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KK is Taking Over the Oil Market
Rank: Elder Joined: 6/2/2008 Posts: 1,438
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Milken, I appreciate the fact that you have are indeed knowledgeable in this field. But can you elaborate on the comment regarding competitiveness of KK's retail outlets vs Total. milken wrote:The most profitable segment is retail i.e. service stations. Total leads here with over 35% share of the fuel business. However with ERC limiting the margins, more cash is being made from non fuel items in the stations such as rent on ATMS, restaurant, shop, service bay etc. Needless said KK stations lack competitiveness in this area. KK may grow but it will be some time before thay threaten Total in the retail segment.
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Rank: Elder Joined: 5/27/2008 Posts: 3,760
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@milken, much appreciate your hard and cold facts, but remember that in this forum anything that disparages KK or r***a will invite venom. Truth told, KK stations are dinghy, nothing like Total but it is till my largest holding.
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Rank: Member Joined: 4/25/2008 Posts: 192 Location: Nairobi
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mwanahisa wrote:Milken, . But can you elaborate on the comment regarding competitiveness of KK's retail outlets vs Total.
I will look at this from there angles. Location, Presentation and Services. Location:Most Total stations are located in choice areas where more money can be made eg South C, Msa road past Imara Daima, Waiyaki way (both sides near Safcom), Arwings Kodhek near Nbi Hosp, Thika Road, Nyeri name it. These locations ensure that the stations move higher volumes, command better rent for Total and allows the company to charge more rent on ATMs, chemists etc. How many strategically located KK stations can you name?PresentationThe station layout and size of Total station is better than KK. Total prohibits parking of vehicles in stations during business hours making it easy for the motorists to enter the station. Frankly, a number of KK stations eg Jogoo road and park road Ngara are more of parking yards than service stations. The striking red color (read human behavior)makes the station appear neat and clean. Compare KK stations with Total as you drive todayServicesTotal stations must have a lube bay, gas and a small shop. Thus motorists will prefer going there so that they can have all the shopping needs attended in one place. The station ceases to be a petrol place but a market where you can withdraw money, fuel, have the car washed as you enjoy some bitings in the restaurant. To tal takes this seriously and has branded the shop, the lube bay and the car wash. Actually as a dealer you pay separate rent for each item (i.e. shop, service bay cas wash e.t.c) which means more money for the company. From observation, you will see that very few KK stations have other value addition services. FYI there are some station shops with a monthly turnover of over 5M and 30% margins. Try asking how much a carwash is at a Total Arwings Kodhek of buying bread from any Bonjour shop (it will be 4 bob more than your Kiosk). Itari muting'oe ihuragwo ngi ni Ngai
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Rank: Elder Joined: 5/27/2008 Posts: 3,760
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SMS received. "Dear kenolkobil client, your K-Card discount for June 2011 has been credited to your K-Card. Once you insert your K-Card to the K-Card PDQ at the service station, you will see an alert on the screen:'Remote top up' . Please input your secret pin no. to down load your discount. D=Good day. K-CARD" NICE
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Rank: Chief Joined: 1/3/2007 Posts: 18,223 Location: Nairobi
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milken wrote:VituVingiSana et al
Total lost market share owing to loss of Agrreko contract not because of KK card.
I did not attribute KK's increased market share due to the K-card which was launched recently. Aggreko sales would be less profitable (margin) vs retail fuel sales. Or so I think.
Market share in itself does not lead to profits since one may have to sacrifice the margins in order to sell more. Agreed. This is why I like KK's foreign adventures + other lines of business
Cards do not make that much cash for the OMC since most organizations buying will insist on discounts owing to the huge volume of business. However, when the same organization agrees to buy lubes from you and LPG for staff (you start a scheme) the OMC recoups the lower margins.
The most profitable segment is retail i.e. service stations. Total leads here with over 35% share of the fuel business. However with ERC limiting the margins, more cash is being made from non fuel items in the stations such as rent on ATMS, restaurant, shop, service bay etc. Needless said KK stations lack competitiveness in this area. KK may grow but it will be some time before thay threaten Total in the retail segment. How many stations does Total have vs KK? Also some areas see higher volumes but this depends on many other factors
Additionally there is no rule limiting one's market share (Total and Shell have at point in the recent past each controlled in excess of 30% of the market share) Might be but when acquisitions take place 'market share' is used to force sale of locations. Agip by Shell. Caltex by Total 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: 18,223 Location: Nairobi
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Gordon Gekko wrote:@milken, much appreciate your hard and cold facts, but remember that in this forum anything that disparages KK or r***a will invite venom. Truth told, KK stations are dinghy, nothing like Total but it is till my largest holding. It's dingy not dinghy (a type of boat)  And true!!! Total portrays a cleaner image vs KK though I like the new designs. KK needs to force its dealers to upgrade the locations/stores. Of course, with low margins (3%) many dealers have no incentive to expand fuel sales. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 5/27/2008 Posts: 3,760
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@VituVingiSana, thanks. you know English came on a dinghy!!! Meanwhile KK says that petrol prices will go up by ksh 2.46 tomorrow.
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Rank: Chief Joined: 1/3/2007 Posts: 18,223 Location: Nairobi
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Gordon Gekko wrote:@VituVingiSana, thanks. you know English came on a dinghy!!! Meanwhile KK says that petrol prices will go up by ksh 2.46 tomorrow. If they had come on dinghies, they would have never managed to conquer Kenya but they came on ships that bombed the crap out of the Sultan of Zanzibar in 17 mins! The shortest war in history. Saw the announcement & whereas ERC/kiraitu/nyoike will blow hot air... KK is right, the KES has jumped off a cliff. Just slower than Uganda Shilling! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 4/25/2008 Posts: 192 Location: Nairobi
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Gordon Gekko wrote:@VituVingiSana, thanks. you know English came on a dinghy!!! Meanwhile KK says that petrol prices will go up by ksh 2.46 tomorrow. Can't go that high. Wanna bet? Itari muting'oe ihuragwo ngi ni Ngai
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Rank: Member Joined: 4/25/2008 Posts: 192 Location: Nairobi
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[quote=VituVingiSana] How many stations does Total have vs KK? Also some areas see higher volumes but this depends on many other factorsActually when you include Timesavers (those stations in a container) they might be at par. However, what volumes do the stations make? Just look around in Nairobi and upcountry and you will see the volumes Total stations do compared to KK. Total has more than 20 stations that do 300M3 while KK has less than 10 of those. Itari muting'oe ihuragwo ngi ni Ngai
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Rank: Chief Joined: 3/24/2010 Posts: 6,779 Location: Black Africa
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Yet given an opportunity to invest in Kenol vs Total, the smart investment would be in KK GOD BLESS YOUR LIFE
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Rank: Member Joined: 9/9/2010 Posts: 784 Location: ant hill - red hill
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Kenol Kobil has been very aggressive but i think they are first chasing market share then hope margins will follow. Total is better position locally but KK EA market is a big advantage with no price control out there. KK share is still a better share. The greatest act of bravery is chancing a fart while suffering from diarrhoea
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Rank: Chief Joined: 1/3/2007 Posts: 18,223 Location: Nairobi
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milken wrote:[quote=VituVingiSana]How many stations does Total have vs KK? Also some areas see higher volumes but this depends on many other factors
Actually when you include Timesavers (those stations in a container) they might be at par. However, what volumes do the stations make? Just look around in Nairobi and upcountry and you will see the volumes Total stations do compared to KK. Total has more than 20 stations that do 300M3 while KK has less than 10 of those. Where do you get the info? I am impressed! LOL... I like the stations in a container. I recall when they were introduced the idea was to save 'space' & rent but provide convenience. Of course, there is a disadvantage when you can't sell other stuff when prices are controlled. Anyway, do you know how many stations each has? 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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There are two kk stations that worry me. The one near china center on ngong rd. And the one in south c, near oil libya. Its not good for the companies image, they are ghost towns and dingy. And located close to other very well run stations. The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Chief Joined: 1/3/2007 Posts: 18,223 Location: Nairobi
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Aguytrying wrote:There are two kk stations that worry me. The one near china center on ngong rd. And the one in south c, near oil libya. Its not good for the companies image, they are ghost towns and dingy. And located close to other very well run stations. Send an e-mail to the Charles Njogu guy. I am telling you, I complained about a dingy station... 1 year later it was totally redone! Of course, the question is... does the 3/- margin encourage dealers to invest? Maybe not... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 4/25/2008 Posts: 192 Location: Nairobi
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VituVingiSana wrote:
Of course, the question is... does the 3/- margin encourage dealers to invest? Maybe not...
An OMC will not look at the 3bob ERC whines about but the amount being made at the whole margin plus other income a station generates. Besides the ERC margin is a maximum and OMC's rarely make this especially when dealing with major buyers (KQ, Kengen, Bamburi). Consequently, OMC's will continueto construct and upgrade stations because they are most profitable avenues . Regarding stations see below DODO (Dealer Owned Dealer Operated )An investor owns a plot, builds the station and approaches an oil marketer to brand the station. He enters in to an agreement to buy all the product from that marketer. Depending on his negotiation skills, the dealer can get up to 5bob per litre. CODO (Company Owned Dealer Operated )These are the majority. The company owns the premises. Either by having bought the plot and then constructed the station or having entered a long term lease for the plot and then constructed the station. The company then looks for a financial dealer with finacial capital to run the station. Dealers gets at most 2.50 per litre. CODO (Company Owned Company Operated )These are stations owned and run by the company. While it is illegal for an OMC to run a station, several situations make this a necessity e.g. when you have thrown out a dealer or no dealers are willing to take a station).A legal loophole exists where a company can run the station thro a sales rep (like KK) or an SPV (like Total). Here the reatil margins are added to the price thus the margin is made at the wholesale price and not retail price. Itari muting'oe ihuragwo ngi ni Ngai
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Rank: Member Joined: 1/16/2010 Posts: 672 Location: nairobi
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I AM STILL IN THE MARKET BUYING KENOL KOBIL. SOMEBODY GIVE ME MORE MONEY!!!  God gave me the power to make wealth ... Blessed the work of my hands & enabled be A SELF MADE BILLIONAIRE ...... TO GOD THE FATHER OF MY LORD JESUS CHRIST; BE THE GLORY NOW & FOREVER MORE!
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Rank: Veteran Joined: 4/30/2010 Posts: 1,635
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@ mjuaji wa stocks - You must be happy today...KK back to 11/- today.
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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FUNKY wrote: @ mjuaji wa stocks - You must be happy today...KK back to 11/- today. =>And now at 10.35. My target is KES 9.75. No typo! The opposite of courage is not cowardice, it's conformity.
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Rank: Chief Joined: 1/3/2007 Posts: 18,223 Location: Nairobi
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Nice! Yesterday I got some at 11.50 (a bargain) & now at 10.50 (YES!!!) Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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