Whoa! Easy goes... No personal insults. Please.

Back to Unga (from KQ)...

Bottomline: The stated NAV/Share [FY 2016-17] as of 30th June 2017 is approx 50/-
There's 6 months of (profitable?) trading from July-Dec 2017.
Add another 8 months of (profitable?) trading from Jan-Sep 2018.
The "Operating Lease Rentals" (land) value as of 30th June 2013 was only 27mn BUT in Note 25 it says
"The operating lease prepayment relates to leasehold land. The leasehold land was revalued as at 30 June 2013 by Knight Frank Valuers Limited on an open market value basis for existing use at Shs 878,500,000."
Cash on Hand for the Group was 1.714bn (Note 29b)

In 2016-17, there were one-off provisions for:
Closure of the Uganda factory/plant [which was a drain on the business]
Nakumatt [non-cash since Nakumatt wasn't going to pay anyway]
Ennsvalley [bad debt provisions, write-down of goodwill, etc BUT mostly non-cash]

In 2017-18
1) New wheat mill in Nairobi is fully operational
2) Jul-Dec 2017 had subsidized maize so little risk to Unga. At the AGM, they said "Jogoo" was the preferred brand among consumers and sales were brisk i.e. they sold all they milled under the subsidy program.
3) There was a cheap "feedstock" shortage in 2016-17 but remedied thanks to the subsidy program since 1H 2017-18.

"In Kenya, Unga Limited recorded lower gross margins compared to the prior year. This was due to the loss of maize volumes occasioned by the scarcity of raw materials and availability of lower priced competitor products."

4) "The costs of raw materials for Unga Limited increased compared to the prior year with maize and finger millet prices increasing by 12% and 21% respectively within this financial period. Unga Farm Care (EA) Limited experienced cases of irregular flow of raw materials, particularly maize, in the last quarter which impaired our ability to fulfill market demands. To manage this impact we opted to utilise substitutes such as local wheat and barley which was competitively priced, although in limited supply."

5) "Maize supply is also expected to stabilise with effect from July 2017 as the Government maize subsidy program settles down. The unusually high import levels of maize have created significant pressure on port logistics causing delays in both maize and wheat receipts at the mills. The North Rift maize crop is expected to find a market that is in relatively short supply, thereby forcing pricing for a 90kg bag to be above Kes 3,000." >>> Probably sorted out or better in 2017-18 reducing transport costs.

6) "In order to increase Unga Limited’s storage capacity, we rehabilitated the Commercial Street wheat silos and also installed a new 11,540 metric ton silo complex in Eldoret. The new silos are expected to reduce our input costs previously incurred from warehousing, handling and bagging." >>> Good for long-term growth (storage) and reduction in operational costs.

Bottomline: I think the "value" of each Unga share should be 65-80. Let's see where this ends up!
I await [@pesanane here is looking at you!] the 1H 2017-18 results

Why is (profitable) KK trading at 15/- while (not yet profitable) KQ is trading at 16/-?
Why is (profitable) Coop trading at 17 while (barely profitable) NBK at 8.30?

In other words, the market often mis-prices the value of a firm.
As a Warren Buffett fan, I recognize this and try [& do not always succeed] in buying "undervalued" shares but one has to be patient.
https://en.wikipedia.org/wiki/Undervalued_stock

KenRe with a NAV/share of 32+ [& growing] trades at 20/-.
@Ericsson and I are in TPSEA which at 36 is under-valued [IMHO]
I believe NIC is under-valued vs peers.

Why is/as Unga under-valued [IMHO]?
1) Ennsvalley. The purchase of Ennsvalley from the Ndegwa Family (& friends) was done at a crazy high price. It was valued by Unga at KES 1bn at the time and Unga had to write off debts (Nakumatt), lay off staff (costs) and close locations (loss of equipment, furniture and goodwill).

The above left a sour taste in investors' mouths. The clean up helps focus on future growth BUT before we got there, the Seaboard+Victus/Ndegwa bid came through.

2) Uganda - Another botched acquisition. After buying out the minority shareholders at a premium, the plant was scrapped and manufacturing ceased. The staff was laid off (costs) and plant scrapped (one-off writedown).

This transaction was a drag on earnings and used up cash. Now that the UG plant is closed, the management can focus on profitable exports to UG from Eldoret.

3) The controlling shareholders (Ndegwas) might not be in Merali's league but they are not "Aga Khan" either i.e. benefits are shared with the minorities.

4) Drought/Elections/Politics. Reduced spending power, uncertainty and maize/wheat (esp in RV) politics which prevents imports of cheaper grains.

I remain optimistic about Unga [as long as the management doesn't screw up] and I would rather NOT sell at 40/- and support efforts that it remains a Listed Firm as others look at it as an acquisition target. Of course, there's always a price that I will accept and sell out!

Meanwhile, congratulations on your investment in UNGA.. You are one lucky bastard