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KenolKobil HY 2015 net profit up 73%
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Angelica _ann
#21 Posted : Tuesday, August 11, 2015 7:20:10 AM
Rank: Elder


Joined: 12/7/2012
Posts: 11,908
murchr wrote:
VituVingiSana wrote:
murchr wrote:
muganda wrote:
Group delivered excellent results
8% increase in volumes
Improved gross margins to 8.3% from 5.9%
Overhead up only 3%
Forex losses of only 155m

Expected downward trend in fuel prices, to have positive impact on second half.
Dividend of 0.10

File http://ge.tt/7lZTCyL2/v/0


I thought they did away with that

This happens when you have fuel (or services) you have to pay for in USD but have committed to sell in LCY (the depreciating currencies of EAC including KES, TZS, BFR and UGX). The outlier may be RWF.

"Forex losses of Ksh 155 million for the six months June 2015 compared to Ksh 142 million for the six months June 2014, followed from significant depreciation of the local currencies across the countries where the Group operates, against the US dollar which continues to strengthen globally. It is the Group’s policy not to take any foreign exchange hedging positions. The nature of our business mix incorporates a natural hedge of US dollar inflows that offsets the dollar liabilities. Nevertheless, management has taken appropriate initiatives and actions to mitigate against the exposure across the Group."


Clear as crystal. Merci!

Will this FX loss increase as the US$ continues to strengthen against the regional currencies?
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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dunkang
#22 Posted : Tuesday, August 11, 2015 8:00:39 AM
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Joined: 6/2/2011
Posts: 4,818
Location: -1.2107, 36.8831
What caught my eyes in the entire HY result was on the commentary that stated something like this;

" the falling global oil prices is a money maker to our bottomline"

This means more more in 2nd half.
Receive with simplicity everything that happens to you.” ― Rashi

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Kausha
#23 Posted : Tuesday, August 11, 2015 9:48:04 AM
Rank: Member


Joined: 2/8/2007
Posts: 808
The bottom line appears to me conservatively managed. Keep some of the profits for the second half especially in a very challenging environment where very fear are reporting anything beyond 10% earnings growth. The interim dividend is also confidence that the business is making real money. Overall a final dividend of 40cts will be just fine.

What I find obnoxious is V. Juma's article on the business daily. A business cannot be growing profits every year for the past 3 years on cost cutting. Incidentally he mentions the cust cutting compensated for lower sales. Is the guy being a dander or is he that challenged. The company grew volumes by 8 percent. Unless he just arrived from Mars, the cost of fuel halved between 1H14 and 1H15 and therefore in currency terms the sales would be dropping significantly eiishhh.So the company wants to have little debt so that it can avoid forex losses and high interest payments. From the look of things Kenol has optimal gearing now and the cost of debt has come off substantially. Forex losses can only be managed and not eradicated due to the multiplicity of currencies.

Little wonder NMG sales have been dropping year on year. With such kind of mediocre reporting, increasingly some of us can not justify paying anything more than 20bob to read some poorly written articles.
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mlennyma
#24 Posted : Tuesday, August 11, 2015 10:02:51 AM
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Joined: 7/21/2010
Posts: 6,183
Location: nairobi
You mean when I fly abroad nobody can tell me the cow has now given birth???this milk can only get sweeter
"Don't let the fear of losing be greater than the excitement of winning."
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Aguytrying
#25 Posted : Tuesday, August 11, 2015 10:13:05 AM
Rank: Elder


Joined: 7/11/2010
Posts: 5,040
mlennyma wrote:
You mean when I fly abroad nobody can tell me the cow has now given birth???this milk can only get sweeter


Ha ha. We are having the last laugh here. how was obieroways?
I see wanjiku are very active today(even forgetting about the bear), the big boys leaving them to fight it out.
But i always wonder why KK goods news comes in bad times(bear). At least the results were't released on friday. will be happy to mop up some more when we get back to 8.00

Meanwhile looks like the correction of the NSE is losing steam....
The investor's chief problem - and even his worst enemy - is likely to be himself
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mlennyma
#26 Posted : Tuesday, August 11, 2015 10:19:47 AM
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Joined: 7/21/2010
Posts: 6,183
Location: nairobi
Aguytrying wrote:
mlennyma wrote:
You mean when I fly abroad nobody can tell me the cow has now given birth???this milk can only get sweeter


Ha ha. We are having the last laugh here. how was obieroways?
I see wanjiku are very active today(even forgetting about the bear), the big boys leaving them to fight it out.
But i always wonder why KK goods news comes in bad times(bear). At least the results were't released on friday. will be happy to mop up some more when we get back to 8.00

Meanwhile looks like the correction of the NSE is losing steam....

when simba retreated I knew the elephant can't fight the jungle alone lets wait Kk could be the one to rally hard I pray speculators keep off
"Don't let the fear of losing be greater than the excitement of winning."
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VituVingiSana
#27 Posted : Tuesday, August 11, 2015 11:09:35 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,121
Location: Nairobi
Angelica _ann wrote:
murchr wrote:
VituVingiSana wrote:
murchr wrote:
muganda wrote:
Group delivered excellent results
8% increase in volumes
Improved gross margins to 8.3% from 5.9%
Overhead up only 3%
Forex losses of only 155m

Expected downward trend in fuel prices, to have positive impact on second half.
Dividend of 0.10

File http://ge.tt/7lZTCyL2/v/0


I thought they did away with that

This happens when you have fuel (or services) you have to pay for in USD but have committed to sell in LCY (the depreciating currencies of EAC including KES, TZS, BFR and UGX). The outlier may be RWF.

"Forex losses of Ksh 155 million for the six months June 2015 compared to Ksh 142 million for the six months June 2014, followed from significant depreciation of the local currencies across the countries where the Group operates, against the US dollar which continues to strengthen globally. It is the Group’s policy not to take any foreign exchange hedging positions. The nature of our business mix incorporates a natural hedge of US dollar inflows that offsets the dollar liabilities. Nevertheless, management has taken appropriate initiatives and actions to mitigate against the exposure across the Group."


Clear as crystal. Merci!

Will this FX loss increase as the US$ continues to strengthen against the regional currencies?

Yes.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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VituVingiSana
#28 Posted : Tuesday, August 11, 2015 11:12:11 AM
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Joined: 1/3/2007
Posts: 18,121
Location: Nairobi
dunkang wrote:
What caught my eyes in the entire HY result was on the commentary that stated something like this;

" the falling global oil prices is a money maker to our bottomline"

This means more more in 2nd half.

Yes. Lower global fuel prices:
1) Lower working capital (financing) requirements for the same volume of sales.
2) Lower price per liter tends to boost volumes. We buy more volume at 85 vs 105.
3) Fixed KES/liter margins = higher GPM when prices are lower. Hurts when prices rise.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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muganda
#29 Posted : Tuesday, August 11, 2015 11:53:21 AM
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Joined: 9/15/2006
Posts: 3,905
Who wants to tackle why Operating Cash Flow appears to be so dismal? From 7.9bn to 2.4bn
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muganda
#30 Posted : Tuesday, August 11, 2015 12:23:57 PM
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Joined: 9/15/2006
Posts: 3,905
muganda wrote:
Who wants to tackle why Operating Cash Flow appears to be so dismal? From 7.9bn to 2.4bn

oH, I see the answer to my question in last year's report:
Oil marketers had pre-paid KShs 4.2bn resulting from an import of distress OTS cargo of Jet A1 in Jun 2014.

So last year's number was the outlier - this year's is the norm.
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lochaz-index
#31 Posted : Tuesday, August 11, 2015 2:05:12 PM
Rank: Veteran


Joined: 9/18/2014
Posts: 1,127
muganda wrote:
muganda wrote:
Who wants to tackle why Operating Cash Flow appears to be so dismal? From 7.9bn to 2.4bn

oH, I see the answer to my question in last year's report:
Oil marketers had pre-paid KShs 4.2bn resulting from an import of distress OTS cargo of Jet A1 in Jun 2014.

So last year's number was the outlier - this year's is the norm.


Thanks for saving me the trouble.I just had a look at the results and those figures were the standout discrepancy.
The main purpose of the stock market is to make fools of as many people as possible.
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Kausha
#32 Posted : Tuesday, August 11, 2015 2:46:38 PM
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Joined: 2/8/2007
Posts: 808
In addition, when a business operating cash flows resemble EBITDA then all is well. This appears to be the case.
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Kausha
#33 Posted : Tuesday, August 11, 2015 3:45:45 PM
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Joined: 2/8/2007
Posts: 808
The other notable thing to discern is the increase in operating leverage of the company (able to grow sales high off same fixed cost with at slightly lower fixed cost base). This is very important and one of the strengths of companies such as safcom and some banks. Essentially KK's gross margin expansion flowed down to the bottom line almost fully. The savings in interest expenses were gobbled up by taxation.

I still don't understand why KK cannot offset it's entire deferred tax asset in one go...
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Pesa Nane
#34 Posted : Tuesday, August 11, 2015 4:03:01 PM
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Joined: 5/25/2012
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Why was it deemed more important to load an interim div. on a "high value stock" (on account of the depressed share price) as opposed to lower debt/ financing?
Pesa Nane plans to be shilingi when he grows up.
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VituVingiSana
#35 Posted : Wednesday, August 12, 2015 3:54:43 AM
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Joined: 1/3/2007
Posts: 18,121
Location: Nairobi
Pesa Nane wrote:
Why was it deemed more important to load an interim div. on a "high value stock" (on account of the depressed share price) as opposed to lower debt/ financing?

The hassle of paying 10 cents/share doesn't seem worth it. I am not a fan of interim dividends. Keep it simple, pay a dividend once a year.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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VituVingiSana
#36 Posted : Wednesday, August 12, 2015 4:03:07 AM
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Kausha wrote:
The other notable thing to discern is the increase in operating leverage of the company (able to grow sales high off same fixed cost with at slightly lower fixed cost base). This is very important and one of the strengths of companies such as safcom and some banks. Essentially KK's gross margin expansion flowed down to the bottom line almost fully. The savings in interest expenses were gobbled up by taxation.

I still don't understand why KK cannot offset it's entire deferred tax asset in one go...

Different subsidiaries have their own Deferred Tax Assets and the application depends on the jurisdiction's tax laws. The largest level of DTAs are in Kenya and Tanzania.

Only taxable profits made in Kenya can be used to offset DTAs in Kenya. Ditto Tanzania and if the TZ subsidiary doesn't make profits, the DTAs are worthless.

DTAs are only considered assets if there is a significant likelihood of using them. In Kenya it is currently 5 years. If KK (Kenya) continues making large profits then the Kenyan portion of the DTAs will be fully utilized.

I believe Rwanda, Ethiopia & Burundi have no DTAs. I am not sure about Uganda.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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mlennyma
#37 Posted : Wednesday, August 12, 2015 11:33:27 AM
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Joined: 7/21/2010
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Location: nairobi
Is it total to rally on behalf of Kk?
"Don't let the fear of losing be greater than the excitement of winning."
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VituVingiSana
#38 Posted : Wednesday, August 12, 2015 11:58:04 AM
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mlennyma wrote:
Is it total to rally on behalf of Kk?

Most of the same reasons should apply to Total as did to KK except for debt levels and FX positions. These exceptions depend on the firm rather than the market for fuel.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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mlennyma
#39 Posted : Wednesday, August 12, 2015 1:13:06 PM
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A sign of 8bob coming back is visible
"Don't let the fear of losing be greater than the excitement of winning."
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VituVingiSana
#40 Posted : Wednesday, August 12, 2015 2:09:17 PM
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mlennyma wrote:
A sign of 8bob coming back is visible

That is good news but my broker says there is a lot of demand at 8.50 waiting in the wings. We don't see the real demand/supply for many counters.

For those in this boat for the 'long' term... I am happier with lower prices. This is a play for for (post-election) 2018.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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