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KENGEN RESULTS
Rank: Member Joined: 9/19/2006 Posts: 18
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This quiet interesting that a wholesaler in the name of KenGen cannot match profit made by a retailer in the name of KPLC. Mathematics aside, it beats all logic that such a poor performance has never been matched by the the rosy picture that has been continuously painted of this mostly monopolistic company as in : during the IPO and the bonds issue. Eddy Njoro just continues to create more eddy currents and turbulence that easily translates to attenuated cash flow. Ain't time for smoothing the flow and diminishing these eddy currents. timska attached the following image(s):  kengen.jpg (3kb) downloaded 0 time(s).
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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@timska on reading your first sentence, i was convinced that you were about to offer a deep analysis of the below par Kengen performance! Lol your post makes for light reading for the frustrated shareholders out there though. Life is short. Live passionately.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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As long as kengen continues to rely this heavily on hydro power then its profit outlook doesnt look too rosy... i think to make good money from this counter investors may have to wait a minimum of 7 years as its sorts out its diversification/expansion... Mark 12:29
Deuteronomy 4:16
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Rank: Veteran Joined: 8/16/2009 Posts: 994
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While I had acquired some units at an average of 22.79, I finally exited last month at 15.20. Although I made a loss of 33%, I figured out that Iam better off out of this counter. My reasons for the exit have been confirmed by the results i.e. overreliance on Hydro and even with Sh25Bln loan much will go to finance expensive thermal and drought prone hydro plants. If I was convinced that KENGEN intend to pursue Geothermal seriously, I would have stayed on. It seems only a strategic investor with more knowledge on power operations can save KENGEN. Time is money, so money is time. Money saved is time gained in reverse! Money stores your life’s energy. You expend your energy, get paid money, and store that money for a future purchase made in a currency.
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Rank: Elder Joined: 5/27/2008 Posts: 3,760
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@gatheuzi, Kengen doesn't over rely on hydro - IT IS A HYDRO GENERATOR and has been for as long as I have known it. There is a company that generates using geo (called Geothermal something) there are the ibeafricas and Tsavo Powers that do fuel powered generation. There is a separate entity that does wind generation at Ngong - can't remember the name.
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Gordon Gekko wrote:@gatheuzi, Kengen doesn't over rely on hydro - IT IS A HYDRO GENERATOR and has been for as long as I have known it. There is a company that generates using geo (called Geothermal something) there are the ibeafricas and Tsavo Powers that do fuel powered generation. There is a separate entity that does wind generation at Ngong - can't remember the name. Kengen signed up New Zealand consultants Sinclair Knight Merz to come up with the technical design, prepare tender documents and pre-qualify potential bidders for a 280 megawatts geothermal power project in Olkaria. Project to cost SH 100B and to be completed in Mid 2013... Business Daily 10 Feb 2010. I am preparing an arsenal to invade KENGEN with, between now and 2011, while the prices are still low. Why? - Classic Buffet stock. - Demand for power, specifically cheap power can only go up. - Investors are still looking short term, while I hold a medium/ Longterm view. - Even if i am wrong, the fundamentals are OK and there is a chance of a good return, even without the Geothermal project. Life is short. Live passionately.
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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Hmmmn @sparkly, and why would you launch your arsenal into Kengen as opposed to KPLC? Just asking...
It seems at times like performance of the two are inversely correlated.
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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@ muganda hehehe i cant help it but laugh...unless sparkly is looking @ 5 years from now...it looks like kengen is still in the planning phase...i will by kengen say @ 8 bob whereas i will buy kplc anytime provided i have the cash.
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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@muganda my rationale is that Kengen will be able to produce cheaper bulk power and sell it to the Kplc at the same agreed price. Kplc will of course buy more from kengen as opposed to the thermal sources. Kplc's operating expenses are more than kengen's hence an investor will get a better return from investing in kengen. I am also apprehensive of the effect of the restructuring on the kplc stock. Remember the GOK pref shares arose from amounts owed by kplc to kengen. @thedeal cheka tu ... Are you not the same dude advising people to buy into safcom in march, wait for results in april, sell cum div and jump into mumias in May! In this game, patience is not A virtue but THE virtue. Life is short. Live passionately.
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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@ sparkly my advice is free of charge...whereas for kengen lauch ur arsenal if you are looking long term like you said...but theres one red flag on kengen...they have borrowed to much(bonds,loans)...note also the decline in the EPS...THERES NO HOPE FOR GOOD DIV HERE...LOL.
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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the deal wrote:@ sparkly my advice is free of charge...whereas for kengen lauch ur arsenal if you are looking long term like you said...but theres one red flag on kengen...they have borrowed to much(bonds,loans)...note also the decline in the EPS...THERES NO HOPE FOR GOOD DIV HERE...LOL. @thedeal true that the company has borrowed lots of money. Even the 280MW project will be funded by the GOK and International Financial Organisations. The cost of finance for Kengen from these sources is cheaper than equity financing. Being a public utility, consumers of electricity are the ones to bear the finance costs. As a consumer i only hope that Kengen will see sense to hedge agains't Forex flactuations. The company passed the Forex losses directly to consumers last year. Life is short. Live passionately.
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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@sparkly, realise that your reasons for Kengen also hold true for KPLC with the advantage that KPLC seems to have fewer competitors as compared to Kengen. Also KPLC is a B2C end-user facing entity. Is it just me or do these businesses seem to have larger impact than backend providers in Kenya? And then the icing of diversification, what with KPLC leasing fiber and all... sparkly wrote:Why?
- Classic Buffet stock.
- Demand for power, specifically cheap power can only go up.
- Investors are still looking short term, while I hold a medium/ Longterm view.
- Even if i am wrong, the fundamentals are OK and there is a chance of a good return, even without the Geothermal project.
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Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi
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Although I won't invest in either (well at least until KPLC is free of the heavy GoK hand), right now, I'd take KPLC to KenGen. Although its try to diversify from hydro (the Ngong wind project), I think it'll be a while before KenGen assures of growing profitability and lighter debt burden. The Governor of Nyeri - 2017
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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Kenya's power sector has a huge potential. 1300MW installed capacity is a big joke by international standards(South Africa 43,000MW). Which serious industry will set up with that kind of capacity.I was actually surprised that the PM was asking Toyota to put up a plant in Kenya.
KENGEN is looking at installed capacity of 2300MW by 2013 and 3000MW by 2018 which is a low target. This is a company that needs serious foreign investment if it has to keep up with demand. I would buy and accumulate kengen for any price below 12.50 (fair value). This is my retirement stock
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Rank: Veteran Joined: 8/16/2009 Posts: 994
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I am not sure why there was negative cashflow from operations. Is it KPLC not paying on time or is KENGEN paying its bills too soon. However the proceeds from Bond issue helped the company make investments including 2.9B in Treasury Bonds! Time is money, so money is time. Money saved is time gained in reverse! Money stores your life’s energy. You expend your energy, get paid money, and store that money for a future purchase made in a currency.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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@sparkly why would you invest in kengen as opposed to KPLC??? all future benefits accruing to kengen will multiplied much more to KPLC... KPLC is a pure monopoly whereas kengen faces steep competition from IPP's who seem to be growing.. but all these IPP's supply to one party KPLC... KPLC expects to be disributing 10,000MW by 2020 while kengen expects to be producing 4,000MW in the same period... KPLC will not face higher operating expenses as GOK has set up KETRACO to take up construction of new transmission the lines which KPLC will manage... Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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and where does Lake Turkana Wind Power fit into all this? 300MW by end of 2011 [20% of national installed capacity] ....cheaper, and with added benefit of carbon credits.... Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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mukiha wrote:and where does Lake Turkana Wind Power fit into all this?
300MW by end of 2011 [20% of national installed capacity] ....cheaper, and with added benefit of carbon credits.... Kenya's projected demand is 2000MW by 2014 so 300MW wind power will only meet part of the deficit. The project has to await the construction of the transmission line between Ethiopia and Kenya. The price movement on Kengen stock is much better than KLPC which is always on average stuck at Kshs 150. KPLC should consider a share split.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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mkonomtupu wrote:KPLC should consider a share split. @mkonomtupu where have you been or where are you??? in case you dint here KPLC is going to split its shares before the end of june this year... i think after that you will get to know which one of the two stocks has better price movement... kengen's fundamentals cannot touch KPLC's Mark 12:29
Deuteronomy 4:16
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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Guru any idea of the share split ratio. I introduced both Kengen and KPLC during the 2006 IPO in almost equal portions and well kengen has not disappointed. KPLC has solid fundamentals i agree but Kengen offers a lot more excitement in terms of new technology, new power plants, corporate strategy. KPLC telling consumers to use less electricity, allowing government agencies to take up its core mandate looks to me a weak strategy. Analogy Kengen is like the brewer(EABL) and KPLC like a big pub franchise in town. It make more sense to own the brewer.
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