a 2 for 5 bonus is good,havent been lookin at this stock for sometime.wazurians whats your unbiased pridiction for its price movement for the next few weeks before the book closure date.

@sparkly wouldnt the price rise in the shortrun as this bonus gives nbk bright future prospects,but after the exbonus date of cause the price must adjust to the new pe as the EPS will decrease due to an increase in the number of outstanding shares.any one looking at the financial statement?whats the profit eps pe number of ord shares etc.

Just a thought..previously thot on a different thread..
I have kshs500 in my wallet (i wish i'd have more), plus my ATM card. I'm young..hoping to grow my wealth over time..having an ATM says i have savings that grow over time. If i go and withdraw kshs 200 from the bank, i will have kshs700 in my wallet... Does that make me wealthier?.. Actually i'v diluted my networth by making shs200 of my savings highly liquid..i can spend it now!..plus it's friday.

NBK's bonus issue..does that increase my wealth as an investor?..NOT really...they are converting shareholder funds...equivalent to my savings into easily disposable units.. if am a long term investor..they aren't preserving my wealth..just playing my greed.

Traders only are the ones justified to be happy with this...the greater fool theory says some guy outside there will be so greedy for cash he won't mind buying the share at a price way too over valued. Alas! Alas.. no wonder the Bible condemns greed.


CONCERN THOUGH:
does the bonus apply only to the 200,000,000 ordinary share or includes the 1,135,000,000 pref shares also?

But for investors... it's just playing us.

@jaguar..pick annual report of 2008 from NBK offices Harambee Avenue..for reference purposes..check out Balance sheet.. it has Assets..Liabilities..shareholder funds.. Its from share holder funds your extra shares come from.
Out of profits a company makes..(EPS).. only a portion is paid out as dividends..the rest is ploughed back into the business..it's recorded under share holder funds..aka shareholders Equity..
NBK 7,906,692,000 in shareholder funds..assuming bonus is to ordinary share holders..n they have 200,000,000 ord shares of 5bob each.. an issue of 2 for every 5 means they'l do 80,000,000 new shares of 5bob each..
to pay for them..they will take from shareholder funds total ammount of 80,000,000.00*5.00= 400,000,000.

@mwanafunzi please read proverB's reply carefully and be educated.

@jaguar this "bonus" is the profits that the company has been retaining for the last ten years, converted into shares.

As a shareholder, the bonus was still your money, only that if you wanted to "cash" the retained profits, you had to sell your shares.

If you sell your bonus shares, you will get cash but your % ownership of the company will be diluted. The company will not be creating money from nothing.

I received the (bonus) shares certificate by registered post this morning

are u sure its a nice deal?

@proverb interesting way of looking at it. Looks like you don't trust yourself with liquid cash eh he he

I choose bonus over dividends any day. One Reason is they are not taxed. And secondly the retained earnings are used to grow the biz

@GG i looked at the Q1 and H1 results of the companies that paid bonus shares and none have been charged any tax for the payout