 200 with such discounted rights but then again I can't blame the market for making my wealthy with its inefficiencies.... I'm sure KPLC bulls will join me in stocking up if @stocksmaster's predictions come true Mark 12:29
Deuteronomy 4:16
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