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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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@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) Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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mkonomtupu wrote:Guru, EPS in agric stocks is never a good guide to make decisions.
The next roller-coaster is going to the financials
@mkonomtupu EPS may not be the best indicator of agriculturals prices but it can be a good one... Because on any counter the EPS can help calculate the downside risk in price and the dividend paid is also in most times directly co-related to the EPS.... talking about the financial roller-coaster... i dont really expect one until the companies start releasing their half year results... Mark 12:29 Deuteronomy 4:16
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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kakuzi might have stopped its "free fall" demand came through at 75 fairly strong Mark 12:29 Deuteronomy 4:16
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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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85/- is the last traded price... Plenty of demand at 80/- 18,000 shares at 87/- look good... Great P/E & the tea prices have held up well even with increased production... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 9/4/2009 Posts: 700 Location: Nairobi
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@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? “We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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@scubidu according to that "so called" rating this is how the scores are analysed Z-SCORE ABOVE 3.0 -The company is safe based on these financial figures only. Z-SCORE BETWEEN 2.7 and 2.99 - On Alert. This zone is an area where one should exercise caution. Z-SCORE BETWEEN 1.8 and 2.7 - Good chances of the company going bankrupt within 2 years of operations from the date of financial figures given. Z-SCORE BELOW 1.80- Probability of Financial embarassment is very high. i've just tried it out and it seems like total madeness because according to the score mumias, safcom, and kengen are going bankrupt within 2 years and KPLC AND KQ will be insolvent immediately... PLEAAASSSEE GIVE ME A BREAK!!!! Tis assesment is based purely on company financials and it still doesnt make any sense... Mark 12:29 Deuteronomy 4:16
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Rank: Elder Joined: 12/6/2008 Posts: 3,548
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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? A New Kenya
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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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@scubidu - I need to read up on it BUT... please use the score on the KQ, etc using financials from 3 years ago... then we can compare... If KQ flunked it 3 years ago... but it is far stronger now than 2008 I would say KPLC has never been stronger in the past 8 years. What was the Z-score 3 years ago? Please calculate the scores for us... in 2008 Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 9/4/2009 Posts: 700 Location: Nairobi
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@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? “We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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@scubidu the reason i CANNOT agree with the altman Z model is because it judges companies using only financials maikng it seem like the more debt a company takes on the more likely it is to go bankrupt and the less debt a company takes on the more safe it is from bankruptcy... it doesnt consider the companies strategies to meet its future obligations and future changes in the asset base of the company as a result of taking on debt... armed with this makes current financials become useless... (ARM management says the company will be debt free by 2013 but this model says it going bankrupt this year) funny huh??? about the co-relation... its all over the NSE.. for companies with strong cash flow when the EPS goes up dividends go up.. representing a direct corelation between EPS and dividends.... Mark 12:29 Deuteronomy 4:16
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Rank: Veteran Joined: 9/4/2009 Posts: 700 Location: Nairobi
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@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. “We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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Rank: Veteran Joined: 9/4/2009 Posts: 700 Location: Nairobi
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@guru267. Quote:about the co-relation... its all over the NSE.. for companies with strong cash flow when the EPS goes up dividends go up.. representing a direct corelation between EPS and dividends.... Show me the correlation with Rea Vipingo, Sasini, Kakuzi...pick any of those agricultural EPSs for five years and correlate them to dividends paid+cashflow generated. I think all indicators can be picked apart if you factor in "company strategies to meet future obligations and future changes in the asset base", which sounds so subjective, how is the growth financed is also crucial. we all follow generally accepted guidelines...more debt, more risk...some crazy guy said don't buy high PE stocks cos there's expensive...ARM has averaged ~20x trailing pe between 2005-2009 but is the best performing stock within the same period (40%pa). Now I'm not saying the z score is reliable...it's not, but it may reveal shortcomings. ARM management say they'll be debt-free by 2013....do they intend to issue a 3 year corporate bond? What are they using the money for...capex, why would I issue long term funding in 2010 then retire it in 2013? At minimum 5yrs for the sake of matching maturities with other govt paper. “We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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While you were on Z scores... Kakuzi traded 433,000 shares today. I think the institutions are jumping in with both feet. Life is short. Live passionately.
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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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sparkly wrote:While you were on Z scores... Kakuzi traded 433,000 shares today. I think the institutions are jumping in with both feet. LOL... nicely put... The PER is very low.. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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Scubidu wrote:@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)
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... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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VituVingiSana wrote: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 you are soo right.. this scoring is only based on financials and it is EMPHASIZED on the site to use this Z scoring only after all other considerations... i mean if this way of scoring had any weight or relevance then why would institutions be pouring into these so called "unsafe" companies like they are doing now... Mark 12:29 Deuteronomy 4:16
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Rank: Veteran Joined: 9/4/2009 Posts: 700 Location: Nairobi
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@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. “We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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mkonomtupu wrote:Now the agric stocks are now in full retreat. I pity those who bought at those high prices. Hope you don't get stuck for a long time. These agric stocks had a similar dance in the 1990's. Guru, EPS in agric stocks is never a good guide to make decisions.
The next roller-coaster is going to the financials
Say what? The Agricultural Shares (Kakuzi, Williamson & Kapchorua - 3 I own) have all returned 100% since the above was posted... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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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.
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Rank: Elder Joined: 5/27/2008 Posts: 3,760
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@vvs, all the agrics are doing a number except the one I own - Sasini....
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