@sparkly - At 38/- I would buy as many as possible... and forget about them for a few years!

As @guru says... pipe dream (unless GoK does a mugabe on them)

kakuzi might have stopped its "free fall" demand came through at 75 fairly strong

@guru267. You ever used an indicator called "Altman Z-Score" (I think it's sometimes called Bankruptcy ratio) on Kenyan stocks.

I read that it's defined as a measure of the possibility of a company becoming insolvent based on five criteria. A ratio greater than 2.67 indicates that the company's liquidity is is good shape. A ratio below 1.87 indicates that the company is well on the way to bankruptcy.

I tried it on some NSE listed companies:
Carbacid 7.330
NMG 5.849
Rea Vip 4.007
EABL 3.504
Sasini 2.892
Kakuzi 2.659
Safcom 2.484
Mumias 2.467
KEnGen 2.136

In the danger zone
ARM 1.604
KPLC 1.653
KQ 1.498

What could it be saying about ARM, KPLC & KQ? For me the indicators shows that they may have working capital constraints and/or high gearing (debt). You agree?

Hi Z Score kitu kama ni kweli, some of us are going to have sleepless nights. Due to KPLC monopoly e.t.c i would not worry but the rest?

@guru267. Well I don't think the Z score is completely bogus...there are reasons that KPLC and KQ have low scores....my take is gearing and working capital, which are both crucial indicators of bankruptcy...I think the score helps pin-point these things. But you're right, probably can't apply it in isolation. Don't you think the score spells a warning for a company like ARM, looking to raise money through a bond?

Something interesting u said in a previous post...mentioning using the agricultural EPS as an indicator of dividend payout, becoz of a co-relation...not entirely sure I agree with this. Dividends don't seem to be very correlated...can u give an example?

@vvs.

Z scores for KPLC / KQ below: (based on my calculation)

2006: (2.166) / (1.443)
2007: (1.804) / (1.546)
2008: (1.506) / (1.723)
2009: (1.653) / (1.498)

The score looks at 5 components. I think it's best for everyone to calculate there own figures...I cud be wrong. As I mentioned the score may not be perfect but seems to highlight two things in KQ and KPLC that are problematic. In the case of KQ it may just be a one off event due to the fuel hedging accounting.

The first problematic thing the z score picked was the negative working capital (noting that we're basing it on previous years figures)- KQ current ratio was 1.6 in 2008 then 0.9 in 2009, KPLC 1.1 in 2008 then 0.9 in 2009.

The second component was gearing- KPLC ratio was 34% in 2008 then 28% in 2009, KQ 34% in 2008 and 58% in 2009 (these are my estimates).

Like I said KQ situation may just be a one off event...but KPLC has taken more loans since 2006 and 2009 was the first time (since 2003) that working capital was negative.

And that doesn't mean that they're going bust...Uchumi's ratio declined from 3.699 in 2002 to 0.027 in 2005 shortly b4 they told us to buy the rights...it's now 2.333. Will I buy them now??? No. The score tells me why.

While you were on Z scores... Kakuzi traded 433,000 shares today. I think the institutions are jumping in with both feet.

Well... I think this Z-score is a bunch of crap...

I mean... KQ, KPLC (among many other NSE firms) shud have been down the tubes since 2007 if this was to be believed...

I prefer my own devices...

@vvs @guru267 Okay Z-score aside. You guys heard about the Equity Linked Note ARM wants to introduce, not a conventional corporate bond...it sounds wickedly complex. When I get more details I'll post a new thread.

Say what? The Agricultural Shares (Kakuzi, Williamson & Kapchorua - 3 I own) have all returned 100% since the above was posted...[/quote]


The El-nino year has come to an end. The next one year is a la-nina year. Let's wait and see..the bubble with these stocks in the 1990's lasted 3 years.