I will quote someone first..


so, to traders...and investor..

The average price of KQ in march was Kshs 58.6
Thanx to muganda's comment elsewere..i revisited the "Greater fool Theory"...where someone out there will always be more of a fool than you to pay a higher price than the one you paid for a stock you hold!

So.. comparing that price to fundamentals..
PSR..price to sales ratio = Kshs 0.38..for every shilling KQ collected in revenues..investors in march were paying 38 CENTS..PSR less than 1 is always a nice attention grabber for me!

P/E..price to earnings ratio = 13.33...for evry shilling reported by KQ as earnings, investors were paying 13.33 Kshs..

(but the earnings for KQ were "manipulated" in terms of huge chunk of earnings is not from core business of air transport bothe people and cargo..thus why PSR is better criteria for me....on my opinion)


Dividend Yield of 1.71...compared to overal market..i guesss the return as dividend is better than most
So..is thatthe best price to buy in i ask? If all i desired to own was a portion of the shareholders' fund of KQ..which, per share is Kshs 40.24...and paid Kshs 58.6 for it... for a shilling in KQ's shareholders' equity i'd hav paid Kshs 1.46!...46% higher

But today.. assuming price is Kshs 47.5
PSR is down to 0.31
P/E is down to 10.80
Dividend Yield is UP.. ..to 2.11

but for a portion of shareholders' equity..price at 47.5 someone who paid 47.5 today is paying Kshs 1.18 for every shilling in equity...yaaani...paying Kshs 1.18 to have a right to be a shareholder of 1shilling of the shareholders' equity fund

The Lower the price the greater the value in our national carrier...

Considering the Greater fool Thory...plus Value investing...the lower KQ goes..the Bigger my smile gets..

The problem i have... is on the management focussing on fuel hedging rather than operating busines!!

But rather than sit and wait..find a pot of Gold somewhere..and BUY through spreading... split 100K into 10 lots..or more..and buy as price moves..consistency is the KEY!!...and as Kina Deal and VVS will start rejoicing at some distant future when KQ recovers..You won't be laughing..you'll be nodding at your wisdom.

@vvs. I used average share holders' equity for 2008/2009 thus why my figure is lower than the one you quote. Thanx anyways.

. Price lower..now question remains what time scale to use in spread buying...

People,you do know that NAV has no much use in valuing the airline industry.

@sheep...@ vvs too.. Thanx for the lesson.

My thinking.. i want to buy into KQ. Already there are existing shareholder's..including the one selling to me..in my judging the price..i have to think what my actual investment is.. hence shareholders' fund... that is what i'm buying..any profits..returns earned either go there..or drain that fund..dividend is paid from that fund too..
it is only wise that "me" as an individual will consider the price i am paying for a share against the portion of shareholder's fund that i will be entitled to.

This is my own practice...not an "INVESTMENT RULE"..just my own approach.

Everything is in their favour,the hedges,weak shilling...passenger no's have been increasing in the last 3 Quaters...i wanna add more,waiting to see if we will breach the 44 bob mark.

Lakini... the management has gotten stale!

LOLest! He makes almost 50mn yet has almost no KQ shares... His interests not aligned with ours

Not 50mn/month but per year... Lakini, u dont expect a sweeper to match the pay either... just saying...

BTW, pilots are very well paid or they might fly away...

I did a re-alignment as well... I sold my CMC...

- KQ is at NAV (or lower coz the planes are priced in US$ which is now stronger)...

- Fuel has dropped in price thus the operational costs will be lower for now. The hedges will take a hit but that is not an immediate cash loss...

- At lower fuel prices, KQ can enter into additional hedges at lower prices...

- The WC2010 has pushed through additional tourists through Kenya/JKIA using KQ. A pity the African teams have performed poorly...

BTW, KQ codeshares with Korean Airlines... I hope they use KQ to get to Jo'burg!

@qw - 444,000+ KQ shares traded with 68% net purchases by foreigners... I hope you are right on the technical side... I am confident on the fundamental side coz of the reasons I gave above...

- Weak KES helps KQ coz 90% sales in foreign currency mostly US$
- Lower oil prices hurts hedge gains BUT benefits from lower operational costs.
- Planes in US$ are worth 'more' in KES
- WC2010 effects will be postive coz 60,000+ folks expected to fly KQ NBO-JoBurg-NBO. This will negate losses from ash cloud.
- New planes expected
- New destinations in 1H 2010-11 (Muscat, Juba already open)

I still have my gripes about the management...