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Kplc restructure plan out
Rank: Elder Joined: 6/2/2008 Posts: 1,438
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Aguytrying wrote:Next time there's a split, iVe seen a loophole. there's a temporary confusion on some in some investors minds and hence, just after the split i can make money!!! No one was willing to pay 230 on friday, today some are buying it at 240!! Equivalent ie 30. mmmhhh I have used precisely this sort of scenario to good effect in the past, especially when there was a prompt board. However, you have to be very careful. In the case of KPLC, by the time your shares bought at 230 on Friday, 19th clear i.e. Friday this week, the split shares will have been credited and you might find you can only sell your shares at 25. At such a price you will be looking at a loss, so in order to profit, it will very much depend on the particular circumstances. On the other hand if we had faster clearing, then a profitable outcome would be much more likely.
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Rank: Elder Joined: 11/27/2007 Posts: 3,604
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Aguytrying wrote:While listening to the radio today, i heard a very patriotic song. I was sure it was a national unity one or such like. Only for it to end (took the best part of 2 mins), and it was a kplc advert! cracked me up, i like. these guys are advertising all over. it reminds me of the kengen IPO, the same trend was followed then later they declared that they are selling the shares to the public. am sure most Kenyans will be disappointed to learn that only existing shareholders can participate in the rights issue. African parents don't know how to say sorry.. the closest you will get to a sorry is a 'have you eaten'
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Rank: Chief Joined: 1/3/2007 Posts: 18,218 Location: Nairobi
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@sober - Well, they can buy from me! At a nice premium... My target in 18 months (after FY 2011-12 Results) is minimum of 40/- (& having 'eaten' a dividend) For some that 45% (over the current price) is too low in 18 months but I am OK with 30% p.a.) Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 9/23/2010 Posts: 2,221 Location: Sundowner,Amboseli
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mwanahisa wrote:Aguytrying wrote:Next time there's a split, iVe seen a loophole. there's a temporary confusion on some in some investors minds and hence, just after the split i can make money!!! No one was willing to pay 230 on friday, today some are buying it at 240!! Equivalent ie 30. mmmhhh I have used precisely this sort of scenario to good effect in the past, especially when there was a prompt board. However, you have to be very careful. In the case of KPLC, by the time your shares bought at 230 on Friday, 19th clear i.e. Friday this week, the split shares will have been credited and you might find you can only sell your shares at 25. At such a price you will be looking at a loss, so in order to profit, it will very much depend on the particular circumstances. On the other hand if we had faster clearing, then a profitable outcome would be much more likely. Doing away with the Prompt board while leaving the Normal Board at T+4 at 4PM, was IMHO, very retrogressive. It the very minimal, they should have brought down the clearing to T + 3! Nowadays in this mkt, prices chance so much in such a short duration of time. a case in point is the recent Eaagads fiasco! @SufficientlyP
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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Sufficiently Philanga....thropic wrote:mwanahisa wrote:Aguytrying wrote:Next time there's a split, iVe seen a loophole. there's a temporary confusion on some in some investors minds and hence, just after the split i can make money!!! No one was willing to pay 230 on friday, today some are buying it at 240!! Equivalent ie 30. mmmhhh I have used precisely this sort of scenario to good effect in the past, especially when there was a prompt board. However, you have to be very careful. In the case of KPLC, by the time your shares bought at 230 on Friday, 19th clear i.e. Friday this week, the split shares will have been credited and you might find you can only sell your shares at 25. At such a price you will be looking at a loss, so in order to profit, it will very much depend on the particular circumstances. On the other hand if we had faster clearing, then a profitable outcome would be much more likely. Doing away with the Prompt board while leaving the Normal Board at T+4 at 4PM, was IMHO, very retrogressive. It the very minimal, they should have brought down the clearing to T + 3! Nowadays in this mkt, prices chance so much in such a short duration of time. a case in point is the recent Eaagads fiasco! @mwanahisa, i Hear you. it truly does depend on the circumstanes. Wish the clearing was faster, some of us who watch the boards regularly(all the time), would have opportunities. The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Chief Joined: 1/3/2007 Posts: 18,218 Location: Nairobi
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The Prompt Board was used to front-run trades... It was not right to have 2 boards... BUT I agree the T+3 is way too slow... We need REAL-TIME... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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VituVingiSana wrote:The Prompt Board was used to front-run trades... It was not right to have 2 boards... BUT I agree the T+3 is way too slow... We need REAL-TIME... By and large the prompt board was abused as not all investors had equal access to the trades there, so I agree with you on that count. The trading cycle is currently T+4 meaning today's purchases will only be available to sell on Monday, next week. I guess this doesn't concern you too much as you are a long-termer. I do both long and short term myself, so I would dearly love to see a day when we can get instant clearance as happens e.g. on the JSE and other markets.
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Rank: Chief Joined: 1/3/2007 Posts: 18,218 Location: Nairobi
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@mwanahisa - Regardless of my nature of investing... T+4 is an eternity! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 9/26/2006 Posts: 439 Location: CENTRAL PROVINCE
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VituVingiSana wrote:@sober - Well, they can buy from me! At a nice premium... My target in 18 months (after FY 2011-12 Results) is minimum of 40/- (& having 'eaten' a dividend) For some that 45% (over the current price) is too low in 18 months but I am OK with 30% p.a.) @ VituVingiSana: The target is very realistic. With a current EPS of Ksh 2.14 and approximately 20% annual growth for the period June 10 to June 11, then in Sept 2011 after the end of year results are announced(10 Months from now), the share could be trading at an EPS of about Ksh 2.55. At current P/E of 13, that translates to a price of Ksh 33. By May 2012 (18 months from now), assuming the 20% annual growth holds (and the P/E of 13), then the projected price would be ksh 33 X 1.2 = Ksh 39.60 I intend to join this counter but the timing is critical for maximization of capital gains. I would feel cheated if i got in at anything higher than the govt conversion price of Ksh 207 (Ksh 25.875). By December 23rd, I am optimistic that the window of opportunity to get this shares at below this price will present itself. Post rights and after excess liquidity is mopped up post listing, the share should be trading at the Ksh 28-30 range (P/E of 13 to 14) by March 2011. Happy hunting.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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mwanahisa wrote:
I don't think this will last long. Prepare for the share to come down to the 27 - 30 range cum-rights and sub 25 after going ex-rights
@mwanahisa its these kind of predictions that make me wonder if calculators are standardized... If one were to ask which company has better fundamentals between kengen and KPLC 9 out of every 10 analyst would pick KPLC... So why then would you value KPLC at 25 (P/E of 11.6) and yet the market values kengen at 17.2(P/E of 19.5)??? In my books I would value the two stocks exactly the same so I would put KPLC at 40bob instead... Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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guru267 wrote:mwanahisa wrote:
I don't think this will last long. Prepare for the share to come down to the 27 - 30 range cum-rights and sub 25 after going ex-rights
@mwanahisa its these kind of predictions that make me wonder if calculators are standardized... @g267, valuations are not based purely on intrinsic factors, and hence 2 analysts will arrive at different valuations depending on the weight they give to different considerations. The cum-rights price for KPLC today ranged between 27 and 30 with an average price of 28. At 28, the weighted average of both the share and the right is Kshs 25.61; while at 27, it is 24.89, which is sub 25. If I can get the share at this price ex-rights, it means I will be indifferent between buying the share cum-rights or buying it ex-rights. Any shareholder who manages to get an allocation that is disproportionate to their current holding will lower their cost to a price approaching the 19.50 price. What is to prevent such a shareholder from selling at 24 and taking a quick 20% profit? I believe that this will hold back the price for a while. I however expect this scenario to change once the excess shares from the rights issue are mopped up through profit taking. I think KenGen is valued at a much higher PE than KPLC, partly because of where the share price has come from - a high of 40+ at the IPO level. The bulk of non-IPO shareholders hold the share at a much higher price than today's price while IPO shareholders look at the price they could have sold it. That keeps the KenGen price much higher than it should be.
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Rank: Veteran Joined: 6/2/2010 Posts: 1,075
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These debates on what the share price is going to be are always very amusing. Truth is no one can tell; all the above predictions are based on assumptions which may or may not hold. For exaple predictions of growth rates of 20% year on year are rather optimistic....
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Rank: Member Joined: 9/26/2006 Posts: 439 Location: CENTRAL PROVINCE
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mwanahisa wrote:guru267 wrote:mwanahisa wrote:
I don't think this will last long. Prepare for the share to come down to the 27 - 30 range cum-rights and sub 25 after going ex-rights
@mwanahisa its these kind of predictions that make me wonder if calculators are standardized... @g267, valuations are not based purely on intrinsic factors, and hence 2 analysts will arrive at different valuations depending on the weight they give to different considerations. The cum-rights price for KPLC today ranged between 27 and 30 with an average price of 28. At 28 the weighted average of the both the share and the right is Kshs 25.61 while at 27 it is 24.89, which is sub 25. If I can get the share at this price ex-rights it means I will be indifferent between buying the share cum-rights or buying it ex-rights. Any shareholder who manages to get a more than an allocation that is disproportionate to their current holding will lower their cost to a price approaching the 19.50 price. What is to prevent such a shareholder from selling at 24 and taking a quick 20% profit? I believe that this will hold back the price for a while. I however expect this scenario to change once the excess shares from the rights issue are wiped out through profit taking. I think KenGen is valued at a much higher PE partly because of where the share price has come from - a high of 40+ at the IPO level. The bulk of non-IPO shareholders hold the share at a much higher price than today's price while IPO shareholders look at the price they could have sold it. That keeps the KenGen price much higher than it should be. @ Mwanahisa: Very true. At current prices, the 'benefits" accruing from the rights are factored. Once the share goes ex rights, this benefits will dissapear (just like a share going ex dividend). This is when the share will dip to below Ksh 25. If i was a short term speculator holding the shares currently; It would make sense to sell at even Ksh 24 once the shares go ex-rights, then use the cash to pick up my 40% rights at Ksh 19.50. Happy hunting.
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Rank: Chief Joined: 1/3/2007 Posts: 18,218 Location: Nairobi
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@PeniMbili - LOL... 20% growth in PAT is a given for FY 2010-11 [barring a huge disaster] At the AGM, the MD mentioned that units sold had increased 10%+ since Jan 2010 so KPLC is pushing 10%+ more units [BTW, still suppressed peak demand] using the SAME infrastructure... Marginal profits would rise faster than costs... Given the rains & increased generation capacity, there is scope for increased sales in FY 2010-11. If we add 2011-12 then we are talking even better numbers! [If it rains... If more projects come online... If, if, if...] But I am an optimist! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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@mwanahisa and @stocksmaster you Guys I now see what you guys are saying... In the very short term especially as soon as it goes ex rights it might see some some profit taking... But so did STAN CHART(fell to 250 after rights) TPS(momentarily hit 55 after rights) KCB (hit 17.65 after rights) Though we all know where ALL these stocks are trading now so if the same happens to KPLC i'm piling in... simple.... Currently I'm averaging 15.5 on the stock and after the rights it will rise to 16.75 so I dont stand to lose anything..... @mwanahisa Kengen is valued with that P/E because investors see it as the ultimate growth stock not because of the I.P.O biz.... If they double their supply by 2015 as is their goal their profits will soar but better still KPLC's profits will ROOOOAAAARRR
because at least they don't have a 27billion loan to service at 12.5% p.a Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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guru267 wrote:@mwanahisa and @stocksmaster you Guys I now see what you guys are saying... In the very short term especially as soon as it goes ex rights it might see some some profit taking...
But so did STAN CHART(fell to 250 after rights)
TPS(momentarily hit 55 after rights)
KCB (hit 17.65 after rights)
Though we all know where ALL these stocks are trading now so if the same happens to KPLC i'm piling in... simple....
Currently I'm averaging 15.5 on the stock and after the rights it will rise to 16.75 so I dont stand to lose anything.....
@mwanahisa Kengen is valued with that P/E because investors see it as the ultimate growth stock not because of the I.P.O biz....
If they double their supply by 2015 as is their goal their profits will soar but better still KPLC's profits will ROOOOAAAARRR
because at least they don't have a 27billion loan to service at 12.5% p.a @ guru. He! kwani at what price did u get in, must have been a while back. U have all to gain. Even your mumias entry was low. U must be looking at 100% return at that entry. kudos(wish it was me) The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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This is my strategy: I'm not currently a shareholder of Kplc. I will not buy kplc shares before the book closure of the rights(unless the price goes to 25-which will be too low to resist). Between 1-23 dec. i will buy the rights at a premium of 4 shillings or less. maximum 5(if above 5, i wont buy them at all). I will exercise my rights when it is time. When the share gets diluted after the rights issue, I will buy more kplc shares off the market at a price of 25 or below. My target average price of my rights and shares will be 25 or better inclusive of commissions. As i dont intend to stay in the counter for long. I will wait to sell the shares at around 30/- bringing it to a capital gain of ~20%. The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Chief Joined: 1/3/2007 Posts: 18,218 Location: Nairobi
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30/- Cum Rights today... I guess Equity & Centum made some easy money on the Underwriting... 107,000 shares sold... Sounds a lot but divide by 8 to get the 'old' shares. Of course, the other '7' split shares will not be uploaded until Thursday... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,218 Location: Nairobi
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Every little bit helps! http://www.standardmedia...20energy%20independence
Ignore the bit about the whiners... So more electricity to sell... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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@aguytrying I like your strategy of getting the rights from the market but those hoping to buy the shares at 25 I hope you plan to do so for a looooonngg time... Mark 12:29
Deuteronomy 4:16
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