Rank: Elder Joined: 7/22/2009 Posts: 7,910
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MaichBlack wrote:mufasa wrote:From the wall of #TheKenyanWallstreet
Dr. Kenne Belgrade of Faida Investment Bank, the Lead Transaction Advisor, speaks on the KPC IPO Valuation.
• Three methods used: income, assets, peer comparison.
• Independent asset valuer priced KPC assets at ~KSh 124Bn.
• EV to EBITDA chosen to reflect operating cash flow.
• Peer set drawn from India and developed markets.
• Peer median EV to EBITDA ~9.56x.
• IPO priced at ~8.1x EV to EBITDA to support wide Kenyan ownership.
Dr. Kenne Belgrade on post-listing price dynamics.
- Sees upside adjustment after listing, not downside correction.
- Pushes back on narratives of a sharp post-IPO price fall.
- Points to unmet institutional demand at the offer stage.
- Expects secondary-market buying from investors excluded in the primary.
- Long-term capital positioned to absorb any retail exits.
Kenya Pipeline growth, margins, and comparables.
◉ Kenya Pipeline CAGR about 8.4%, versus KenGen and KPLC near 2%.
◉ Growth viewed as more critical than headline margins.
◉ Dividend yield alone seen as an incomplete return measure.
◉ Safaricom identified as the closest local comparable by scale and economics.
◉ Safaricom five-year CAGR around 8.8% versus Kenya Pipeline at 8.4%.
◉ EBITDA margins similar, Safaricom near 50%, Kenya Pipeline near 49%.
◉ Dividend yields comparable, Kenya Pipeline about 3.9%, Safaricom about 4.1%.
◉ Valuation gap highlighted, Kenya Pipeline around 1.7x book versus Safaricom near 5x.
*Why Kenya Pipeline does not belong in the same valuation bucket as KenGen, KPLC, or TotalEnergies.*
➠ TotalEnergies Kenya not comparable, market cap about KSh 6Bn versus KPC cash of KSh 16.2Bn.
➠ KPC operates a midstream monopoly, Total is a downstream oil marketer among 140+ competitors.
➠ KPLC trades near 0.22x book, implying asset pricing unsuitable for a strategic national asset like KPC.
➠ Low PE at KPLC and KenGen reflects weak growth and structural constraints, not undervaluation.
➠ PE ratios must adjust for both margins and growth, not viewed in isolation.
➠ KPC projected FY revenue about KSh 41Bn and net profit about KSh 9.6Bn.
➠ Implied net margin around 24–25%, materially above most listed utilities.
➠ Strong margins and faster growth fundamentally separate KPC from KenGen and KPLC.
What else do you expect the lead transactional advisor to say? Hii maneno yake ni ile tuliambiwa in professional/technical terms inaitwa hot air!!! Talking exactly how one would expect a primary beneficiary of the 3 Billion transaction fees to!! What else would he say?? I asked you a simple question @Mufasa. Don't take advice from someone who is greatly benefiting from your actions which they are trying to influence! At the very least get a second opinion. Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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