Fear of a terrible performance FY20 perhaps?

They just banked ksh2 billion cash in land sales in Vipingo during a pandemic. The deal pipeline is an estimated 8 billion. The gains are not reflected in the income statement since the revaluation gains were already recognized in the comprehensive income statement and these were done at their current valuations. Pre-sold housing units stand at 10bn with a profit potential of 4bn. Cash collections stand at Ksh230 million a month. These sales wont come into the income statements till they are completed and handed over. I think the real estate is doing just fine given the economic conditions. After years of waiting, they are converting those assets into cash.

This year there is no major asset sale hence the profit warning. Centum has a market cap of ksh10bn vs Ksh8.3 bn in cash, equities, fixed income and mutual funds. The rest of the businesses they own (including real estate) are being valued at Ksh1.7 billion. I see opportunity.

I am trying to buy more but I have little cash on hand.
I have given up on the kelele ya chura.

As you said, the recognition of profits is about timing.

- Non-cash FV gains recognized earlier as per IFRS.
- Cash inflow not in the P&L but shows up in the CF statement.
- "Profits" (a mix of cash and non-cash) only show up after the units are handed over.

The non-cash, non-real estate assets took a beating thanks to COVID but some may come out stronger eg Isuzu and Longhorn. The latter was forced to digitize its content and that should help in the future.

Some e.g. Sabis will need to figure out what's next. Akiira will take longer than anticipated.

And the best thing is that Centum has cash. The Debt:Equity ratio has been reducing.

AMU
If the LNG pipeline is built (DSM-MSA-Lamu) or TZ sells KE LNG which can also be shipped then even Amu may be built though this would take much longer than anticipated. When this happens, a potential write-back (though non-cash at that point) is possible.

For sure it will take a while to recover due to financing challenges but it will come back. Patience....

The LNG plant is for KENGEN and it will be built in Kilifi.
It's in KENGEN strategic plan.

I was discussing an LNG plant for AMU in Lamu not Kilifi.
Is there no possibility that the LNG pipeline could eventually be extended north to Lamu?
What's the plan to power Lamu Port and environs?

Two Rivers

The ongoing construction at Two Rivers is going on at a nice pace.
I need to tour each of the Two Rivers projects.
Of course, the devil is in the sales!
Unlike single houses eg Awali, you can't build as they are sold/contracted when you build high-rise towers.

@watesh - They said in their presentation that they break ground when they have 30% pre-sales.
Questions:
Are pre-sales guaranteed sales?
For such projects what's the minimum sales needed to break even?
*I know this is a very broad question. Lots of variables from sales price, financing, construction costs, etc. I am looking for insights.

I wonder how the tenants at TR Mall are doing. It would not surprise me if a few close and others get a rent reduction. The "entertainment" side may do okay as people want to go out pot-COVID.

Vipingo

The desalination plant (in Kilifi) is ready. That's a huge differentiator for Centum. I have friends in Mombasa who order water and it's always a dodgy affair.

Any progress on the road from Mombasa to Kilifi?

I read the Mall at Vipingo will be ready mid-2022 (need confirmation) but it doesn't belong to Centum from what I read. Someone else bought the land.

There's a cashew nut factory coming up. I love local value addition.

@watesh When will buyers of 1255 Palms will start taking delivery of their units?

Then what/who was Amu going to supply? There must have been some plan.

Top shareholder of Centum Dr Chris Kirubi has passed away.

How will this affect the share?