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ARM HY2017
Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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lochaz-index wrote:faa wrote:Around mid 2015, I bought ARM shares at an average at an average of Ksh90.00 per share
This was out of a recommendation from faida investment bank.
Luckily I saw the boat sinking and sold at a loss ,at Ksh 83.00
Losses are real at the NSE
Superb move. Pulling the plug on a loser stock is not easy. That would have been a very tortuous ride down to the current price. The very one class that I have to attend, learn, comprehend and religiously practice. Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Quote:RESULTS
The Board of Directors hereby announces the half year results of the group for the six months ending June 30, 2017.
The group has continued to experience unprecedented headwinds in Tanzania characterised by increased competition and continued softening in cement prices. This challenging environment has impacted the cement industry as a whole. This translated into a declining contribution from our Tanzanian operations to the group’s topline: turnover for the half year period ended June 30, 2017 was KES 5.347 billion compared to KES 6.670 billion Year-over-Year.
In addition to the difficulties experienced on the market demand and pricing ends, our EBITDA has been severely impacted by the ban of coal imports decided by the Government of Tanzania: it has hampered our ability to achieve reasonable levels of clinker production utilisation rates at our Tanga clinker plant and, as such, impacted higher unit production costs.
These exogenous factors have brought our EBITDA for the six months to KES 261 million.
Cash generated from operations, after working capital changes, for the six months was KES 1.207 billion driven by reduced inventory levels and improved collections from customers. Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Quote:CREDIT RATING
On 31st July, Global Credit Rating Co. (GCR) adjusted ARM Cement’s debt rating to BB+(KE) and B(KE) in the long term and short term respectively. In doing so, GCR highlighted the deteriorating operating environment in Tanzania with coal supply problems and price pressure that have impacted capacity utilisation and margins.
However, GCR also recognised the substantial de-gearing of the balance sheet and reduced interest charges resulting from the equity injection by CDC. They also see as a positive sign the coming impact the closing of the sale of our non-core business will have on our leverage.
The rating agency also underlined that ARM had been proactively taking a number of well thought steps meant at addressing its current capital structure, as well as materially improving its performance through tailor made initiatives. These include (but are not limited to) negotiations on a new capital injection, the refinancing of existing debt, the development of clinker sales to third parties, etc.
This holistic approach will restore ARM’s financial flexibility and reposition it for long term, profitable growth. We are confident we will start seeing the positive impact of these initiatives during the course of H2 2017 Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Quote:OUTLOOK
The situation in Tanzania has now began to improve with cement selling prices improving, with a positive impact on cash generation and profitability. Two new coal mines are were started in Tanzania thereby reducing the previous persistent shortage.
Going forward, we anticipate consistent and reliable supply of coal with improved capacity utilization rates at our Tanga clinker plant, paired with uninterrupted supply of clinker to the Dar Es Salaam and Athi River Cement grinding units.
As mentioned, the Company has embarked on a turnaround strategy: management’s focus is on
i) further upgrading ARM’s industrial network,
ii) restoring its financial flexibility and
iii) rebuilding the base for long-term and superior profitability levels.
As far as investments are concerned, the Company plans to grow and strengthen its cement business in Kenya in addition to doubling grinding capacity at its Athi River plant.
The group is at the concluding stage of discussions with a strategic investor for the sale of the non-cement business. The funds from the sale are likely to be received in the fourth quarter of 2017.
On the back of a strategic review it has finalised early in the year, the group has initiated
a process to secure a fresh equity injection from a strategic, long-term minded investor.
Once this process has been completed, the Company’s balance sheet will have the right maturity and interest expense profiles: we are currently discussing with financial institutions, including (but not limited to) international development finance institutions.
The Board and Management trust the Company will re-establish its position in the cement industry once this turnaround has been successfully implemented. Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 12/7/2012 Posts: 11,908
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Kizungu mingi after i burnt to recognition. Accepted and moved on  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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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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On the back of a strategic review it has finalised early in the year, the group has initiated
a process to secure a fresh equity injection from a strategic, long-term minded investor.What happened to CDC who just joined recently? Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Chief Joined: 1/3/2007 Posts: 18,103 Location: Nairobi
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Ericsson wrote:On the back of a strategic review it has finalised early in the year, the group has initiated
a process to secure a fresh equity injection from a strategic, long-term minded investor.
What happened to CDC who just joined recently? CDC were sold a lemon! This firm has become speculative. In an earlier thread, I had said a firm I like is Bamburi for the long-term. The price at the time wasn't cheap but fair. It is relatively debt-free [well, not completely] and has a good brand name. A builder I talked to said he prefers his clients use Bamburi's cement vs the others. I think the Chinese building the SGR also use (mostly) Bamburi's cement. Looking for ANOTHER strategic investor?  Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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The conversion price for the ARM shares was 40. And vvs you were a fan of ARM. Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 6/23/2009 Posts: 13,519 Location: nairobi
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Ericsson wrote:The conversion price for the ARM shares was 40.
And vvs you were a fan of ARM.
An African chameleon
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 12/7/2012 Posts: 11,908
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obiero wrote:Ericsson wrote:The conversion price for the ARM shares was 40.
And vvs you were a fan of ARM.
An African chameleon Investors including VVS change their minds after doing due diligence  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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Rank: Veteran Joined: 8/28/2015 Posts: 1,247
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Ericsson wrote:The conversion price for the ARM shares was 40.
And vvs you were a fan of ARM.
And you would have trusted cdc to do due deligence for you. Narrow shave. Karibu niruke ndani with all my eggs. Just lucky an inner voice kept me behind the schedule. This counter looked like the last bus remaining on the stage for the just ended mini bull rally. Time for the bulls to exit the stage and welcome the bears on the drivers seat. Nothing remaining to write home about this economy versa the just prescribe supreme dose of political maladies and malaise. Time to fold up as reasonable gentlsmen 🙌🙌💂👧 ,Behold, a sower went forth to sow;....
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Rank: Chief Joined: 1/3/2007 Posts: 18,103 Location: Nairobi
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Ericsson wrote:The conversion price for the ARM shares was 40.
And vvs you were a fan of ARM.
Nope, not a fan (for a few years) but I have watched it with interest. I have no ARM shares though I do regret not buying them at 3/- in the late 90s. I have a few (insignificant) Bamburi bought back in the day. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/23/2009 Posts: 13,519 Location: nairobi
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VituVingiSana wrote:Ericsson wrote:The conversion price for the ARM shares was 40.
And vvs you were a fan of ARM.
Nope, not a fan (for a few years) but I have watched it with interest. I have no ARM shares though I do regret not buying them at 3/- in the late 90s. I have a few (insignificant) Bamburi bought back in the day. Wait.. @vvs was trading stocks in the late 90s
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Member Joined: 5/14/2014 Posts: 288 Location: nairobi
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i told guys to be worried about firms that carry alot of debt.I hope people listened I find satisfaction in owning great business,not trading them
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Rank: Chief Joined: 1/3/2007 Posts: 18,103 Location: Nairobi
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obiero wrote:VituVingiSana wrote:Ericsson wrote:The conversion price for the ARM shares was 40.
And vvs you were a fan of ARM.
Nope, not a fan (for a few years) but I have watched it with interest. I have no ARM shares though I do regret not buying them at 3/- in the late 90s. I have a few (insignificant) Bamburi bought back in the day. Wait.. @vvs was trading stocks in the late 90s #MzeeNiMimi so when you pretend to educate some of us on "history"  Firms grow and fall. Barclays was UNTOUCHABLE. Even StanChart was a distant 2nd. KCB looked big but it was all fake profits under Kaminchia and Bii. KQ was floundering at 8 [when I first bought them and the firm was doing well under Presbury. Naikuni rode the wave but then got greedy. Mudany (of KenGen) was CFO of KQ] Bamburi saw profits SOAR after price controls were lifted. People like BC Patel made billions by being in the right place at the right time. KPLC was 20/- and then soared to 200/- as tariffs were increased & after reforms including the removal of Gichuru. KenGen ("Milkshake") brought the boys to the yard. Money poured into the NSE. Hubris. Over-expansion [fast growth fueled by debt] can destroy a promising firm. Look at ARM or KQ. Something similar happened with KenGen [huge debt until GoK converted debt to equity]. Or KPLC. As a rule, I do not like GoK firms coz of the poor financial performance and corruption. I have KenRe but I watch it as much as possible. If I feel things are going the other way, I will bail out. EABL took on a lot of debt to get into TZ and it is paying a heavy price. Unga almost went bankrupt when the interest rates soared. It sold the iconic Chester House and Unga House to pay down debt. It also sold Elianto [though I believe that was a shady deal]. Then scams like Merali's firms eg Firestone & Eveready. Gems [not all is perfect all the time but on balance  ] like Aga Khan firms. Solid firms like BAT have done well. Very little debt vs the profitability of the firm. Learn from history. That's why I became extremely wary of KQ in 2012 when I saw the presentation/info on "Project Mawingu" ... and I bailed out. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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ARM Cement’s deeper losses have compelled it to embark on a new round of fundraising that will see the company sell a stake to a new investor in the short term, diluting existing shareholders. The company, which recently raised Sh14 billion by issuing a 42 per cent equity to UK-based CDC Group, says it requires additional funds to steady current operations and fund new investments. Chief executive Pradeep Paunrana told the Business Daily the amount to be raised from the sale is yet to be determined, adding that the company’s existing major shareholders will provide debt funding in the interim period when it will also complete the sale of its fertiliser business. “We will first sell the non-cement business, take short term shareholder loans and then bring a strategic long-term investor,” Mr Paunrana said. “We will do what is right for all shareholders to restore the value. The value has been eroded because of our Tanzanian operations.” Mr Paunrana said CDC will remain a shareholder in the company and has opted not to pump in more capital because it has reached its limit as an institutional investor.ARM will prefer to get a cement firm to bring in capital, operational and technical expertise but other investors are also being considered.They chased away Bamburi cement when it was it's major shareholder.When Bamburi was there company was doing well
The fundraising was prompted by deeper losses in the half year ended June which Mr Paunrana attributed to its Tanzanian business. The firm’s net loss stood at Sh1.4 billion in the review period, widening 5.3 times from Sh266.7 million a year earlier. “We were selling cement at a price below cost in Tanzania for the past six months,” Mr Paunrana said, adding that the commodity’s price in the Dar market fell from $88 per tonne in September last year to lows of $60 per tonne this year. The price wars were sparked by the entry of Nigeria’s Dangote Cement which is known to slash prices to gain market share, hobbling weaker players. Besides raising new funds, ARM is also planning to restructure its current debt to 10-year obligations to ease pressure on its cash flows. http://www.businessdaily...84080-28p17mz/index.htmlWealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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target1360 wrote:i told guys to be worried about firms that carry alot of debt.I hope people listened True. The lesson is clear as day that imprudent use of debt is fatal. If not sure, just avoid companies with debt. Life is short. Live passionately.
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Rank: Veteran Joined: 4/4/2016 Posts: 1,997 Location: Kitale
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sparkly wrote:target1360 wrote:i told guys to be worried about firms that carry alot of debt.I hope people listened True. The lesson is clear as day that imprudent use of debt is fatal. If not sure, just avoid companies with debt. it depends with the impact of the debt in the general financial health of a company.Kengen is a good company with huge debts but uses it in a very healthy manner.The recent results of Kengen shows a positive cash flow.That means they are using the debts productively.The cash flow statement is the ultimate thermometer of a company.Whats their ability to generate cash from operations,financing and investing activities? A good company should positively generate cash from these angles. Towards the goal of financial freedom
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Rank: Chief Joined: 1/3/2007 Posts: 18,103 Location: Nairobi
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Ebenyo wrote:sparkly wrote:target1360 wrote:i told guys to be worried about firms that carry alot of debt.I hope people listened True. The lesson is clear as day that imprudent use of debt is fatal. If not sure, just avoid companies with debt. it depends with the impact of the debt in the general financial health of a company.Kengen is a good company with huge debts but uses it in a very healthy manner.The recent results of Kengen shows a positive cash flow.That means they are using the debts productively.The cash flow statement is the ultimate thermometer of a company.Whats their ability to generate cash from operations,financing and investing activities? A good company should positively generate cash from these angles. Please look at KenGen's financial statements pre-Rights. GoK converted huge loans to equity. KenGen came close to beaching certain debt covenants. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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VituVingiSana wrote:Ebenyo wrote:sparkly wrote:target1360 wrote:i told guys to be worried about firms that carry alot of debt.I hope people listened True. The lesson is clear as day that imprudent use of debt is fatal. If not sure, just avoid companies with debt. it depends with the impact of the debt in the general financial health of a company.Kengen is a good company with huge debts but uses it in a very healthy manner.The recent results of Kengen shows a positive cash flow.That means they are using the debts productively.The cash flow statement is the ultimate thermometer of a company.Whats their ability to generate cash from operations,financing and investing activities? A good company should positively generate cash from these angles. Please look at KenGen's financial statements pre-Rights. GoK converted huge loans to equity. KenGen came close to beaching certain debt covenants. GoK converted the debt to Equity so that the company could take more debt. Life is short. Live passionately.
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