I picked some more KK thanks to the corrupt MoE officials... http://www.kenolkobil.co...ive_page_id=&id=235

I have faith in KK... After the dust settles... I see 13/-...

FROM STERLING, ON MUMIAS

Esteemed Client,

Attached, please find our initial coverage report on Mumias Sugar Company.

Inside the issue;

INTRODUCTION

We initiate our coverage on Mumias Sugar Company (MSC), with a long term BUY recommendation based on our target price of Kshs 18.60 which provides a 32.86% upside potential. Apart from the primary business of production and manufacture of sugar, electricity co-generation and ethanol production are expected to be the other key products that will contribute into the future topline performance of the company. Some little contribution can be expected from water production, given the heavy presence of other key players such as Keringet. Mumias accounts for 45.2 percent of total sugar production in the country.

VALUE DRIVERS

• Increase of the co-generation capacity. Currently the company sells 26 MW to KPLC at a price of Ksh 4.68/kWh which translates to Kshs 1.1 Bn p.a in revenues; a 7.5% contribution to the gross revenues.
• Mumias can convert its molasses output into 65,000 litres per day of ethanol. This could go a long way in countering the ever-rising petroleum (fuel) prices.
• Taking advantage of the on-going privatization of most firms in the industry while effectively implementing on-going projects.
• Continued compliance with all environmental regulations in addition to introduction of better sugar farming systems to cut down on production costs.
• Fast tracking of reforms to implement a payment system that is based on sucrose content and not the current weight-based payment system.
• Aggressive marketing for water, by leveraging on existing distribution network for Sugar likely to boost the topline, albeit marginally

INVESTMENT CASE

The case for investing in Mumias is largely backed by revenue diversification from a sole product –sugar, into co-generation of electricity and Ethanol. We view the co-generation of electricity as a two-pronged strategy; acting as an additional revenue stream as well as cutting down on production costs. Effectively, the long term impact would be significant increase in revenues and profitability growth. The growth in profits, mainly at the operational level will be catalyzed by increased efficiency. This explains our bias/preference for the Price/sales approach which provides an upside potential of 32.86% to the current market price of Ksh 14.00.

Please refer to the attachment for more details.



Kind Regards,



Research Department,

finally we agree on something

Then we disagree again... What the hell are you doing giving everready as a recommendation... Even if it rises by some bloody miracle there will be other fundamentally backed counters that will seriously outperform it

Nishatuma

@vvs,if they have a second half run equivalent to the first,13 will be a give away.

Ignore Unga at your own peril...Ugali is way undervalued...What fund managers need is a confirmation...that confirmation is coming 24-09-2010....NB:What ever affects Unga affects the Kenyan economy in general...

Please explain to us on Wazua how you 'shorted' Williamson... We are curious... Please do not ignore this thread...

no doubt its a YES.

OUR PEOPLE UNITED, SHALL NEVER BE DEFEATED!