Therein lies the rub.

The prices can be as high as $4/kg but if you do not have enough to sell, you are screwed.

From what I understand, there is a huge shortage of leaf [some factories are working only 2 shifts not 3 in 2010] while others have closed down.

My friend... The rains have to be CONSISTENT... tea is produced all year round though there are seasons as well... but we need a lot more rain. Consistent rain. I hope the rains continue for another 3 months otherwise the tea will stunt + not enough water for hydropower [thus raising production costs for tea]...

Sasini FY is 31 March 2011 so they will not be affected as much this FY. Also depends where the farms are & whether they have dams/irrigation. Not all farms are in the same boat.

AGREED about the need for consistent rains. If 2009 was anything to go by, the reduction of leaf, resulted in record tea prices since Kenya is the biggest exporter in the world for black tea.

Hence, could not the reduction in production be offset by higher USD prices and higher exchange rate for the USD against the KSh?

BTW, Sasini's year end is 30th September.

I would expect as much. The problem is that it is difficult for any big buyer to get a big chunk of these shares as they are very tightly held.

The only one of these companies that trades reasonably big volumes is Sasini but it is generally believed in the market (certainly by Wazuans) that it is the worst of the lot. This is largely due to OUR negative perceptions of the main shareholder, although I respect the Chairman (Jim McFie) a great deal. Secondly, their accounting policies are a lot more aggresive than their counterparts.

But at today's price of 9.55, that gives you a dividend yield of over 5%, with a PE close to 2 and a Price to Book ratio of about 1/3. Surely, one could do worse. I am voting to pick it at these levels for long term investors.

i also dont trust this merali guy. however this stock looks attractive at the current price. btw, at what price are investors expecting to pick their stocks? this is how bargains slip from investors.

THE HAWKER IS ON THE LOOSE ONCE AGAIN (OUR CBK)



If I am asked…. …,I would say that Nairobi city council and all other municipal councils of kenya have really relaxed in their obligation of apprehending hawkers nowadays.

No wonder the biggest hawker is on the loose once again…….(our beloved CBK)…,
Recently I had many of you guys writing me …, asking my views on the recent issue of savings and investment bonds.

There are those of you who really wanted to know if I have something to say about these bonds that are being hawked by our CBK
However let me precaution that the following expression has been written with no consent to either encourage or discourage you as far as purchasing of this instrument (bonds) is concerned.

You see our govt has become so broke that it’s now issuing bonds via CBK aimlessly without any sensitivity on the negative impact that these bonds are impacting on our economy.

As a poor father will send his son to hawk fruits from his farm to the urban centre and so does our govt is using CBK to go hawking bonds all over the country.

We all know that the poor father cares less about the hygiene of his fruits and then does not mind about the health of the would be customers and so does our govt care less about the business health of our investment and the whole economy at large.

This govt cares less about our investment…………

First of all, it messes up with our revenues through massive corruption and lavish spending with no framework of how to improve our lives or any fiscal structure to improve growth and development, in our beloved nation.

Just as the stupid father would never carry out extensive farm improvement projects, he will not make any serious input on incentives to improve his fruits plantation, yet he’s there every other season to harvest fruits from the same same farm and you’d hear him complaining to God about how He has been unfair on season share-out.

Just the same way our govt complains to us about how we are not serious in investment and entrepreneurship thus poor economic performance year in year out.

First, this govt came up with Safaricom IPO.As toxic as it was the govt knew this just too well by understanding that it was dangerous to offload shares of a company more than the demand could chew, or the number that exceed the average trading volume of our stock market.

After all the winner was treasury department as it got what it wanted to supplement its budget thus ensuring corruption stomachs are well fed and its lifestyle of lavish spending remains uninterrupted. Then what about you and me………? We were left to fend for ourselves with shares that cannot even collateralize a borrowing from any financial institution.

Several months later, our CBK came back once again on a Safaricom jacket and issued a corporate bond. he he he he he he………………..Govt corporations and parastatals aren’t famous with issuing bonds to the public .
Instead they either sell bond coupons to the treasury or receive tokens from the govt. during hard times; like a case of pan paper mill webuye and National bank.

How would safaricom issue corporate bonds using the left hand…..and then give out dividend using the right hand at the same time………..? Why would it not have used that dividend to fund its projects…., instead of issuing out corporate bonds…..all I know is that treasury was broke….and it desperately needed cash ….and they had to create a way to get it.

Please ask yourself this, why do corporate flourish in Kenya while the govt languish in poverty? Remember before each and every company jubilate over profits as they do every year, the govt has already taken its share yet its still walking around without shoes, while companies that are doing business in its own soil are driving heavy machines…………………………’’kuna shida hapa bwana trader.’’

As if that was not enough, our CBK went ahead to change the formulae of calculating inflation levels. This was done by reviewing the basket of goods that inflation was worked out on there before and went further to knock out some goods from the basket as if production & purchases of these goods were banned in Kenya……….

When this fishy formulae was applied it automatically changed our inflation level from double digits to single digits uuuuiiiiiiiiiiiiii

Please remember all the production & consumption of goods that ascribed our inflation level to double digit levels is still there….., as we’re still consuming the goods and their cost of production is still there. Thus our inflation level is not single digit as told rather its double.

Why would or CBK do this?

He he he he he………………….this is why…………………our CBK knew just too well that it was planning to raise funds to supplement the messed up budget through bonds like , infrastructural bond one and two, and off course we have the current one called savings and investment.

If the govt would have issued these bonds with an annual return of 12%, and our inflation level is 24%.............then it’ would have construed unworthwhile for any investor to commit his funds.

So the govt had to keep its house in order first by applying this fishy mode of inflation calculation before welcoming you to the slaughter house.

Please know that the 12% you are given by the bond issuer (CBK) its value is being eaten up by the fishily hidden double digit 24% inflation level.
So you are merely purchasing an asset whose value of return is two times weak over an inflation level that is two times greater.

So your investment is upside down as you are investing for a return which is less than inflation level. Its like a company announcing a net profit that is equivalent to bond returns yield in a country……………why would it hassle with employees, govt regulations and inputs ………………………….it would be wise use that capital to buy the govt bond instead….and get the same return.

Therefore, entrepreneurial returns in a country must be above govt bond yields and inflation level so as to make the undertaking worthwhile, otherwise not, as entrepreneurship and investment is what an economy depends on for consumption, employment and wealth creation…...
so if govt issued bonds is giving high returns more that returns on investment…..then business people will not bother with all the hassle of doing business …rather they will instead invest in those bonds and get the same return cool.

Now the danger in our bond market is that the inflation monster standing at a hidden 24%, is eating up all the value of your return (12%) plus another chunk of 12% from your seed capital.

So when you will be liquidating your investment (bond) you will find that the cost of goods and investment would have gone high up by then that what your money can acquire today would not be able to acquire then….mostly you will realize this upon noticing how the purchasing power of your capital can really get less as compared to today.

As we have two segments of interest rate in an economy .our CBK is fishily skilled such that it reviews what we call real interest rate (CBK rate) down so as to get undue control of bank lending rate (nominal rate).

Then it comes down to start issuing bonds under nominal interest rate segment. simply by changing the bonds name to call them infrastructural bond as well as saving and investment bonds so as to have them fit in the nominal market……………..

And you will hear the same govt complaining over higher interest rate charged by banks ….. yet it’s the one that has come to compete with them in their territory……………competing for deposits……………..

Anyway …let me leave it there………….as am sounding more of a political economist than the real finance teacher am known to be.

Next I will be telling you how this whole drama is affecting

Our money supply,

Widens budget deficits,

Weaken our economic growth,

Undermine capital circulation,

Sasini not great but not a bad counter own either...at the current price its certainly undervalued even if the majority shareholder is not to be trusted i will try pick some next week.

Will the Kenya Shilling volatility significantly affect KK's performance?

I think KCB was the bank that made the most from FOREX. 2.7 billion!

Kenya Tea Output Slipped to 26.7 Million Kilograms in February, Board Says

http://www.bloomberg.com...february-board-says.html