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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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MaichBlack wrote:Calculations redone using 280/= as advised by @murchr
The method they use to calculate the new price is still flawed. It overvalues the share because it does not take cognizance of the money pocketed by the shareholders.
Take for example last year.
Share price 280/=
Dividend: 25% * 280 = 70/=
Re-invested = 65% * 70 = 45.5/=
Paid = 35% * 70 = 24.5/=
From my mathematics:
New Price = Old price + reinvested amount
= 280 + 45.5
= Ksh 325.5/=
You cannot add the whole 70/= to get the new price because you have already taken out 24.5/=
These guys added the whole 70/= to 280/= to get 350/= ignoring the fact that they had already paid out 24.5/=
Not matter how you dice and slice it, you can't get 350/=
But with this approach, the current price should be Kshs. 325.5/= NOT 350/=
And it get worse!!!
From these calculations, you should remain with the same number of shares but now worth 325.5/=. But in this case (what they are doing), you end up with more shares, valued at a higher price (350/=)!
Simple case:
Say you had 10,000 shares worth 280/=
Your dividends are 10,000 * 280 * 25% = 700,000/=
re-capitalized = 65% * 700,000 = 455,000/=
Cash paid = 25% * 700,000 = 175,000/=
Number of new shares allocated = 455,000 / 280 = 1,625/=
Total Number of Shares = 10,000 + 1,625 = 11,625
Price Changes immediately to 350/=, so now the value of your shares is:
11,625 * 350 = 4,068,750/=
Add 175,000 cash and you have 4,068,750 + 175,000 = 4,243,750/=
But the real value is (10,000 * 280) + (10,000 * 280 * 25%) = 3,500,000/=
=> The first bracket is for original value. The second one is for the total prorated profit attributable to your shares.
Your shares are now overvalued by 4,068,750 - 3,500,000 = 568,750/=
And that is just in the first year! And remember this will be compounded every year.
If you re-invest all your earnings:-
Number of new shares allocated = 700,000 / 280 = 2,500/=
Total Number of Shares = 10,000 + 2,500 = 12,500
Price Changes immediately to 350/=, so now the value of your shares is:
12,500 * 350 = 4,375,000/=
Your shares are now overvalued by 4,375,000 - 3,500,000 = 875,000/=
Then compound that annually.
They need a mathematician down there if not a finance guy!!! OK...... add this Every month a member makes a mandatory monthly contribution of 3000 which is capitalized at the end of the year, so your investment is not constant if you started off with 10000 shares you should have 10102 by the end of the year before div & rebates.  make that +25/- goodwill and brand, I mean why should you get the share at the base value? "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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After reading this thread, it sounds like magic how money is growing here. almost too good to be true. @Maich. Also weighing my options kabla wazime taa pande hii . Lol at slaves children getting immediately pregnant. thats what is happening here! The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Elder Joined: 12/25/2014 Posts: 2,300 Location: kenya
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murchr wrote:MaichBlack wrote:Calculations redone using 280/= as advised by @murchr
The method they use to calculate the new price is still flawed. It overvalues the share because it does not take cognizance of the money pocketed by the shareholders.
Take for example last year.
Share price 280/=
Dividend: 25% * 280 = 70/=
Re-invested = 65% * 70 = 45.5/=
Paid = 35% * 70 = 24.5/=
From my mathematics:
New Price = Old price + reinvested amount
= 280 + 45.5
= Ksh 325.5/=
You cannot add the whole 70/= to get the new price because you have already taken out 24.5/=
These guys added the whole 70/= to 280/= to get 350/= ignoring the fact that they had already paid out 24.5/=
Not matter how you dice and slice it, you can't get 350/=
But with this approach, the current price should be Kshs. 325.5/= NOT 350/=
And it get worse!!!
From these calculations, you should remain with the same number of shares but now worth 325.5/=. But in this case (what they are doing), you end up with more shares, valued at a higher price (350/=)!
Simple case:
Say you had 10,000 shares worth 280/=
Your dividends are 10,000 * 280 * 25% = 700,000/=
re-capitalized = 65% * 700,000 = 455,000/=
Cash paid = 25% * 700,000 = 175,000/=
Number of new shares allocated = 455,000 / 280 = 1,625/=
Total Number of Shares = 10,000 + 1,625 = 11,625
Price Changes immediately to 350/=, so now the value of your shares is:
11,625 * 350 = 4,068,750/=
Add 175,000 cash and you have 4,068,750 + 175,000 = 4,243,750/=
But the real value is (10,000 * 280) + (10,000 * 280 * 25%) = 3,500,000/=
=> The first bracket is for original value. The second one is for the total prorated profit attributable to your shares.
Your shares are now overvalued by 4,068,750 - 3,500,000 = 568,750/=
And that is just in the first year! And remember this will be compounded every year.
If you re-invest all your earnings:-
Number of new shares allocated = 700,000 / 280 = 2,500/=
Total Number of Shares = 10,000 + 2,500 = 12,500
Price Changes immediately to 350/=, so now the value of your shares is:
12,500 * 350 = 4,375,000/=
Your shares are now overvalued by 4,375,000 - 3,500,000 = 875,000/=
Then compound that annually.
They need a mathematician down there if not a finance guy!!! OK...... add this Every month a member makes a mandatory monthly contribution of 3000 which is capitalized at the end of the year, so your investment is not constant if you started off with 10000 shares you should have 10102 by the end of the year before div & rebates. make that +25/- goodwill and brand, I mean why should you get the share at the base value? @maichblack sorry to take you back.in your math its very clear and elaborate though there is somewhere mahali naona your math missed a step ama part of your calculation is unaccounted for .And I Quote: "Your dividends are 10,000 * 280 * 25% = 700,000/= re-capitalized = 65% * 700,000 = 455,000/= Cash paid = 25% * 700,000 = 175,000/=" sasa hapa you have done your math for 65% of 700,000 and 25% of 700,000. where did you take the 10% ( because 65% + 25% ≠ 100%) maybe this is a step that makes you be in doubt of their valuation..... just saying
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Rank: Hello Joined: 2/11/2015 Posts: 3 Location: nakuru
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Woow, am motivated by the calculations on hw i can emass wealth on shares. I must invest for real.
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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Thanks @enyands. I started with 35% at the top then somewhere down the line I confused and used 25% which was propagated to the other calculations. I have corrected the mistake and highlighted the affected (recalculated) values in blue. As you can see, it makes the overvaluation even worse!!! MaichBlack wrote:Calculations redone Again
The method they use to calculate the new price is still flawed. It overvalues the share because it does not take cognizance of the money pocketed by the shareholders.
Take for example last year.
Share price 280/=
Dividend: 25% * 280 = 70/=
Re-invested = 65% * 70 = 45.5/=
Paid = 35% * 70 = 24.5/=
From my mathematics:
New Price = Old price + reinvested amount
= 280 + 45.5
= Ksh 325.5/=
You cannot add the whole 70/= to get the new price because you have already taken out 24.5/=
These guys added the whole 70/= to 280/= to get 350/= ignoring the fact that they had already paid out 24.5/=
Not matter how you dice and slice it, you can't get 350/=
But with this approach, the current price should be Kshs. 325.5/= NOT 350/=
And it get worse!!!
From these calculations, you should remain with the same number of shares but now worth 325.5/=. But in this case (what they are doing), you end up with more shares, valued at a higher price (350/=)!
Simple case:
Say you had 10,000 shares worth 280/=
Your dividends are 10,000 * 280 * 25% = 700,000/=
re-capitalized = 65% * 700,000 = 455,000/=
Cash paid = 35% * 700,000 = 245,000/=
Number of new shares allocated = 455,000 / 280 = 1,625/=
Total Number of Shares = 10,000 + 1,625 = 11,625
Price Changes immediately to 350/=, so now the value of your shares is:
11,625 * 350 = 4,068,750/=
Add 245,000 cash and you have 4,068,750 + 245,000 = 4,313,750/=
But the real value is (10,000 * 280) + (10,000 * 280 * 25%) = 3,500,000/=
=> The first bracket is for original value. The second one is for the total prorated profit attributable to your shares.
Your shares are now overvalued by 4,313,750 - 3,500,000 = 813,750/=
And that is just in the first year! And remember this will be compounded every year.
If you re-invest all your earnings:-
Number of new shares allocated = 700,000 / 280 = 2,500/=
Total Number of Shares = 10,000 + 2,500 = 12,500
Price Changes immediately to 350/=, so now the value of your shares is:
12,500 * 350 = 4,375,000/=
Your shares are now overvalued by 4,375,000 - 3,500,000 = 875,000/=
Then compound that annually.
They need a mathematician down there if not a finance guy!!! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 12/25/2014 Posts: 2,300 Location: kenya
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MaichBlack wrote:Thanks @enyands. I started with 35% at the top then somewhere down the line I confused and used 25% which was propagated to the other calculations. I have corrected the mistake and highlighted the affected (recalculated) values in blue. As you can see, it makes the overvaluation even worse!!! MaichBlack wrote:Calculations redone Again
The method they use to calculate the new price is still flawed. It overvalues the share because it does not take cognizance of the money pocketed by the shareholders.
Take for example last year.
Share price 280/=
Dividend: 25% * 280 = 70/=
Re-invested = 65% * 70 = 45.5/=
Paid = 35% * 70 = 24.5/=
From my mathematics:
New Price = Old price + reinvested amount
= 280 + 45.5
= Ksh 325.5/=
You cannot add the whole 70/= to get the new price because you have already taken out 24.5/=
These guys added the whole 70/= to 280/= to get 350/= ignoring the fact that they had already paid out 24.5/=
Not matter how you dice and slice it, you can't get 350/=
But with this approach, the current price should be Kshs. 325.5/= NOT 350/=
And it get worse!!!
From these calculations, you should remain with the same number of shares but now worth 325.5/=. But in this case (what they are doing), you end up with more shares, valued at a higher price (350/=)!
Simple case:
Say you had 10,000 shares worth 280/=
Your dividends are 10,000 * 280 * 25% = 700,000/=
re-capitalized = 65% * 700,000 = 455,000/=
Cash paid = 35% * 700,000 = 245,000/=
Number of new shares allocated = 455,000 / 280 = 1,625/=
Total Number of Shares = 10,000 + 1,625 = 11,625
Price Changes immediately to 350/=, so now the value of your shares is:
11,625 * 350 = 4,068,750/=
Add 245,000 cash and you have 4,068,750 + 245,000 = 4,313,750/=
But the real value is (10,000 * 280) + (10,000 * 280 * 25%) = 3,500,000/=
=> The first bracket is for original value. The second one is for the total prorated profit attributable to your shares.
Your shares are now overvalued by 4,313,750 - 3,500,000 = 813,750/=
And that is just in the first year! And remember this will be compounded every year.
If you re-invest all your earnings:-
Number of new shares allocated = 700,000 / 280 = 2,500/=
Total Number of Shares = 10,000 + 2,500 = 12,500
Price Changes immediately to 350/=, so now the value of your shares is:
12,500 * 350 = 4,375,000/=
Your shares are now overvalued by 4,375,000 - 3,500,000 = 875,000/=
Then compound that annually.
They need a mathematician down there if not a finance guy!!! @maichblack I see your point direct , hypothetically speaking I don't think both institutional administrations and regulators care a thing about how to do the "right" thing ( I know western pay into details). It all falls on our back as wanjikus . Get in there, get what you get or your ROI, get out and move on. lets say you invest in this sacco and next year the value gets over valued again, dispose it get your money and look for another potential overvalued stock and do the same, as long as the slaves are working and pregnanting each other basi everyone is happy.... anyway this is just my thoughts
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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enyands wrote:@maichblack I see your point direct , hypothetically speaking I don't think both institutional administrations and regulators care a thing about how to do the "right" thing ( I know western pay into details). It all falls on our back as wanjikus . Get in there, get what you get or your ROI, get out and move on. lets say you invest in this sacco and next year the value gets over valued again, dispose it get your money and look for another potential overvalued stock and do the same, as long as the slaves are working and pregnanting each other basi everyone is happy.... anyway this is just my thoughts Exactly @enyands. And that is why I said I will play the system to my advantage. This overvaluation will keep getting worse because it is compounded. It is not sustainable and I suspect they will change the formula next AGM or the one after that! If they don't, one day the sh!t will hit the fan! But as you are saying, if you keep a keen eye and get out before the sh!t hits the fan, then you get out with ridiculous returns!!! Having said that, I am still getting in. But I will just buy everything at 350/=. After that, I will not participate in the purchase of the overvalued shares anymore unless they change the revaluation formula (Apart from the allocation they will be doing for the 3k monthly contribution and slaves re-investment). Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 12/25/2014 Posts: 2,300 Location: kenya
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MaichBlack wrote:enyands wrote:@maichblack I see your point direct , hypothetically speaking I don't think both institutional administrations and regulators care a thing about how to do the "right" thing ( I know western pay into details). It all falls on our back as wanjikus . Get in there, get what you get or your ROI, get out and move on. lets say you invest in this sacco and next year the value gets over valued again, dispose it get your money and look for another potential overvalued stock and do the same, as long as the slaves are working and pregnanting each other basi everyone is happy.... anyway this is just my thoughts Exactly @enyands. And that is why I said I will play the system to my advantage. This overvaluation will keep getting worse because it is compounded. It is not sustainable and I suspect they will change the formula next AGM or the one after that! If they don't, one day the sh!t will hit the fan! But as you are saying, if you keep a keen eye and get out before the sh!t hits the fan, then you get out with ridiculous returns!!! Having said that, I am still getting in. But I will just buy everything at 350/=. After that, I will not participate in the purchase of the overvalued shares anymore unless they change the revaluation formula (Apart from the allocation they will be doing for the 3k monthly contribution and slaves re-investment). @maichblack hapa tuko pamoja. 
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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Maichblack. Fanya financial mathematics. P/E ratio, P/B ratio "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: Elder Joined: 12/25/2014 Posts: 2,300 Location: kenya
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murchr wrote:Maichblack. Fanya financial mathematics. P/E ratio, P/B ratio MaichBlack hebu fanya uturushie results . Want to join and im waiting for a final green light
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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MaichBlack , there's no issue with the valuation. The shares trading on the floor go for 325 min and 350 max fair value "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: New-farer Joined: 1/21/2015 Posts: 10 Location: Nairobi
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The key reason why I have joined SIC is because it is more tax efficient than an ordinary company. Look at it this way. The rebates to shareholders (i.e. dividends) in the case of a cooperative are paid out ABOVE THE LINE i.e. before payment of income taxes. This is allowed under section 19A of the Income Tax Act. When you receive the dividends, you only pay 5% withholding tax which is a final tax i.e. no further taxes are due from the investor.
In effect what this means is that since in the case of a company dividends would have been below the line, the dividends would have suffered 30% tax and a further 5% withholding tax on dividends when paid to you. So by investing in SIC, you save 30% corporation taxes which you would otherwise have suffered.
Now imagine all the gains SIC is making from the sales of land, apartments etc which are only taxed at 5%! SIC is in effect operating like a REIT without the difficulties associated with obtaining CMA approvals etc.
One other thing that I differ with MaichBlack's analysis. While he is looking at the valuation of the shares, he is not looking at the fundamentals of SIC i.e. what is the PBV or PE ratios. Bearing in mind that the amount of land and Work In Progress associated with the apartments they are constructing, in fact their balance sheet is undervalued rather than overvalued. The methodology of pricing the shares may be wrong but until we know what is the PBV and PE, we cannot say whether the share is actually overvalued or not.
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Rank: New-farer Joined: 7/3/2011 Posts: 30 Location: Nairobi
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Unrealistic returns.Mr Charles Ponzi?:-O I used to be a pig but I am now a bull-bear hybrid.
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Rank: Elder Joined: 7/11/2012 Posts: 5,222
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Minor Mullah wrote:The key reason why I have joined SIC is because it is more tax efficient than an ordinary company. Look at it this way. The rebates to shareholders (i.e. dividends) in the case of a cooperative are paid out ABOVE THE LINE i.e. before payment of income taxes. This is allowed under section 19A of the Income Tax Act. When you receive the dividends, you only pay 5% withholding tax which is a final tax i.e. no further taxes are due from the investor.
In effect what this means is that since in the case of a company dividends would have been below the line, the dividends would have suffered 30% tax and a further 5% withholding tax on dividends when paid to you. So by investing in SIC, you save 30% corporation taxes which you would otherwise have suffered.
Now imagine all the gains SIC is making from the sales of land, apartments etc which are only taxed at 5%! SIC is in effect operating like a REIT without the difficulties associated with obtaining CMA approvals etc.
One other thing that I differ with MaichBlack's analysis. While he is looking at the valuation of the shares, he is not looking at the fundamentals of SIC i.e. what is the PBV or PE ratios. Bearing in mind that the amount of land and Work In Progress associated with the apartments they are constructing, in fact their balance sheet is undervalued rather than overvalued. The methodology of pricing the shares may be wrong but until we know what is the PBV and PE, we cannot say whether the share is actually overvalued or not. Their recent Ololua joint venture is REITS live live. Investors though should have been given preference for purchase.
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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So Capitalization was moved from 1B to 1.5B. Was this resolution passed? Anyone with more information about Top Farm? "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: Veteran Joined: 10/11/2009 Posts: 1,223
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murchr wrote:So Capitalization was moved from 1B to 1.5B. Was this resolution passed? YES! during the AGM held on 28.02.2015 History will not remember you for your IQ. It will remember you for what you did. “Genius is 1 percent inspiration, 99 percent perspiration.” Thomas Edison
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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BGL wrote:murchr wrote:So Capitalization was moved from 1B to 1.5B. Was this resolution passed? YES! during the AGM held on 28.02.2015 Thanks BGL, do you have more details on Top Farm, like where it is and what they do etc "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: Veteran Joined: 10/11/2009 Posts: 1,223
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murchr wrote:BGL wrote:murchr wrote:So Capitalization was moved from 1B to 1.5B. Was this resolution passed? YES! during the AGM held on 28.02.2015 Thanks BGL, do you have more details on Top Farm, like where it is and what they do etc Top Farm made a presentation during the AGM. The CEO has a minority stake in the venture. They are in Kajiado county. https://twitter.com/topfarm_
History will not remember you for your IQ. It will remember you for what you did. “Genius is 1 percent inspiration, 99 percent perspiration.” Thomas Edison
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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BGL wrote:murchr wrote:BGL wrote:murchr wrote:So Capitalization was moved from 1B to 1.5B. Was this resolution passed? YES! during the AGM held on 28.02.2015 Thanks BGL, do you have more details on Top Farm, like where it is and what they do etc Top Farm made a presentation during the AGM. The CEO has a minority stake in the venture. They are in Kajiado county. https://twitter.com/topfarm_
Asante "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: Hello Joined: 6/29/2015 Posts: 4 Location: Nairobi
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Looking for a registered member to introduce me to investment co-operative. Joining with both feet. Yahooo!!
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