Wazua
»
Investor
»
Stocks
»
Its A Rights Issue From Kenya Airways!
Rank: Elder Joined: 6/2/2008 Posts: 1,438
|
In the case of KQ, sadly I am forced to agree with you that the rights can only bode ill for current shareholders.
Shareholders approved an increase in the number of shares from the current circa 460 million shares to 2 billion shares, essentially quadrupling the number of shares. Should the Directors exercise the authority extorted from shareholders, they can issue a rights issue of 3 for every 1 share. As some of you may recall, the last 3 for 1 rights issue was done by Olympia at Kshs 14. As they say, the rest is history!
Granted, KQ will continue to grow its profits, however, the growth in profits will be nowhere near the anticipated huge increase in the number of shares. EPS will henceforth reduce dramatically and I cannot see the dividend being increased anytime soon. Note the increase in the 2011 dividend was just a sweetener to "sucker" guys in.
ALL IN ALL, THINGS ARE NOT LOOKING TOO BRIGHT FOR KQ SHAREHOLDERS.
|
|
|
Rank: Elder Joined: 11/7/2007 Posts: 2,182
|
for the interest of the shareholders, i think the mgt should wrap this off, its a bad decision to get capital in a bear market. LOVE WHAT YOU DO, DO WHAT YOU LOVE.
|
|
|
Rank: Elder Joined: 6/2/2008 Posts: 1,438
|
I am not too sure that Mgt really care about the interests of current shareholders. They are focused on expanding the airline, not necessarily in growing shareholder wealth and sometimes these two can be mutually exclusive.
It may be worth noting that Directors collectively own the really grand total of 26,000 shares in their individual capacities. It's not a wonder they are insistent on bringing a rights issue to market in this bear environment. They hardly stand to lose a thing.
Having said that, as the price depreciates to the anticipated level of Kshs 15 or so, it would make a lot of sense to participate but purely to lock in short term profits.
|
|
|
Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
|
2012 wrote:Personally and from experience I would not participate in any rights in the NSE. Look at KCB, KPLC, NIC, all are trading way way below the rights price, bear or otherwise. Tps did well, remember. This bear has not spared the companies that did not do rights. Life is short. Live passionately.
|
|
|
Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
|
@Mwanahisa the future looks bright for KQ...Africa is an emerging continent with an expanding middle class who will need to fly often...KQ is also well position to link trade between Africa and the World...also the liberation of African skies will benefit KQ...with revenue projected to be 110-120 Bln...KQ is a Buy even with 3:1 rights issue but when @hisah draws those trend lines the charts point to Sh17...thats where I will make a Grand Entry!!!!
|
|
|
Rank: Chief Joined: 1/13/2011 Posts: 5,964
|
|
|
|
Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
|
Local travellers to start paying Kenya Airways in US dollars: LINKFrom next week get ready to pay in US dollars for domestic flights on KQ. And all this time I thought it was a Kenyan airline. At this rate CBK should just circulate US$ for domestic use and kill the Ksh. 
BBI will solve it :)
|
|
|
Rank: Elder Joined: 6/2/2008 Posts: 1,438
|
@he deal. I am not disputing that KQ will likely do well as an airline (Note the word likely). However, with a 3:1 rights issue, the mid term future for the share is dire. To maintain current EPS, KQ would have to quadruple its profits. How long do you think it will take for that to happen?On the other hand there may well be a chance to make some money in the short term if indeed the price continues falling. H1 2011-12 results will be excellent and may bump up the price a little. However, this will clearly be shortlived due to the spectre of the rights hanging over the share. I notice that KQ has already started advertising so the rights issue cannot be far off. the deal wrote:@Mwanahisa the future looks bright for KQ...Africa is an emerging continent with an expanding middle class who will need to fly often...KQ is also well position to link trade between Africa and the World...also the liberation of African skies will benefit KQ...with revenue projected to be 110-120 Bln...KQ is a Buy even with 3:1 rights issue but when @hisah draws those trend lines the charts point to Sh17...thats where I will make a Grand Entry!!!!
|
|
|
Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
|
mwanahisa wrote:@he deal. I am not disputing that KQ will likely do well as an airline (Note the word likely). However, with a 3:1 rights issue, the mid term future for the share is dire. To maintain current EPS, KQ would have to quadruple its profits. How long do you think it will take for that to happen?On the other hand there may well be a chance to make some money in the short term if indeed the price continues falling. H1 2011-12 results will be excellent and may bump up the price a little. However, this will clearly be shortlived due to the spectre of the rights hanging over the share. I notice that KQ has already started advertising so the rights issue cannot be far off. the deal wrote:@Mwanahisa the future looks bright for KQ...Africa is an emerging continent with an expanding middle class who will need to fly often...KQ is also well position to link trade between Africa and the World...also the liberation of African skies will benefit KQ...with revenue projected to be 110-120 Bln...KQ is a Buy even with 3:1 rights issue but when @hisah draws those trend lines the charts point to Sh17...thats where I will make a Grand Entry!!!! Uhmmh a 3:1 RI will bring how many shares into the market? With PAT of between Sh6-7.2 Billion for FY 2011/12 what will be the EPS?
|
|
|
Rank: Elder Joined: 6/2/2008 Posts: 1,438
|
the deal wrote:Uhmmh a 3:1 RI will bring how many shares into the market? With PAT of between Sh6-7.2 Billion for FY 2011/12 what will be the EPS? Currently KQ has just under 462 million shares in issue. A 3:1 rights issue would increase these shares to approximately 1.85 Billion shares. Taking the top end of your PAT estimate of Kshs 7.2 B, EPS would amount to Kshs 3.9 per share. In 2011-12, I doubt whether KQ will be able to grow PAT by more than 100%, which is what 7.2 B would represent. All the same, I can see a short term play shaping up on KQ.
|
|
|
Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
|
mwanahisa wrote:the deal wrote:Uhmmh a 3:1 RI will bring how many shares into the market? With PAT of between Sh6-7.2 Billion for FY 2011/12 what will be the EPS? Currently KQ has just under 462 million shares in issue. A 3:1 rights issue would increase these shares to approximately 1.85 Billion shares. Taking the top end of your PAT estimate of Kshs 7.2 B, EPS would amount to Kshs 3.9 per share. In 2011-12, I doubt whether KQ will be able to grow PAT by more than 100%, which is what 7.2 B would represent. All the same, I can see a short term play shaping up on KQ. At 17 bob where me & hisah are waiting for this Boeing...PE will be 3.9 post rights issue ofcourse!!!
|
|
|
Rank: Elder Joined: 6/2/2008 Posts: 1,438
|
the deal wrote:mwanahisa wrote:All the same, I can see a short term play shaping up on KQ. At 17 bob where me & hisah are waiting for this Boeing...PE will be 3.9 post rights issue ofcourse!!! Then, let's hope it gets there. But I can guarantee you, this will be one where I sneak in - at Minus 20 Kshs and exit ASAP.
|
|
|
Rank: Chief Joined: 8/4/2010 Posts: 8,977
|
@23.25 with a 2011 low of 23. Did the KQ pilot bail out without warning!? The capitulation... $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
|
|
|
Rank: Veteran Joined: 3/16/2009 Posts: 1,464
|
|
|
|
Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
|
hisah wrote:@23.25 with a 2011 low of 23. Did the KQ pilot bail out without warning!? The capitulation...   Sigggggh 22.50 today...the capitulation continues...
|
|
|
Rank: User Joined: 8/29/2011 Posts: 1,045 Location: Mtaani
|
the deal wrote:hisah wrote:@23.25 with a 2011 low of 23. Did the KQ pilot bail out without warning!? The capitulation... Sigggggh 22.50 today...the capitulation continues... volumes are just tooooo weak for me to get concerned...
|
|
|
Rank: Elder Joined: 6/2/2008 Posts: 1,438
|
Considering the upcoming massive dilution that has been telegraphed by the company, the lower it goes, the better it is.
This will create room for some modest upside around the H1 results.
|
|
|
Rank: Chief Joined: 8/4/2010 Posts: 8,977
|
the deal wrote:hisah wrote:@23.25 with a 2011 low of 23. Did the KQ pilot bail out without warning!? The capitulation... Sigggggh 22.50 today...the capitulation continues... 22 prints...
NBK looks like it wants to break below 20...$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
|
|
|
Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
|
The Boeing has put in a nasty 2Q perfomance http://www.kenya-airways...nd%20quarter%202011.pdf
@HIsah time to start getting in!
|
|
|
Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
|
My analysis of the KQ 2Q operational results Kenya on http://contrarianinvestingkenya.info NOW
|
|
|
Wazua
»
Investor
»
Stocks
»
Its A Rights Issue From Kenya Airways!
Forum Jump
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.
|