obiero wrote:Just woke up.. Was at the exchange bar yesterday where I was told that an impairment loss of KES 5.4B was factored into the first half results to clear out naikuni demons.. ngunze opted to use the same tactic employed by bob collymore in announcing a much reduced profit/loss at onset so as to set ground for take off.. African operations excluding West Africa have all gained by over 15% in revenue with costs being reduced on majority of routes by new craft, esp DRC to which the 787 has been flying at avg 89% cabin load. I recommend a buy. Thank me later
Excellent news. The catch for me is that I have very limited capital to allocate. I have to choose between KK, KQ, etc... At this point I would do what Warren Buffett advises. Do not buy into turnarounds i.e. KQ is still turning around while KK has turned around.
If I had listened to Buffett, I would have waited to buy into KK after the turnaround. So for 2.5 years [since the 2012 mega-loss] I have held KK which has paid poor dividends (while T-Bonds paid 12%) while 'turning around' and the price has been stagnant.
So if I apply this to KQ, I will say KQ is a buy(even a premium) 2 years from now AFTER they have executed. In the intervening 2 years, I would rather buy KK which will pay higher dividends and/or become an acquisition target. Regardless of the potential for acquisition, KK has reduced debt [read Ohana's interview in BD] in 2015 while disposing of unprofitable assets including a clean-up of the books post-Segman.
So what Ngunze is did in 2014-15 and will continue in 2015-16, Ohana has done in 2013 and 2014.
@Obiero - If Ngunze manages to pilot KQ to greater heights, I may join you in 2017.
BTW, I am just using KK as an example but there are many firms that have cut down on debt, consolidated their businesses, etc... and are now growing. Another that comes to mind is Unga which has consistently paid down debt, improved operational earnings, has considerable assets and is now vertically expanding its business lines. Perhaps it may even become an acquisition target based on the recent (attempted) acquisitions of food/nutrition firms by South Africans.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett