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BRITAK IPO: The Money Maker
Rank: Elder Joined: 6/2/2008 Posts: 1,438
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Whether this issue will succeed and provide some upside for investors will depend on the way the company works on investors perception.
They have a few things going for them:
1. The "stellar" performance in 2010.
2. The guys behind the company i.e. the likes of James Mwangi, Jimnah Mbaru, Benson Wairegi etc are well regarded locally and internationally.
3. If the issue is succesful, the company will have brought in new money which it can use to diversify their earnings stream without having to sell their stakes in Equity and HF. Note that Equity has been an extremely rewarding investment for them and still continues to churn out amazing numbers.
4. Their comparatives in the market - in my view their closest comparator will be Jubilee which is viewed as a little stodgy and rather conservative and expensive on a pure share price basis (I prefer it myself). The others will be Centum which is on higher multiples but better in diversification. TransCentury will also be coming in (and as it will be an investment holding company to all intents and purposes), in comparison, BA will be a far better buy. CFCIH on the other hand is way too expensive on a PE basis.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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mwanahisa wrote:
4. Their comparatives in the market - in my view their closest comparator will be Jubilee which is viewed as a little stodgy and rather conservative and expensive on a pure share price basis (I prefer it myself).
I would prefer a little stodgy and conservative as these produce long term consistent results.. Jumpiness and extravagance bring you ulcers and volatility.. Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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guru267 wrote:I would prefer a little stodgy and conservative as these produce long term consistent results..
Jumpiness and extravagance bring you ulcers and volatility..
D' accord! But I maintain that I can make some money in BA (remember Uchumi?) and use it to add it on to my position in the stodgy company.
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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the deal wrote:Update we rate the company EXPENSIVE compared to its peers check here @the deal, I have had a quick look at your blog. In my view it is unfair to use 2.15 B shares in your calculations as BA will not have had the benefit of the 5.85 B in generating their results. For now I would use the 1.5 B shares that will have been in issue in the period. I also cannot see how you arrived at an NBV figure of Kshs 4.7. I have a figure of Kshs 7.05 (Pre-IPO) and 7.64 (Post IPO). We can of course have a debate about the veracity of these NBV figures given the compexities of NBVs which include an elament of market prices for quoted equities. Also much as we are highlighting the fact that BA had extraordinary earning figures in 2010, the same applies across the industry although to a lesser extent (esp for KNRE). So while earnings will most likely drop for BA, they are likely to also drop or stagnate for the others. On the other hand if the IPO will be succesful, BA will have the benefit of deploying new funds at a time of depressed share prices amongst other opportunities. I also feel that you should include Centum, Panafric and CFCIH to the comparators. If you do this, you will see that BA comes somewhere in between on the basis of 2010 figures.
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Rank: Elder Joined: 11/27/2007 Posts: 3,604
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i don't remember the last time i haboured such a feeling for an IPO. i am in this full swing, although i haven't heard of anyone talking of the real figures concerning the IPO: the share limits (max and min), classes of buyers e.t.c African parents don't know how to say sorry.. the closest you will get to a sorry is a 'have you eaten'
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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@mwanahisa read my blogpost again and you will see that Britak as a business is struggling...management has failed to diversify the companies earning streams...its only now that their thinking of taking real estate seriously how??? While buying their IPO pray that the NSE doe as not fun otherwise they will be forced to issue a profit warning in their first year of listing...the IPO might be successful but it will have to do with marketing and the Sh9 bob price so wanjiku will buy in droves thinking its cheap and why ignore the 2.1 bln shares? Are they not coming to the market? Why are you investing in IPO state your reasons? If its Equity you want why not just buy from the market?
To me Britak offers nothing special...CIC is the company to watch.
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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@thedeal, I agree with your point regarding Britak not being well diversified. Note, you can often obtain superior results through having a narrower focus albeit much more risky. I believe that Britak is addressing the need for diversification through the IPO. On the other hand I disagree with you regarding the fact their ratios indicate that they are expensive vis-a-vis their peers (using 2010 figures) - please recheck your computations. Of course, if you go back to 2008 & 2009, then you are onto something.
I postulate that 2011 ratios will at least be at par with their peers having had the benefit of the IPO funds (except perhaps in comparison to Jubilee and KNRE). BTW, if you look at my posts, I have also indicated that I would initially be taking a speculative position on the counter but I would look at it again after it settles.
As for CIC, it is an excellent company, but not a buy at the figures that have lately been mentioned on this forum. At Kshs 100, what are CIC's PE, PBV & DY figures? Way too expensive, if you ask me.
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Rank: New-farer Joined: 7/6/2010 Posts: 25
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minimum shares set at 2000
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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the deal wrote:they will be forced to issue a profit warning in their first year of listing... @the deal, I have had a look again and I am forced to concede that a profit warning in 2011 is a real possibility. Too much of their income in 2010 was tied to the fortunes of the stock market. It would have been great if the offer came in with H1 earnings update but I do not expect their IM will have incorporated it. I have also tried to strip off the market premium from the NAVs for Equity Bank and HF. This shaves off an incredible amount from the NAV, although arguably the same would happen to the likes of Centum. With the foregoing, I would also advise folks to be extremely cautious on this IPO and only buy what they can afford to speculate on. After the IPO is over we will be able to then reevaluate when H1 2011 figures will also come in. As the deal has indicated profits are almost certain to be lower in 2011. So indeed @the deal, I agree it is a case of "caveat emptor." That will of course not prevent me from speculating.
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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Is it bravery or desperation doing an IPO now? Sehemu ndio nyumba
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Rank: Elder Joined: 10/13/2009 Posts: 1,950 Location: in kenya
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SO the IPO is for a subsidiary of http://www.britishamericaninvestment.com which is a very profitable company which owns a substatial stake in Equity bank and housing finance.Check out some excerpts from its milestone records http://www.britishameric...ment.com/Milestones.asp
Quote: 2005 - Acquisition of Courts, the leading household goods retail chain in Mauritius and Madagascar.
- BA Kenya acquires stake in Equity Bank (Kenya).
- Launch of Bramer Asset Management. Quote:2007 - Banking licence granted in Mauritius.
- Equity Bank and BA Kenya invest in Kenya Housing Finance Corporation.
- IDC (International Dealership Company) gets exclusive representation of Princess Yachts in Mauritius. Quote:2008 - Acquisition of South East Asian Bank (subsequently rebranded to Bramer Banking Corporation)
in Mauritius.
- Equity Bank (Kenya) acquires Microfinance Bank Ltd in Uganda.
- British American Insurance Co. (Mtius) Ltd rebranded to BAI Co. (Mtius) Ltd.
- Acquisition of ‘Agence Generale de Commerce Ltee’, the distributor of ‘Continental’ tyres. '......to the acknowledgment of the mystery of God, and of the Father, and of Christ; 3 In whom are hid all the treasures of wisdom and knowledge.' Colossians 2:2-3
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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Lek wrote:minimum shares set at 2000 Trying to suck in the small guys. Is this really smart? I guess that tells us they are not confident that High Net Worth and Institutions will go for it in a big way!
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Rank: Member Joined: 1/26/2011 Posts: 211 Location: Nairobi
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With the consensus being that 2011 will be a difficult year for Britak, i wonder where the Management will plough the Ksh 5B IPO funds into to generate new income streams.
This might just be a flash in the pan for me, though i will seek to profit from the folly rather than participate in it so to say....
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Rank: Elder Joined: 10/13/2009 Posts: 1,950 Location: in kenya
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Excuse my ignorance @mwanahisa said the IPO is for the investment wing not the holding company.The holding company(Britak)is wholly owned(100%) by British American Investment Co. (Mtius) Ltd according to their 2009 Financial Report The company that own Equity and HF. So My question is which company is being floated and what does it really own. '......to the acknowledgment of the mystery of God, and of the Father, and of Christ; 3 In whom are hid all the treasures of wisdom and knowledge.' Colossians 2:2-3
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Rank: Member Joined: 9/21/2006 Posts: 422 Location: Nairobi
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.....I think am more confused now
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Rank: Elder Joined: 6/19/2008 Posts: 4,268
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mwanahisa wrote:Lek wrote:minimum shares set at 2000 Trying to suck in the small guys. Is this really smart? I guess that tells us they are not confident that High Net Worth and Institutions will go for it in a big way! I would think BA is just being prudent and considering the difficult timing of their IPO. I wouldn't necessarily tie it to having "confidence" or lack of it. It is still a "pass" for me though.
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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@selah, I never stated that it is the investment wing that is being listed. It is British American Investments Company. This is an investments holding company. It controls British American Insurance Company, British American Asset Managers and Britam Insurance Company Uganda. selah wrote:Excuse my ignorance @mwanahisa said the IPO is for the investment wing not the holding company.The holding company(Britak)is wholly owned(100%) by British American Investment Co. (Mtius) Ltd according to their 2009 Financial Report The company that own Equity and HF. So My question is which company is being floated and what does it really own.
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Rank: Member Joined: 9/26/2006 Posts: 441 Location: CENTRAL PROVINCE
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mwanahisa wrote:the deal wrote:they will be forced to issue a profit warning in their first year of listing... @the deal, I have had a look again and I am forced to concede that a profit warning in 2011 is a real possibility. Too much of their income in 2010 was tied to the fortunes of the stock market. It would have been great if the offer came in with H1 earnings update but I do not expect their IM will have incorporated it. I have also tried to strip off the market premium from the NAVs for Equity Bank and HF. This shaves off an incredible amount from the NAV, although arguably the same would happen to the likes of Centum. With the foregoing, I would also advise folks to be extremely cautious on this IPO and only buy what they can afford to speculate on. After the IPO is over we will be able to then reevaluate when H1 2011 figures will also come in. As the deal has indicated profits are almost certain to be lower in 2011. So indeed @the deal, I agree it is a case of "caveat emptor." That will of course not prevent me from speculating. I agree with @ Deal (nice piece in your blog on this IPO). The IPO price of Ksh 9 is rather high factoring in that the company will be hard pressed to replicate last years results in 2011. The BRITAK shareholders have timed the IPO to perfection (on their part) when the cow is at its fattest knowing an earnings famine is on the horizon. I think i will stay out from this one but i have a feeling an opportunity to buy it at below IPO price will present itself before the year is over. Happy hunting.
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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Well they can come back in the market and start buying my Equity all the way to 42 bob that way me and them will be winners...LOL...CEO in his interview was hopeful of a market recovery in 2H...lets hope the NSE goes back to 4600...
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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Why is Kiarie leaving when an IPO is being floated...? $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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