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Time to play the Market......2024
Rank: Member Joined: 8/6/2018 Posts: 299
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stocksmaster wrote:stocksmaster wrote:watesh wrote:stocksmaster wrote:watesh wrote:Ericsson wrote:stocksmaster wrote:watesh wrote:watesh wrote:Let me join in and share mine
Key Play For 2024
Kenya Power
The stock that everyone loves to hate.
FY23 EPS: (1.64)
Current Share Price: 1.6
P/E rato: NIL
Dividend pay out ratio: NIL
Tail winds
1.New tariffs – Average charge per unit will be up by at least 40% (consumption charge excluding FCC,FERFA,IA etc) this goes directly to KPLC. Margins doubled at half year as compared to the 2022 election tariff. 2nd half % growth will be lower since new tariffs commenced on April.
2. EPRA approved recovery of 6.5bn for tariff cut extension. Half of it will be in FY24 so that’s an extra 3.2bn
3. Heavy recovery of forex charges – In FY23 there was a 5bn charge in the cost of sales related to unrealized forex costs that wasn’t recovered due to lack of dollars for payment. KP had to eat up the cost. Currently in FY24, H2 forex recoveries as of April are already 40% higher than H1 indicating heavy recoveries in H2.
4. $/Ksh rate – If by June 30th the rate of dollar to ksh sticks to 140 and below, there will be very little unrealized for losses for the year. Assuming costs don’t skyrocket and gross profit at H2 is similar to H1, EPS should be approx 5 when rate is at 150, 3 when at 160 and sinks into losses past 170.
5. Cashflows – For the past 2 financial years KP has had really amazing cashflows. Now sitting at almost 20bn as at Dec 2023. I expect at least 2bn in interest income
6. Transfer of assets to Ketraco – KP CEO & CFO revealed they rarely revalue their assets eg land. Hence valuations are very highly muted. The transfer wipes out 80bn in debt. Commercial debt stands at 36bn. I wonder if this will trigger a forex loss recovery that has accumulated to over ksh20bn. Either way less interest charges and unrealized forex loss charge.
7. Good rains – From November to date, the more margin rich hydro power is being dispatched over thermal. There is more curtailment of wind & geothermal in favor of hydro. Wind is low margin.
8. Debt recovery – Defaults are over 35bn and there was a provisions charge of 2bn. A tender was issued in Feb for this. Each billion counts in the bottom line.
9. New management – New board, new ceo, more minority shareholder representation. The stalemate is over and things can get moving.
10. Presidential directive – All commercial state corporations should provide 80% of profit after tax for payment of dividend. It’s a long shot but if KP even issues something small, share price will skyrocket. CFO revealed the new board was asking him to budget something for minority shareholders.
11. No major power plant – No jump in capacity charges which are KP’s biggest COS charge.
12. IMF is watching like a hawk
Headwinds
1.ksh – each drop means added costs
2. Loans repayments – Biggest consumer of cash. Moratorium from govt is expiring
3. Government – Any directive can sink the ship
4. Procurement theft – This is where the biggest leakage is. Major projects = major theft. Currently, we have meters and more last mile.
5. Capital gains tax – Transferring assets to Ketraco may trigger a huge capital gains tax.
6. Negative working capital - its shrinking but just doesn't look good on the company.
7. New debt from world bank $300m interest free. It will ease cashflow pains but more unrealized forex losses again.
My target price is 3+ by June 2025 but this is highly dependent on the performance of the ksh. I will jump ship past 170. My current cost basis is 1.55, a price it has stuck to since the onset of the pandemic. So the downside risk is kind of muted. Not planning to hold long term because power utility growth is just 3 - 5% annually
Please criticize my overly optimistic view.
Small update on this: 30th June (date of financial year end). Shilling closed at 130 which means some of the unrealized foreign exchange losses incurred in H1 have been reversed (H1 opened at 140 and closed at 156 as of Dec 31st). Out of the 15 billion charge, around 3bn should be interest charge and others. Without that unrealized forex charge, H1 PBT should be in the range of 10 - 12.5bn. H2 forex charge recoveries were cumulatively approx 60% higher than h1 despite the appreciation of the ksh and heavy rains in Nov, Dec, March, April and May. The extra 10bob appreciation of the ksh means Kenya Power has some unrealized forex gains. However, assuming they book it as a below the line item hence doesn't affect the PBT, I expect PBT for the full year to hit 20 - 25bn (I have also assumed H1 performance is = to H2). Hence PAT of ksh14 - ksh17.5 and EPS of approx 7 - 8.75 for FY24. See you at end of October. https://www.businessdail...ance-of-profits-4700410
@Watesh is onto something. If KPLC makes the minimum predicted Ksh 7 and its board has to obey the idiotic 80% rule that is now embedded as a performance contract metric for state parastatals CEOs, then this share will be on fire. Even a conservative Ksh 1 (which is 14% payout) would push this share to at least around Ksh 4. Happy Hunting KPLC is exempted from the 80% dividend rule. Hmmm...interesting. I haven't come across this info on exemption anywhere. National Treasury Circular No.2/2024 just gives a blanket statement for all commercial state corporations. What about Kengen? Treasury Circular No.2/2024 seems to have no exclusions on the 80% rule....unless the exemption was provided for in the KPLC CEO performance contract. https://www.treasury.go.ke/circulars/
The GM Finance and the KPLC MD seem to indicate that the KPLC shareholders are in for good tidings via possible dividends after half a decade wait: https://youtu.be/V5dB_OL0qDA?si=FfS-349b3HJltFkn
https://youtu.be/gFvwf_KYsLs?si=kZ6AcDmVQi150Vsm
If KPLC is able to restructure it's balance sheet (by Dec 2024 as mandated by IMF) by transfering the 90% foreign denominated loans to Ketraco as it transfers equivalent assets, KPLC is a Ksh 20bn PAT entity (Ksh 10 EPS)..... Happy Hunting. CFO did state the new board asked him to budget for a dividend. Surely, they can just retain all the profits and payout the interest income from the 20bn cash. One thing i noted from Kenya Power is their cashflows have been solid since FY21. They paid out all the expensive overdrafts and their borrowing payments are much higher than proceeds from borrowing. Net cash positive mainly from internally generated cash. @Watesh - KPLC (and KenGen) on fire. How high KPLC goes will largely depend on the dividend after 6 years dividend drought and the balance sheet restructuring. Happy Hunting KPLC share price seems to have found stability at Ksh 3.50 as market awaits end of year results release in the next 2-3 weeks. Dividends of Ksh 1 and above should push it past Ksh 4 which will be a good time to exit since from 2025, it seems it will have competitors (end of monopoly) including direct power sales to consumers by energy generators including KenGen. Next short term play could be KCB. The sale of NBK to Access Bank by Dec 2024 means KCB will book about Ksh 17bn ( projections from KCB half year financial statements), about Ksh 5.30 per KCB share. This may stimulate a special dividend from this one off transaction. The bank is also on course to record at least 55bn net profit for 2024 (Ksh 17 per share),.which should at least generate another Ksh 3 ordinary final dividend. Happy Hunting. The Hour Has Come. Lets see....Dividends should be 3 Bob and above we see how the Prices adjusts. then later we see the effects of assets Transfer to KETRACO in exchange of GoK Onlend loans
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Rank: Veteran Joined: 8/10/2014 Posts: 969 Location: Kenya
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watesh wrote:watesh wrote:Let me join in and share mine
Key Play For 2024
Kenya Power
The stock that everyone loves to hate.
FY23 EPS: (1.64)
Current Share Price: 1.6
P/E rato: NIL
Dividend pay out ratio: NIL
Tail winds
1.New tariffs – Average charge per unit will be up by at least 40% (consumption charge excluding FCC,FERFA,IA etc) this goes directly to KPLC. Margins doubled at half year as compared to the 2022 election tariff. 2nd half % growth will be lower since new tariffs commenced on April.
2. EPRA approved recovery of 6.5bn for tariff cut extension. Half of it will be in FY24 so that’s an extra 3.2bn
3. Heavy recovery of forex charges – In FY23 there was a 5bn charge in the cost of sales related to unrealized forex costs that wasn’t recovered due to lack of dollars for payment. KP had to eat up the cost. Currently in FY24, H2 forex recoveries as of April are already 40% higher than H1 indicating heavy recoveries in H2.
4. $/Ksh rate – If by June 30th the rate of dollar to ksh sticks to 140 and below, there will be very little unrealized for losses for the year. Assuming costs don’t skyrocket and gross profit at H2 is similar to H1, EPS should be approx 5 when rate is at 150, 3 when at 160 and sinks into losses past 170.
5. Cashflows – For the past 2 financial years KP has had really amazing cashflows. Now sitting at almost 20bn as at Dec 2023. I expect at least 2bn in interest income
6. Transfer of assets to Ketraco – KP CEO & CFO revealed they rarely revalue their assets eg land. Hence valuations are very highly muted. The transfer wipes out 80bn in debt. Commercial debt stands at 36bn. I wonder if this will trigger a forex loss recovery that has accumulated to over ksh20bn. Either way less interest charges and unrealized forex loss charge.
7. Good rains – From November to date, the more margin rich hydro power is being dispatched over thermal. There is more curtailment of wind & geothermal in favor of hydro. Wind is low margin.
8. Debt recovery – Defaults are over 35bn and there was a provisions charge of 2bn. A tender was issued in Feb for this. Each billion counts in the bottom line.
9. New management – New board, new ceo, more minority shareholder representation. The stalemate is over and things can get moving.
10. Presidential directive – All commercial state corporations should provide 80% of profit after tax for payment of dividend. It’s a long shot but if KP even issues something small, share price will skyrocket. CFO revealed the new board was asking him to budget something for minority shareholders.
11. No major power plant – No jump in capacity charges which are KP’s biggest COS charge.
12. IMF is watching like a hawk
Headwinds
1.ksh – each drop means added costs
2. Loans repayments – Biggest consumer of cash. Moratorium from govt is expiring
3. Government – Any directive can sink the ship
4. Procurement theft – This is where the biggest leakage is. Major projects = major theft. Currently, we have meters and more last mile.
5. Capital gains tax – Transferring assets to Ketraco may trigger a huge capital gains tax.
6. Negative working capital - its shrinking but just doesn't look good on the company.
7. New debt from world bank $300m interest free. It will ease cashflow pains but more unrealized forex losses again.
My target price is 3+ by June 2025 but this is highly dependent on the performance of the ksh. I will jump ship past 170. My current cost basis is 1.55, a price it has stuck to since the onset of the pandemic. So the downside risk is kind of muted. Not planning to hold long term because power utility growth is just 3 - 5% annually
Please criticize my overly optimistic view.
Small update on this: 30th June (date of financial year end). Shilling closed at 130 which means some of the unrealized foreign exchange losses incurred in H1 have been reversed (H1 opened at 140 and closed at 156 as of Dec 31st). Out of the 15 billion charge, around 3bn should be interest charge and others. Without that unrealized forex charge, H1 PBT should be in the range of 10 - 12.5bn. H2 forex charge recoveries were cumulatively approx 60% higher than h1 despite the appreciation of the ksh and heavy rains in Nov, Dec, March, April and May. The extra 10bob appreciation of the ksh means Kenya Power has some unrealized forex gains. However, assuming they book it as a below the line item hence doesn't affect the PBT, I expect PBT for the full year to hit 20 - 25bn (I have also assumed H1 performance is = to H2). Hence PAT of ksh14 - ksh17.5 and EPS of approx 7 - 8.75 for FY24. See you at end of October. End of October is here. Profit after tax surged to KES 30.08B, a substantial recovery from the previous year’s loss of KES 3.2B, driven by 21% revenue growth and lower finance costs. ⚡️ Electricity sales rose 21% to KES 231.12B, boosted by 447,251 new customer connections and manufacturing growth. 💹 Stronger Shilling in the second half limited cost of sales increases, resulting in a higher gross margin relative to revenue growth. 📊 New cost-reflective tariff in April 2023 supported sales growth. 💰 Finance costs dropped by KES 24.84B, with a KES 7.88B foreign exchange gain from Shilling appreciation against the USD and Euro. ⚙️ Power purchase costs increased to KES 150.61B due to higher demand and earlier high exchange rates. 💼 Operating expenses rose to KES 46.28B due to 92% higher wheeling charges and additional technical staff. 📜 Staff costs impacted by 2023 Finance Act and inflation, managed through zero-based budgeting. 🔄 Working capital improved from negative KES 74.85B (FY 2019-2020) to negative KES 27.44B. 💸 Proposed dividend of KES 0.70 per share, payable 31 Jan 2025. So my target exit price will be calculated using a P/E of 1 - 1.5. So with than an EPS of 15, my minimum share price is 15. Otherwise, I can hold with a starting dividend yield of 46%. There is a likelihood of an interim dividend in March. Free Cashflows should drastically improve once all power producer arreas are cleared. Debt payments should also be lower since commercial debt obligations are much lower.
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Rank: Elder Joined: 7/22/2008 Posts: 2,703
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KPLC profit 30 birrions. Dividend Ksh 0.70!!
Kengen dividend Ksh 0.65!!
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Rank: Elder Joined: 9/23/2010 Posts: 2,220 Location: Sundowner,Amboseli
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Great call @KaunganaDoDO,Watesh and evergreen Stocksmaster  You guys called it!!! @SufficientlyP
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Rank: Member Joined: 9/26/2006 Posts: 404 Location: CENTRAL PROVINCE
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watesh wrote:watesh wrote:watesh wrote:Let me join in and share mine
Key Play For 2024
Kenya Power
The stock that everyone loves to hate.
FY23 EPS: (1.64)
Current Share Price: 1.6
P/E rato: NIL
Dividend pay out ratio: NIL
Tail winds
1.New tariffs – Average charge per unit will be up by at least 40% (consumption charge excluding FCC,FERFA,IA etc) this goes directly to KPLC. Margins doubled at half year as compared to the 2022 election tariff. 2nd half % growth will be lower since new tariffs commenced on April.
2. EPRA approved recovery of 6.5bn for tariff cut extension. Half of it will be in FY24 so that’s an extra 3.2bn
3. Heavy recovery of forex charges – In FY23 there was a 5bn charge in the cost of sales related to unrealized forex costs that wasn’t recovered due to lack of dollars for payment. KP had to eat up the cost. Currently in FY24, H2 forex recoveries as of April are already 40% higher than H1 indicating heavy recoveries in H2.
4. $/Ksh rate – If by June 30th the rate of dollar to ksh sticks to 140 and below, there will be very little unrealized for losses for the year. Assuming costs don’t skyrocket and gross profit at H2 is similar to H1, EPS should be approx 5 when rate is at 150, 3 when at 160 and sinks into losses past 170.
5. Cashflows – For the past 2 financial years KP has had really amazing cashflows. Now sitting at almost 20bn as at Dec 2023. I expect at least 2bn in interest income
6. Transfer of assets to Ketraco – KP CEO & CFO revealed they rarely revalue their assets eg land. Hence valuations are very highly muted. The transfer wipes out 80bn in debt. Commercial debt stands at 36bn. I wonder if this will trigger a forex loss recovery that has accumulated to over ksh20bn. Either way less interest charges and unrealized forex loss charge.
7. Good rains – From November to date, the more margin rich hydro power is being dispatched over thermal. There is more curtailment of wind & geothermal in favor of hydro. Wind is low margin.
8. Debt recovery – Defaults are over 35bn and there was a provisions charge of 2bn. A tender was issued in Feb for this. Each billion counts in the bottom line.
9. New management – New board, new ceo, more minority shareholder representation. The stalemate is over and things can get moving.
10. Presidential directive – All commercial state corporations should provide 80% of profit after tax for payment of dividend. It’s a long shot but if KP even issues something small, share price will skyrocket. CFO revealed the new board was asking him to budget something for minority shareholders.
11. No major power plant – No jump in capacity charges which are KP’s biggest COS charge.
12. IMF is watching like a hawk
Headwinds
1.ksh – each drop means added costs
2. Loans repayments – Biggest consumer of cash. Moratorium from govt is expiring
3. Government – Any directive can sink the ship
4. Procurement theft – This is where the biggest leakage is. Major projects = major theft. Currently, we have meters and more last mile.
5. Capital gains tax – Transferring assets to Ketraco may trigger a huge capital gains tax.
6. Negative working capital - its shrinking but just doesn't look good on the company.
7. New debt from world bank $300m interest free. It will ease cashflow pains but more unrealized forex losses again.
My target price is 3+ by June 2025 but this is highly dependent on the performance of the ksh. I will jump ship past 170. My current cost basis is 1.55, a price it has stuck to since the onset of the pandemic. So the downside risk is kind of muted. Not planning to hold long term because power utility growth is just 3 - 5% annually
Please criticize my overly optimistic view.
Small update on this: 30th June (date of financial year end). Shilling closed at 130 which means some of the unrealized foreign exchange losses incurred in H1 have been reversed (H1 opened at 140 and closed at 156 as of Dec 31st). Out of the 15 billion charge, around 3bn should be interest charge and others. Without that unrealized forex charge, H1 PBT should be in the range of 10 - 12.5bn. H2 forex charge recoveries were cumulatively approx 60% higher than h1 despite the appreciation of the ksh and heavy rains in Nov, Dec, March, April and May. The extra 10bob appreciation of the ksh means Kenya Power has some unrealized forex gains. However, assuming they book it as a below the line item hence doesn't affect the PBT, I expect PBT for the full year to hit 20 - 25bn (I have also assumed H1 performance is = to H2). Hence PAT of ksh14 - ksh17.5 and EPS of approx 7 - 8.75 for FY24. See you at end of October. End of October is here. Profit after tax surged to KES 30.08B, a substantial recovery from the previous year’s loss of KES 3.2B, driven by 21% revenue growth and lower finance costs. ⚡️ Electricity sales rose 21% to KES 231.12B, boosted by 447,251 new customer connections and manufacturing growth. 💹 Stronger Shilling in the second half limited cost of sales increases, resulting in a higher gross margin relative to revenue growth. 📊 New cost-reflective tariff in April 2023 supported sales growth. 💰 Finance costs dropped by KES 24.84B, with a KES 7.88B foreign exchange gain from Shilling appreciation against the USD and Euro. ⚙️ Power purchase costs increased to KES 150.61B due to higher demand and earlier high exchange rates. 💼 Operating expenses rose to KES 46.28B due to 92% higher wheeling charges and additional technical staff. 📜 Staff costs impacted by 2023 Finance Act and inflation, managed through zero-based budgeting. 🔄 Working capital improved from negative KES 74.85B (FY 2019-2020) to negative KES 27.44B. 💸 Proposed dividend of KES 0.70 per share, payable 31 Jan 2025. So my target exit price will be calculated using a P/E of 1 - 1.5. So with than an EPS of 15, my minimum share price is 15. Otherwise, I can hold with a starting dividend yield of 46%. There is a likelihood of an interim dividend in March. Free Cashflows should drastically improve once all power producer arreas are cleared. Debt payments should also be lower since commercial debt obligations are much lower. Short term, the market seems to prefer valuation based on dividend yield. Using the Tbills as a benchmark (since the KPLC and KenGen shares are most likely competing for investment money with these fixed income instruments),the prevailing rates for 91,183 and 364 days instruments are approximately 14%, 14.5% and 15% respectively. That means the short term price target for KPLC using the average of 14.5% yield at a dividend of Ksh 0.70 is Ksh 4.82 hence most likely a trading range of 4.65-5.00 (for a 14-15% dividend yield). For KenGen, applying same parameters of a trading range of 14-15% dividend yield gives a range of Ksh 4.35-4.65 (Median of Ksh 4.50). Thus, at current prices, KenGen seems to have the more upside potential for short term play (a 10-15% short term upside potential before books closure). Long term, KPLC has much higher potential as the realistic price should be in the Ksh 10-15 region once they wipe out the negative working capital in the next one year and are thus able to improve drastically on the dividends. Happy Hunting
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Rank: Member Joined: 9/26/2006 Posts: 404 Location: CENTRAL PROVINCE
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stocksmaster wrote:watesh wrote:watesh wrote:watesh wrote:Let me join in and share mine
Key Play For 2024
Kenya Power
The stock that everyone loves to hate.
FY23 EPS: (1.64)
Current Share Price: 1.6
P/E rato: NIL
Dividend pay out ratio: NIL
Tail winds
1.New tariffs – Average charge per unit will be up by at least 40% (consumption charge excluding FCC,FERFA,IA etc) this goes directly to KPLC. Margins doubled at half year as compared to the 2022 election tariff. 2nd half % growth will be lower since new tariffs commenced on April.
2. EPRA approved recovery of 6.5bn for tariff cut extension. Half of it will be in FY24 so that’s an extra 3.2bn
3. Heavy recovery of forex charges – In FY23 there was a 5bn charge in the cost of sales related to unrealized forex costs that wasn’t recovered due to lack of dollars for payment. KP had to eat up the cost. Currently in FY24, H2 forex recoveries as of April are already 40% higher than H1 indicating heavy recoveries in H2.
4. $/Ksh rate – If by June 30th the rate of dollar to ksh sticks to 140 and below, there will be very little unrealized for losses for the year. Assuming costs don’t skyrocket and gross profit at H2 is similar to H1, EPS should be approx 5 when rate is at 150, 3 when at 160 and sinks into losses past 170.
5. Cashflows – For the past 2 financial years KP has had really amazing cashflows. Now sitting at almost 20bn as at Dec 2023. I expect at least 2bn in interest income
6. Transfer of assets to Ketraco – KP CEO & CFO revealed they rarely revalue their assets eg land. Hence valuations are very highly muted. The transfer wipes out 80bn in debt. Commercial debt stands at 36bn. I wonder if this will trigger a forex loss recovery that has accumulated to over ksh20bn. Either way less interest charges and unrealized forex loss charge.
7. Good rains – From November to date, the more margin rich hydro power is being dispatched over thermal. There is more curtailment of wind & geothermal in favor of hydro. Wind is low margin.
8. Debt recovery – Defaults are over 35bn and there was a provisions charge of 2bn. A tender was issued in Feb for this. Each billion counts in the bottom line.
9. New management – New board, new ceo, more minority shareholder representation. The stalemate is over and things can get moving.
10. Presidential directive – All commercial state corporations should provide 80% of profit after tax for payment of dividend. It’s a long shot but if KP even issues something small, share price will skyrocket. CFO revealed the new board was asking him to budget something for minority shareholders.
11. No major power plant – No jump in capacity charges which are KP’s biggest COS charge.
12. IMF is watching like a hawk
Headwinds
1.ksh – each drop means added costs
2. Loans repayments – Biggest consumer of cash. Moratorium from govt is expiring
3. Government – Any directive can sink the ship
4. Procurement theft – This is where the biggest leakage is. Major projects = major theft. Currently, we have meters and more last mile.
5. Capital gains tax – Transferring assets to Ketraco may trigger a huge capital gains tax.
6. Negative working capital - its shrinking but just doesn't look good on the company.
7. New debt from world bank $300m interest free. It will ease cashflow pains but more unrealized forex losses again.
My target price is 3+ by June 2025 but this is highly dependent on the performance of the ksh. I will jump ship past 170. My current cost basis is 1.55, a price it has stuck to since the onset of the pandemic. So the downside risk is kind of muted. Not planning to hold long term because power utility growth is just 3 - 5% annually
Please criticize my overly optimistic view.
Small update on this: 30th June (date of financial year end). Shilling closed at 130 which means some of the unrealized foreign exchange losses incurred in H1 have been reversed (H1 opened at 140 and closed at 156 as of Dec 31st). Out of the 15 billion charge, around 3bn should be interest charge and others. Without that unrealized forex charge, H1 PBT should be in the range of 10 - 12.5bn. H2 forex charge recoveries were cumulatively approx 60% higher than h1 despite the appreciation of the ksh and heavy rains in Nov, Dec, March, April and May. The extra 10bob appreciation of the ksh means Kenya Power has some unrealized forex gains. However, assuming they book it as a below the line item hence doesn't affect the PBT, I expect PBT for the full year to hit 20 - 25bn (I have also assumed H1 performance is = to H2). Hence PAT of ksh14 - ksh17.5 and EPS of approx 7 - 8.75 for FY24. See you at end of October. End of October is here. Profit after tax surged to KES 30.08B, a substantial recovery from the previous year’s loss of KES 3.2B, driven by 21% revenue growth and lower finance costs. ⚡️ Electricity sales rose 21% to KES 231.12B, boosted by 447,251 new customer connections and manufacturing growth. 💹 Stronger Shilling in the second half limited cost of sales increases, resulting in a higher gross margin relative to revenue growth. 📊 New cost-reflective tariff in April 2023 supported sales growth. 💰 Finance costs dropped by KES 24.84B, with a KES 7.88B foreign exchange gain from Shilling appreciation against the USD and Euro. ⚙️ Power purchase costs increased to KES 150.61B due to higher demand and earlier high exchange rates. 💼 Operating expenses rose to KES 46.28B due to 92% higher wheeling charges and additional technical staff. 📜 Staff costs impacted by 2023 Finance Act and inflation, managed through zero-based budgeting. 🔄 Working capital improved from negative KES 74.85B (FY 2019-2020) to negative KES 27.44B. 💸 Proposed dividend of KES 0.70 per share, payable 31 Jan 2025. So my target exit price will be calculated using a P/E of 1 - 1.5. So with than an EPS of 15, my minimum share price is 15. Otherwise, I can hold with a starting dividend yield of 46%. There is a likelihood of an interim dividend in March. Free Cashflows should drastically improve once all power producer arreas are cleared. Debt payments should also be lower since commercial debt obligations are much lower. Short term, the market seems to prefer valuation based on dividend yield. Using the Tbills as a benchmark (since the KPLC and KenGen shares are most likely competing for investment money with these fixed income instruments),the prevailing rates for 91,183 and 364 days instruments are approximately 14%, 14.5% and 15% respectively. That means the short term price target for KPLC using the average of 14.5% yield at a dividend of Ksh 0.70 is Ksh 4.82 hence most likely a trading range of 4.65-5.00 (for a 14-15% dividend yield). For KenGen, applying same parameters of a trading range of 14-15% dividend yield gives a range of Ksh 4.35-4.65 (Median of Ksh 4.50). Thus, at current prices, KenGen seems to have the more upside potential for short term play (a 10-15% short term upside potential before books closure). Long term, KPLC has much higher potential as the realistic price should be in the Ksh 10-15 region once they wipe out the negative working capital in the next one year and are thus able to improve drastically on the dividends. Happy Hunting Looks like KenGen will have a very good 2024-2025 financial year with Ksh 4.14bn sale in carbon credits to be booked in Jan 2025......that's about 2/3rds of this year's total net earnings being generated from that single transaction. https://www.businessdail...n-credits-sales-4822446
Diamond Trust Bank also looks like it's going to report some muscular Q3 performance based on the DTB Tanzania Q3 results. As the largest Kenyan bank in TZ (both in Assets and Profits), it reported a 331% net earnings with a net profit of Ksh 1.9bn (equivalent to about Ksh 6.80 EPS from just the TZ unit for Q3). https://x.com/TheAbojani...-TaIl6iaf6HQ-w&s=19
My third short term pick (6 months horizon) is Umeme. Their 20 year power concession ends in Feb 2025 (3 months time) with a buyout by the Uganda Govt projected at about USD 255M (about KSh 20.50 per share). Add a final dividend of about Ksh 2-3, and that's a value of about Ksh 23 per share by End of April 2025. Currently trading at Ksh 16-16.50, hence potential capital gains of about Ksh 7 (about 40%) in the next 6 months. Happy Hunting.
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Rank: Veteran Joined: 8/10/2014 Posts: 969 Location: Kenya
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stocksmaster wrote:stocksmaster wrote:watesh wrote:watesh wrote:watesh wrote:Let me join in and share mine
Key Play For 2024
Kenya Power
The stock that everyone loves to hate.
FY23 EPS: (1.64)
Current Share Price: 1.6
P/E rato: NIL
Dividend pay out ratio: NIL
Tail winds
1.New tariffs – Average charge per unit will be up by at least 40% (consumption charge excluding FCC,FERFA,IA etc) this goes directly to KPLC. Margins doubled at half year as compared to the 2022 election tariff. 2nd half % growth will be lower since new tariffs commenced on April.
2. EPRA approved recovery of 6.5bn for tariff cut extension. Half of it will be in FY24 so that’s an extra 3.2bn
3. Heavy recovery of forex charges – In FY23 there was a 5bn charge in the cost of sales related to unrealized forex costs that wasn’t recovered due to lack of dollars for payment. KP had to eat up the cost. Currently in FY24, H2 forex recoveries as of April are already 40% higher than H1 indicating heavy recoveries in H2.
4. $/Ksh rate – If by June 30th the rate of dollar to ksh sticks to 140 and below, there will be very little unrealized for losses for the year. Assuming costs don’t skyrocket and gross profit at H2 is similar to H1, EPS should be approx 5 when rate is at 150, 3 when at 160 and sinks into losses past 170.
5. Cashflows – For the past 2 financial years KP has had really amazing cashflows. Now sitting at almost 20bn as at Dec 2023. I expect at least 2bn in interest income
6. Transfer of assets to Ketraco – KP CEO & CFO revealed they rarely revalue their assets eg land. Hence valuations are very highly muted. The transfer wipes out 80bn in debt. Commercial debt stands at 36bn. I wonder if this will trigger a forex loss recovery that has accumulated to over ksh20bn. Either way less interest charges and unrealized forex loss charge.
7. Good rains – From November to date, the more margin rich hydro power is being dispatched over thermal. There is more curtailment of wind & geothermal in favor of hydro. Wind is low margin.
8. Debt recovery – Defaults are over 35bn and there was a provisions charge of 2bn. A tender was issued in Feb for this. Each billion counts in the bottom line.
9. New management – New board, new ceo, more minority shareholder representation. The stalemate is over and things can get moving.
10. Presidential directive – All commercial state corporations should provide 80% of profit after tax for payment of dividend. It’s a long shot but if KP even issues something small, share price will skyrocket. CFO revealed the new board was asking him to budget something for minority shareholders.
11. No major power plant – No jump in capacity charges which are KP’s biggest COS charge.
12. IMF is watching like a hawk
Headwinds
1.ksh – each drop means added costs
2. Loans repayments – Biggest consumer of cash. Moratorium from govt is expiring
3. Government – Any directive can sink the ship
4. Procurement theft – This is where the biggest leakage is. Major projects = major theft. Currently, we have meters and more last mile.
5. Capital gains tax – Transferring assets to Ketraco may trigger a huge capital gains tax.
6. Negative working capital - its shrinking but just doesn't look good on the company.
7. New debt from world bank $300m interest free. It will ease cashflow pains but more unrealized forex losses again.
My target price is 3+ by June 2025 but this is highly dependent on the performance of the ksh. I will jump ship past 170. My current cost basis is 1.55, a price it has stuck to since the onset of the pandemic. So the downside risk is kind of muted. Not planning to hold long term because power utility growth is just 3 - 5% annually
Please criticize my overly optimistic view.
Small update on this: 30th June (date of financial year end). Shilling closed at 130 which means some of the unrealized foreign exchange losses incurred in H1 have been reversed (H1 opened at 140 and closed at 156 as of Dec 31st). Out of the 15 billion charge, around 3bn should be interest charge and others. Without that unrealized forex charge, H1 PBT should be in the range of 10 - 12.5bn. H2 forex charge recoveries were cumulatively approx 60% higher than h1 despite the appreciation of the ksh and heavy rains in Nov, Dec, March, April and May. The extra 10bob appreciation of the ksh means Kenya Power has some unrealized forex gains. However, assuming they book it as a below the line item hence doesn't affect the PBT, I expect PBT for the full year to hit 20 - 25bn (I have also assumed H1 performance is = to H2). Hence PAT of ksh14 - ksh17.5 and EPS of approx 7 - 8.75 for FY24. See you at end of October. End of October is here. Profit after tax surged to KES 30.08B, a substantial recovery from the previous year’s loss of KES 3.2B, driven by 21% revenue growth and lower finance costs. ⚡️ Electricity sales rose 21% to KES 231.12B, boosted by 447,251 new customer connections and manufacturing growth. 💹 Stronger Shilling in the second half limited cost of sales increases, resulting in a higher gross margin relative to revenue growth. 📊 New cost-reflective tariff in April 2023 supported sales growth. 💰 Finance costs dropped by KES 24.84B, with a KES 7.88B foreign exchange gain from Shilling appreciation against the USD and Euro. ⚙️ Power purchase costs increased to KES 150.61B due to higher demand and earlier high exchange rates. 💼 Operating expenses rose to KES 46.28B due to 92% higher wheeling charges and additional technical staff. 📜 Staff costs impacted by 2023 Finance Act and inflation, managed through zero-based budgeting. 🔄 Working capital improved from negative KES 74.85B (FY 2019-2020) to negative KES 27.44B. 💸 Proposed dividend of KES 0.70 per share, payable 31 Jan 2025. So my target exit price will be calculated using a P/E of 1 - 1.5. So with than an EPS of 15, my minimum share price is 15. Otherwise, I can hold with a starting dividend yield of 46%. There is a likelihood of an interim dividend in March. Free Cashflows should drastically improve once all power producer arreas are cleared. Debt payments should also be lower since commercial debt obligations are much lower. Short term, the market seems to prefer valuation based on dividend yield. Using the Tbills as a benchmark (since the KPLC and KenGen shares are most likely competing for investment money with these fixed income instruments),the prevailing rates for 91,183 and 364 days instruments are approximately 14%, 14.5% and 15% respectively. That means the short term price target for KPLC using the average of 14.5% yield at a dividend of Ksh 0.70 is Ksh 4.82 hence most likely a trading range of 4.65-5.00 (for a 14-15% dividend yield). For KenGen, applying same parameters of a trading range of 14-15% dividend yield gives a range of Ksh 4.35-4.65 (Median of Ksh 4.50). Thus, at current prices, KenGen seems to have the more upside potential for short term play (a 10-15% short term upside potential before books closure). Long term, KPLC has much higher potential as the realistic price should be in the Ksh 10-15 region once they wipe out the negative working capital in the next one year and are thus able to improve drastically on the dividends. Happy Hunting Looks like KenGen will have a very good 2024-2025 financial year with Ksh 4.14bn sale in carbon credits to be booked in Jan 2025......that's about 2/3rds of this year's total net earnings being generated from that single transaction. https://www.businessdail...n-credits-sales-4822446
Diamond Trust Bank also looks like it's going to report some muscular Q3 performance based on the DTB Tanzania Q3 results. As the largest Kenyan bank in TZ (both in Assets and Profits), it reported a 331% net earnings with a net profit of Ksh 1.9bn (equivalent to about Ksh 6.80 EPS from just the TZ unit for Q3). https://x.com/TheAbojani...-TaIl6iaf6HQ-w&s=19
My third short term pick (6 months horizon) is Umeme. Their 20 year power concession ends in Feb 2025 (3 months time) with a buyout by the Uganda Govt projected at about USD 255M (about KSh 20.50 per share). Add a final dividend of about Ksh 2-3, and that's a value of about Ksh 23 per share by End of April 2025. Currently trading at Ksh 16-16.50, hence potential capital gains of about Ksh 7 (about 40%) in the next 6 months. Happy Hunting. Easy money right here. The carbon credits cash is enough to fund a large chunk of the current dividend and another thing is that Kengen is sitting on 25bn in cash which should bring in another 3bn in interest income cash if they are not quick to spend it.
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Rank: Member Joined: 9/26/2006 Posts: 404 Location: CENTRAL PROVINCE
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watesh wrote:stocksmaster wrote:stocksmaster wrote:watesh wrote:watesh wrote:watesh wrote:Let me join in and share mine
Key Play For 2024
Kenya Power
The stock that everyone loves to hate.
FY23 EPS: (1.64)
Current Share Price: 1.6
P/E rato: NIL
Dividend pay out ratio: NIL
Tail winds
1.New tariffs – Average charge per unit will be up by at least 40% (consumption charge excluding FCC,FERFA,IA etc) this goes directly to KPLC. Margins doubled at half year as compared to the 2022 election tariff. 2nd half % growth will be lower since new tariffs commenced on April.
2. EPRA approved recovery of 6.5bn for tariff cut extension. Half of it will be in FY24 so that’s an extra 3.2bn
3. Heavy recovery of forex charges – In FY23 there was a 5bn charge in the cost of sales related to unrealized forex costs that wasn’t recovered due to lack of dollars for payment. KP had to eat up the cost. Currently in FY24, H2 forex recoveries as of April are already 40% higher than H1 indicating heavy recoveries in H2.
4. $/Ksh rate – If by June 30th the rate of dollar to ksh sticks to 140 and below, there will be very little unrealized for losses for the year. Assuming costs don’t skyrocket and gross profit at H2 is similar to H1, EPS should be approx 5 when rate is at 150, 3 when at 160 and sinks into losses past 170.
5. Cashflows – For the past 2 financial years KP has had really amazing cashflows. Now sitting at almost 20bn as at Dec 2023. I expect at least 2bn in interest income
6. Transfer of assets to Ketraco – KP CEO & CFO revealed they rarely revalue their assets eg land. Hence valuations are very highly muted. The transfer wipes out 80bn in debt. Commercial debt stands at 36bn. I wonder if this will trigger a forex loss recovery that has accumulated to over ksh20bn. Either way less interest charges and unrealized forex loss charge.
7. Good rains – From November to date, the more margin rich hydro power is being dispatched over thermal. There is more curtailment of wind & geothermal in favor of hydro. Wind is low margin.
8. Debt recovery – Defaults are over 35bn and there was a provisions charge of 2bn. A tender was issued in Feb for this. Each billion counts in the bottom line.
9. New management – New board, new ceo, more minority shareholder representation. The stalemate is over and things can get moving.
10. Presidential directive – All commercial state corporations should provide 80% of profit after tax for payment of dividend. It’s a long shot but if KP even issues something small, share price will skyrocket. CFO revealed the new board was asking him to budget something for minority shareholders.
11. No major power plant – No jump in capacity charges which are KP’s biggest COS charge.
12. IMF is watching like a hawk
Headwinds
1.ksh – each drop means added costs
2. Loans repayments – Biggest consumer of cash. Moratorium from govt is expiring
3. Government – Any directive can sink the ship
4. Procurement theft – This is where the biggest leakage is. Major projects = major theft. Currently, we have meters and more last mile.
5. Capital gains tax – Transferring assets to Ketraco may trigger a huge capital gains tax.
6. Negative working capital - its shrinking but just doesn't look good on the company.
7. New debt from world bank $300m interest free. It will ease cashflow pains but more unrealized forex losses again.
My target price is 3+ by June 2025 but this is highly dependent on the performance of the ksh. I will jump ship past 170. My current cost basis is 1.55, a price it has stuck to since the onset of the pandemic. So the downside risk is kind of muted. Not planning to hold long term because power utility growth is just 3 - 5% annually
Please criticize my overly optimistic view.
Small update on this: 30th June (date of financial year end). Shilling closed at 130 which means some of the unrealized foreign exchange losses incurred in H1 have been reversed (H1 opened at 140 and closed at 156 as of Dec 31st). Out of the 15 billion charge, around 3bn should be interest charge and others. Without that unrealized forex charge, H1 PBT should be in the range of 10 - 12.5bn. H2 forex charge recoveries were cumulatively approx 60% higher than h1 despite the appreciation of the ksh and heavy rains in Nov, Dec, March, April and May. The extra 10bob appreciation of the ksh means Kenya Power has some unrealized forex gains. However, assuming they book it as a below the line item hence doesn't affect the PBT, I expect PBT for the full year to hit 20 - 25bn (I have also assumed H1 performance is = to H2). Hence PAT of ksh14 - ksh17.5 and EPS of approx 7 - 8.75 for FY24. See you at end of October. End of October is here. Profit after tax surged to KES 30.08B, a substantial recovery from the previous year’s loss of KES 3.2B, driven by 21% revenue growth and lower finance costs. ⚡️ Electricity sales rose 21% to KES 231.12B, boosted by 447,251 new customer connections and manufacturing growth. 💹 Stronger Shilling in the second half limited cost of sales increases, resulting in a higher gross margin relative to revenue growth. 📊 New cost-reflective tariff in April 2023 supported sales growth. 💰 Finance costs dropped by KES 24.84B, with a KES 7.88B foreign exchange gain from Shilling appreciation against the USD and Euro. ⚙️ Power purchase costs increased to KES 150.61B due to higher demand and earlier high exchange rates. 💼 Operating expenses rose to KES 46.28B due to 92% higher wheeling charges and additional technical staff. 📜 Staff costs impacted by 2023 Finance Act and inflation, managed through zero-based budgeting. 🔄 Working capital improved from negative KES 74.85B (FY 2019-2020) to negative KES 27.44B. 💸 Proposed dividend of KES 0.70 per share, payable 31 Jan 2025. So my target exit price will be calculated using a P/E of 1 - 1.5. So with than an EPS of 15, my minimum share price is 15. Otherwise, I can hold with a starting dividend yield of 46%. There is a likelihood of an interim dividend in March. Free Cashflows should drastically improve once all power producer arreas are cleared. Debt payments should also be lower since commercial debt obligations are much lower. Short term, the market seems to prefer valuation based on dividend yield. Using the Tbills as a benchmark (since the KPLC and KenGen shares are most likely competing for investment money with these fixed income instruments),the prevailing rates for 91,183 and 364 days instruments are approximately 14%, 14.5% and 15% respectively. That means the short term price target for KPLC using the average of 14.5% yield at a dividend of Ksh 0.70 is Ksh 4.82 hence most likely a trading range of 4.65-5.00 (for a 14-15% dividend yield). For KenGen, applying same parameters of a trading range of 14-15% dividend yield gives a range of Ksh 4.35-4.65 (Median of Ksh 4.50). Thus, at current prices, KenGen seems to have the more upside potential for short term play (a 10-15% short term upside potential before books closure). Long term, KPLC has much higher potential as the realistic price should be in the Ksh 10-15 region once they wipe out the negative working capital in the next one year and are thus able to improve drastically on the dividends. Happy Hunting Looks like KenGen will have a very good 2024-2025 financial year with Ksh 4.14bn sale in carbon credits to be booked in Jan 2025......that's about 2/3rds of this year's total net earnings being generated from that single transaction. https://www.businessdail...n-credits-sales-4822446
Diamond Trust Bank also looks like it's going to report some muscular Q3 performance based on the DTB Tanzania Q3 results. As the largest Kenyan bank in TZ (both in Assets and Profits), it reported a 331% net earnings with a net profit of Ksh 1.9bn (equivalent to about Ksh 6.80 EPS from just the TZ unit for Q3). https://x.com/TheAbojani...-TaIl6iaf6HQ-w&s=19
My third short term pick (6 months horizon) is Umeme. Their 20 year power concession ends in Feb 2025 (3 months time) with a buyout by the Uganda Govt projected at about USD 255M (about KSh 20.50 per share). Add a final dividend of about Ksh 2-3, and that's a value of about Ksh 23 per share by End of April 2025. Currently trading at Ksh 16-16.50, hence potential capital gains of about Ksh 7 (about 40%) in the next 6 months. Happy Hunting. Easy money right here. The carbon credits cash is enough to fund a large chunk of the current dividend and another thing is that Kengen is sitting on 25bn in cash which should bring in another 3bn in interest income cash if they are not quick to spend it. True.....the Carbon Credit cash actually funds 97% of their current dividends. KPLC also has about 17bn of their cash as at end of June 2024 in addition to the Ksh 25bn in cash position. Question is whether the Carbon Credits cash will be coming at same levels every year or its accumulated credits (The report says they still will be left with about 1.8M credits worth about Ksh 1.6bn. Happy Hunting
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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KaunganaDoDo wrote:stocksmaster wrote:stocksmaster wrote:watesh wrote:stocksmaster wrote:watesh wrote:Ericsson wrote:stocksmaster wrote:watesh wrote:watesh wrote:Let me join in and share mine
Key Play For 2024
Kenya Power
The stock that everyone loves to hate.
FY23 EPS: (1.64)
Current Share Price: 1.6
P/E rato: NIL
Dividend pay out ratio: NIL
Tail winds
1.New tariffs – Average charge per unit will be up by at least 40% (consumption charge excluding FCC,FERFA,IA etc) this goes directly to KPLC. Margins doubled at half year as compared to the 2022 election tariff. 2nd half % growth will be lower since new tariffs commenced on April.
2. EPRA approved recovery of 6.5bn for tariff cut extension. Half of it will be in FY24 so that’s an extra 3.2bn
3. Heavy recovery of forex charges – In FY23 there was a 5bn charge in the cost of sales related to unrealized forex costs that wasn’t recovered due to lack of dollars for payment. KP had to eat up the cost. Currently in FY24, H2 forex recoveries as of April are already 40% higher than H1 indicating heavy recoveries in H2.
4. $/Ksh rate – If by June 30th the rate of dollar to ksh sticks to 140 and below, there will be very little unrealized for losses for the year. Assuming costs don’t skyrocket and gross profit at H2 is similar to H1, EPS should be approx 5 when rate is at 150, 3 when at 160 and sinks into losses past 170.
5. Cashflows – For the past 2 financial years KP has had really amazing cashflows. Now sitting at almost 20bn as at Dec 2023. I expect at least 2bn in interest income
6. Transfer of assets to Ketraco – KP CEO & CFO revealed they rarely revalue their assets eg land. Hence valuations are very highly muted. The transfer wipes out 80bn in debt. Commercial debt stands at 36bn. I wonder if this will trigger a forex loss recovery that has accumulated to over ksh20bn. Either way less interest charges and unrealized forex loss charge.
7. Good rains – From November to date, the more margin rich hydro power is being dispatched over thermal. There is more curtailment of wind & geothermal in favor of hydro. Wind is low margin.
8. Debt recovery – Defaults are over 35bn and there was a provisions charge of 2bn. A tender was issued in Feb for this. Each billion counts in the bottom line.
9. New management – New board, new ceo, more minority shareholder representation. The stalemate is over and things can get moving.
10. Presidential directive – All commercial state corporations should provide 80% of profit after tax for payment of dividend. It’s a long shot but if KP even issues something small, share price will skyrocket. CFO revealed the new board was asking him to budget something for minority shareholders.
11. No major power plant – No jump in capacity charges which are KP’s biggest COS charge.
12. IMF is watching like a hawk
Headwinds
1.ksh – each drop means added costs
2. Loans repayments – Biggest consumer of cash. Moratorium from govt is expiring
3. Government – Any directive can sink the ship
4. Procurement theft – This is where the biggest leakage is. Major projects = major theft. Currently, we have meters and more last mile.
5. Capital gains tax – Transferring assets to Ketraco may trigger a huge capital gains tax.
6. Negative working capital - its shrinking but just doesn't look good on the company.
7. New debt from world bank $300m interest free. It will ease cashflow pains but more unrealized forex losses again.
My target price is 3+ by June 2025 but this is highly dependent on the performance of the ksh. I will jump ship past 170. My current cost basis is 1.55, a price it has stuck to since the onset of the pandemic. So the downside risk is kind of muted. Not planning to hold long term because power utility growth is just 3 - 5% annually
Please criticize my overly optimistic view.
Small update on this: 30th June (date of financial year end). Shilling closed at 130 which means some of the unrealized foreign exchange losses incurred in H1 have been reversed (H1 opened at 140 and closed at 156 as of Dec 31st). Out of the 15 billion charge, around 3bn should be interest charge and others. Without that unrealized forex charge, H1 PBT should be in the range of 10 - 12.5bn. H2 forex charge recoveries were cumulatively approx 60% higher than h1 despite the appreciation of the ksh and heavy rains in Nov, Dec, March, April and May. The extra 10bob appreciation of the ksh means Kenya Power has some unrealized forex gains. However, assuming they book it as a below the line item hence doesn't affect the PBT, I expect PBT for the full year to hit 20 - 25bn (I have also assumed H1 performance is = to H2). Hence PAT of ksh14 - ksh17.5 and EPS of approx 7 - 8.75 for FY24. See you at end of October. https://www.businessdail...ance-of-profits-4700410
@Watesh is onto something. If KPLC makes the minimum predicted Ksh 7 and its board has to obey the idiotic 80% rule that is now embedded as a performance contract metric for state parastatals CEOs, then this share will be on fire. Even a conservative Ksh 1 (which is 14% payout) would push this share to at least around Ksh 4. Happy Hunting KPLC is exempted from the 80% dividend rule. Hmmm...interesting. I haven't come across this info on exemption anywhere. National Treasury Circular No.2/2024 just gives a blanket statement for all commercial state corporations. What about Kengen? Treasury Circular No.2/2024 seems to have no exclusions on the 80% rule....unless the exemption was provided for in the KPLC CEO performance contract. https://www.treasury.go.ke/circulars/
The GM Finance and the KPLC MD seem to indicate that the KPLC shareholders are in for good tidings via possible dividends after half a decade wait: https://youtu.be/V5dB_OL0qDA?si=FfS-349b3HJltFkn
https://youtu.be/gFvwf_KYsLs?si=kZ6AcDmVQi150Vsm
If KPLC is able to restructure it's balance sheet (by Dec 2024 as mandated by IMF) by transfering the 90% foreign denominated loans to Ketraco as it transfers equivalent assets, KPLC is a Ksh 20bn PAT entity (Ksh 10 EPS)..... Happy Hunting. CFO did state the new board asked him to budget for a dividend. Surely, they can just retain all the profits and payout the interest income from the 20bn cash. One thing i noted from Kenya Power is their cashflows have been solid since FY21. They paid out all the expensive overdrafts and their borrowing payments are much higher than proceeds from borrowing. Net cash positive mainly from internally generated cash. @Watesh - KPLC (and KenGen) on fire. How high KPLC goes will largely depend on the dividend after 6 years dividend drought and the balance sheet restructuring. Happy Hunting KPLC share price seems to have found stability at Ksh 3.50 as market awaits end of year results release in the next 2-3 weeks. Dividends of Ksh 1 and above should push it past Ksh 4 which will be a good time to exit since from 2025, it seems it will have competitors (end of monopoly) including direct power sales to consumers by energy generators including KenGen. Next short term play could be KCB. The sale of NBK to Access Bank by Dec 2024 means KCB will book about Ksh 17bn ( projections from KCB half year financial statements), about Ksh 5.30 per KCB share. This may stimulate a special dividend from this one off transaction. The bank is also on course to record at least 55bn net profit for 2024 (Ksh 17 per share),.which should at least generate another Ksh 3 ordinary final dividend. Happy Hunting. The Hour Has Come. Lets see....Dividends should be 3 Bob and above we see how the Prices adjusts. then later we see the effects of assets Transfer to KETRACO in exchange of GoK Onlend loans Asset transfer to KETRACO in limbo Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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stocksmaster wrote:watesh wrote:watesh wrote:watesh wrote:Let me join in and share mine
Key Play For 2024
Kenya Power
The stock that everyone loves to hate.
FY23 EPS: (1.64)
Current Share Price: 1.6
P/E rato: NIL
Dividend pay out ratio: NIL
Tail winds
1.New tariffs – Average charge per unit will be up by at least 40% (consumption charge excluding FCC,FERFA,IA etc) this goes directly to KPLC. Margins doubled at half year as compared to the 2022 election tariff. 2nd half % growth will be lower since new tariffs commenced on April.
2. EPRA approved recovery of 6.5bn for tariff cut extension. Half of it will be in FY24 so that’s an extra 3.2bn
3. Heavy recovery of forex charges – In FY23 there was a 5bn charge in the cost of sales related to unrealized forex costs that wasn’t recovered due to lack of dollars for payment. KP had to eat up the cost. Currently in FY24, H2 forex recoveries as of April are already 40% higher than H1 indicating heavy recoveries in H2.
4. $/Ksh rate – If by June 30th the rate of dollar to ksh sticks to 140 and below, there will be very little unrealized for losses for the year. Assuming costs don’t skyrocket and gross profit at H2 is similar to H1, EPS should be approx 5 when rate is at 150, 3 when at 160 and sinks into losses past 170.
5. Cashflows – For the past 2 financial years KP has had really amazing cashflows. Now sitting at almost 20bn as at Dec 2023. I expect at least 2bn in interest income
6. Transfer of assets to Ketraco – KP CEO & CFO revealed they rarely revalue their assets eg land. Hence valuations are very highly muted. The transfer wipes out 80bn in debt. Commercial debt stands at 36bn. I wonder if this will trigger a forex loss recovery that has accumulated to over ksh20bn. Either way less interest charges and unrealized forex loss charge.
7. Good rains – From November to date, the more margin rich hydro power is being dispatched over thermal. There is more curtailment of wind & geothermal in favor of hydro. Wind is low margin.
8. Debt recovery – Defaults are over 35bn and there was a provisions charge of 2bn. A tender was issued in Feb for this. Each billion counts in the bottom line.
9. New management – New board, new ceo, more minority shareholder representation. The stalemate is over and things can get moving.
10. Presidential directive – All commercial state corporations should provide 80% of profit after tax for payment of dividend. It’s a long shot but if KP even issues something small, share price will skyrocket. CFO revealed the new board was asking him to budget something for minority shareholders.
11. No major power plant – No jump in capacity charges which are KP’s biggest COS charge.
12. IMF is watching like a hawk
Headwinds
1.ksh – each drop means added costs
2. Loans repayments – Biggest consumer of cash. Moratorium from govt is expiring
3. Government – Any directive can sink the ship
4. Procurement theft – This is where the biggest leakage is. Major projects = major theft. Currently, we have meters and more last mile.
5. Capital gains tax – Transferring assets to Ketraco may trigger a huge capital gains tax.
6. Negative working capital - its shrinking but just doesn't look good on the company.
7. New debt from world bank $300m interest free. It will ease cashflow pains but more unrealized forex losses again.
My target price is 3+ by June 2025 but this is highly dependent on the performance of the ksh. I will jump ship past 170. My current cost basis is 1.55, a price it has stuck to since the onset of the pandemic. So the downside risk is kind of muted. Not planning to hold long term because power utility growth is just 3 - 5% annually
Please criticize my overly optimistic view.
Small update on this: 30th June (date of financial year end). Shilling closed at 130 which means some of the unrealized foreign exchange losses incurred in H1 have been reversed (H1 opened at 140 and closed at 156 as of Dec 31st). Out of the 15 billion charge, around 3bn should be interest charge and others. Without that unrealized forex charge, H1 PBT should be in the range of 10 - 12.5bn. H2 forex charge recoveries were cumulatively approx 60% higher than h1 despite the appreciation of the ksh and heavy rains in Nov, Dec, March, April and May. The extra 10bob appreciation of the ksh means Kenya Power has some unrealized forex gains. However, assuming they book it as a below the line item hence doesn't affect the PBT, I expect PBT for the full year to hit 20 - 25bn (I have also assumed H1 performance is = to H2). Hence PAT of ksh14 - ksh17.5 and EPS of approx 7 - 8.75 for FY24. See you at end of October. End of October is here. Profit after tax surged to KES 30.08B, a substantial recovery from the previous year’s loss of KES 3.2B, driven by 21% revenue growth and lower finance costs. ⚡️ Electricity sales rose 21% to KES 231.12B, boosted by 447,251 new customer connections and manufacturing growth. 💹 Stronger Shilling in the second half limited cost of sales increases, resulting in a higher gross margin relative to revenue growth. 📊 New cost-reflective tariff in April 2023 supported sales growth. 💰 Finance costs dropped by KES 24.84B, with a KES 7.88B foreign exchange gain from Shilling appreciation against the USD and Euro. ⚙️ Power purchase costs increased to KES 150.61B due to higher demand and earlier high exchange rates. 💼 Operating expenses rose to KES 46.28B due to 92% higher wheeling charges and additional technical staff. 📜 Staff costs impacted by 2023 Finance Act and inflation, managed through zero-based budgeting. 🔄 Working capital improved from negative KES 74.85B (FY 2019-2020) to negative KES 27.44B. 💸 Proposed dividend of KES 0.70 per share, payable 31 Jan 2025. So my target exit price will be calculated using a P/E of 1 - 1.5. So with than an EPS of 15, my minimum share price is 15. Otherwise, I can hold with a starting dividend yield of 46%. There is a likelihood of an interim dividend in March. Free Cashflows should drastically improve once all power producer arreas are cleared. Debt payments should also be lower since commercial debt obligations are much lower. Short term, the market seems to prefer valuation based on dividend yield. Using the Tbills as a benchmark (since the KPLC and KenGen shares are most likely competing for investment money with these fixed income instruments),the prevailing rates for 91,183 and 364 days instruments are approximately 14%, 14.5% and 15% respectively. That means the short term price target for KPLC using the average of 14.5% yield at a dividend of Ksh 0.70 is Ksh 4.82 hence most likely a trading range of 4.65-5.00 (for a 14-15% dividend yield). For KenGen, applying same parameters of a trading range of 14-15% dividend yield gives a range of Ksh 4.35-4.65 (Median of Ksh 4.50). Thus, at current prices, KenGen seems to have the more upside potential for short term play (a 10-15% short term upside potential before books closure). Long term, KPLC has much higher potential as the realistic price should be in the Ksh 10-15 region once they wipe out the negative working capital in the next one year and are thus able to improve drastically on the dividends. Happy Hunting Is the Kengen dividend sustainable with the upcoming power projects it intends to do? Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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watesh wrote:stocksmaster wrote:stocksmaster wrote:watesh wrote:watesh wrote:watesh wrote:Let me join in and share mine
Key Play For 2024
Kenya Power
The stock that everyone loves to hate.
FY23 EPS: (1.64)
Current Share Price: 1.6
P/E rato: NIL
Dividend pay out ratio: NIL
Tail winds
1.New tariffs – Average charge per unit will be up by at least 40% (consumption charge excluding FCC,FERFA,IA etc) this goes directly to KPLC. Margins doubled at half year as compared to the 2022 election tariff. 2nd half % growth will be lower since new tariffs commenced on April.
2. EPRA approved recovery of 6.5bn for tariff cut extension. Half of it will be in FY24 so that’s an extra 3.2bn
3. Heavy recovery of forex charges – In FY23 there was a 5bn charge in the cost of sales related to unrealized forex costs that wasn’t recovered due to lack of dollars for payment. KP had to eat up the cost. Currently in FY24, H2 forex recoveries as of April are already 40% higher than H1 indicating heavy recoveries in H2.
4. $/Ksh rate – If by June 30th the rate of dollar to ksh sticks to 140 and below, there will be very little unrealized for losses for the year. Assuming costs don’t skyrocket and gross profit at H2 is similar to H1, EPS should be approx 5 when rate is at 150, 3 when at 160 and sinks into losses past 170.
5. Cashflows – For the past 2 financial years KP has had really amazing cashflows. Now sitting at almost 20bn as at Dec 2023. I expect at least 2bn in interest income
6. Transfer of assets to Ketraco – KP CEO & CFO revealed they rarely revalue their assets eg land. Hence valuations are very highly muted. The transfer wipes out 80bn in debt. Commercial debt stands at 36bn. I wonder if this will trigger a forex loss recovery that has accumulated to over ksh20bn. Either way less interest charges and unrealized forex loss charge.
7. Good rains – From November to date, the more margin rich hydro power is being dispatched over thermal. There is more curtailment of wind & geothermal in favor of hydro. Wind is low margin.
8. Debt recovery – Defaults are over 35bn and there was a provisions charge of 2bn. A tender was issued in Feb for this. Each billion counts in the bottom line.
9. New management – New board, new ceo, more minority shareholder representation. The stalemate is over and things can get moving.
10. Presidential directive – All commercial state corporations should provide 80% of profit after tax for payment of dividend. It’s a long shot but if KP even issues something small, share price will skyrocket. CFO revealed the new board was asking him to budget something for minority shareholders.
11. No major power plant – No jump in capacity charges which are KP’s biggest COS charge.
12. IMF is watching like a hawk
Headwinds
1.ksh – each drop means added costs
2. Loans repayments – Biggest consumer of cash. Moratorium from govt is expiring
3. Government – Any directive can sink the ship
4. Procurement theft – This is where the biggest leakage is. Major projects = major theft. Currently, we have meters and more last mile.
5. Capital gains tax – Transferring assets to Ketraco may trigger a huge capital gains tax.
6. Negative working capital - its shrinking but just doesn't look good on the company.
7. New debt from world bank $300m interest free. It will ease cashflow pains but more unrealized forex losses again.
My target price is 3+ by June 2025 but this is highly dependent on the performance of the ksh. I will jump ship past 170. My current cost basis is 1.55, a price it has stuck to since the onset of the pandemic. So the downside risk is kind of muted. Not planning to hold long term because power utility growth is just 3 - 5% annually
Please criticize my overly optimistic view.
Small update on this: 30th June (date of financial year end). Shilling closed at 130 which means some of the unrealized foreign exchange losses incurred in H1 have been reversed (H1 opened at 140 and closed at 156 as of Dec 31st). Out of the 15 billion charge, around 3bn should be interest charge and others. Without that unrealized forex charge, H1 PBT should be in the range of 10 - 12.5bn. H2 forex charge recoveries were cumulatively approx 60% higher than h1 despite the appreciation of the ksh and heavy rains in Nov, Dec, March, April and May. The extra 10bob appreciation of the ksh means Kenya Power has some unrealized forex gains. However, assuming they book it as a below the line item hence doesn't affect the PBT, I expect PBT for the full year to hit 20 - 25bn (I have also assumed H1 performance is = to H2). Hence PAT of ksh14 - ksh17.5 and EPS of approx 7 - 8.75 for FY24. See you at end of October. End of October is here. Profit after tax surged to KES 30.08B, a substantial recovery from the previous year’s loss of KES 3.2B, driven by 21% revenue growth and lower finance costs. ⚡️ Electricity sales rose 21% to KES 231.12B, boosted by 447,251 new customer connections and manufacturing growth. 💹 Stronger Shilling in the second half limited cost of sales increases, resulting in a higher gross margin relative to revenue growth. 📊 New cost-reflective tariff in April 2023 supported sales growth. 💰 Finance costs dropped by KES 24.84B, with a KES 7.88B foreign exchange gain from Shilling appreciation against the USD and Euro. ⚙️ Power purchase costs increased to KES 150.61B due to higher demand and earlier high exchange rates. 💼 Operating expenses rose to KES 46.28B due to 92% higher wheeling charges and additional technical staff. 📜 Staff costs impacted by 2023 Finance Act and inflation, managed through zero-based budgeting. 🔄 Working capital improved from negative KES 74.85B (FY 2019-2020) to negative KES 27.44B. 💸 Proposed dividend of KES 0.70 per share, payable 31 Jan 2025. So my target exit price will be calculated using a P/E of 1 - 1.5. So with than an EPS of 15, my minimum share price is 15. Otherwise, I can hold with a starting dividend yield of 46%. There is a likelihood of an interim dividend in March. Free Cashflows should drastically improve once all power producer arreas are cleared. Debt payments should also be lower since commercial debt obligations are much lower. Short term, the market seems to prefer valuation based on dividend yield. Using the Tbills as a benchmark (since the KPLC and KenGen shares are most likely competing for investment money with these fixed income instruments),the prevailing rates for 91,183 and 364 days instruments are approximately 14%, 14.5% and 15% respectively. That means the short term price target for KPLC using the average of 14.5% yield at a dividend of Ksh 0.70 is Ksh 4.82 hence most likely a trading range of 4.65-5.00 (for a 14-15% dividend yield). For KenGen, applying same parameters of a trading range of 14-15% dividend yield gives a range of Ksh 4.35-4.65 (Median of Ksh 4.50). Thus, at current prices, KenGen seems to have the more upside potential for short term play (a 10-15% short term upside potential before books closure). Long term, KPLC has much higher potential as the realistic price should be in the Ksh 10-15 region once they wipe out the negative working capital in the next one year and are thus able to improve drastically on the dividends. Happy Hunting Looks like KenGen will have a very good 2024-2025 financial year with Ksh 4.14bn sale in carbon credits to be booked in Jan 2025......that's about 2/3rds of this year's total net earnings being generated from that single transaction. https://www.businessdail...n-credits-sales-4822446
Diamond Trust Bank also looks like it's going to report some muscular Q3 performance based on the DTB Tanzania Q3 results. As the largest Kenyan bank in TZ (both in Assets and Profits), it reported a 331% net earnings with a net profit of Ksh 1.9bn (equivalent to about Ksh 6.80 EPS from just the TZ unit for Q3). https://x.com/TheAbojani...-TaIl6iaf6HQ-w&s=19
My third short term pick (6 months horizon) is Umeme. Their 20 year power concession ends in Feb 2025 (3 months time) with a buyout by the Uganda Govt projected at about USD 255M (about KSh 20.50 per share). Add a final dividend of about Ksh 2-3, and that's a value of about Ksh 23 per share by End of April 2025. Currently trading at Ksh 16-16.50, hence potential capital gains of about Ksh 7 (about 40%) in the next 6 months. Happy Hunting. Easy money right here. The carbon credits cash is enough to fund a large chunk of the current dividend and another thing is that Kengen is sitting on 25bn in cash which should bring in another 3bn in interest income cash if they are not quick to spend it. Check the position of cash going forward.They have capex projects going on which will most likely consume a significant chunk of the cash. Olkaria I modernization Olkaria I unit IV and V Turbine upgrading Gogo falls redevelopment Olkaria VII Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Veteran Joined: 8/10/2014 Posts: 969 Location: Kenya
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Ericsson wrote:watesh wrote:stocksmaster wrote:stocksmaster wrote:watesh wrote:watesh wrote:watesh wrote:Let me join in and share mine
Key Play For 2024
Kenya Power
The stock that everyone loves to hate.
FY23 EPS: (1.64)
Current Share Price: 1.6
P/E rato: NIL
Dividend pay out ratio: NIL
Tail winds
1.New tariffs – Average charge per unit will be up by at least 40% (consumption charge excluding FCC,FERFA,IA etc) this goes directly to KPLC. Margins doubled at half year as compared to the 2022 election tariff. 2nd half % growth will be lower since new tariffs commenced on April.
2. EPRA approved recovery of 6.5bn for tariff cut extension. Half of it will be in FY24 so that’s an extra 3.2bn
3. Heavy recovery of forex charges – In FY23 there was a 5bn charge in the cost of sales related to unrealized forex costs that wasn’t recovered due to lack of dollars for payment. KP had to eat up the cost. Currently in FY24, H2 forex recoveries as of April are already 40% higher than H1 indicating heavy recoveries in H2.
4. $/Ksh rate – If by June 30th the rate of dollar to ksh sticks to 140 and below, there will be very little unrealized for losses for the year. Assuming costs don’t skyrocket and gross profit at H2 is similar to H1, EPS should be approx 5 when rate is at 150, 3 when at 160 and sinks into losses past 170.
5. Cashflows – For the past 2 financial years KP has had really amazing cashflows. Now sitting at almost 20bn as at Dec 2023. I expect at least 2bn in interest income
6. Transfer of assets to Ketraco – KP CEO & CFO revealed they rarely revalue their assets eg land. Hence valuations are very highly muted. The transfer wipes out 80bn in debt. Commercial debt stands at 36bn. I wonder if this will trigger a forex loss recovery that has accumulated to over ksh20bn. Either way less interest charges and unrealized forex loss charge.
7. Good rains – From November to date, the more margin rich hydro power is being dispatched over thermal. There is more curtailment of wind & geothermal in favor of hydro. Wind is low margin.
8. Debt recovery – Defaults are over 35bn and there was a provisions charge of 2bn. A tender was issued in Feb for this. Each billion counts in the bottom line.
9. New management – New board, new ceo, more minority shareholder representation. The stalemate is over and things can get moving.
10. Presidential directive – All commercial state corporations should provide 80% of profit after tax for payment of dividend. It’s a long shot but if KP even issues something small, share price will skyrocket. CFO revealed the new board was asking him to budget something for minority shareholders.
11. No major power plant – No jump in capacity charges which are KP’s biggest COS charge.
12. IMF is watching like a hawk
Headwinds
1.ksh – each drop means added costs
2. Loans repayments – Biggest consumer of cash. Moratorium from govt is expiring
3. Government – Any directive can sink the ship
4. Procurement theft – This is where the biggest leakage is. Major projects = major theft. Currently, we have meters and more last mile.
5. Capital gains tax – Transferring assets to Ketraco may trigger a huge capital gains tax.
6. Negative working capital - its shrinking but just doesn't look good on the company.
7. New debt from world bank $300m interest free. It will ease cashflow pains but more unrealized forex losses again.
My target price is 3+ by June 2025 but this is highly dependent on the performance of the ksh. I will jump ship past 170. My current cost basis is 1.55, a price it has stuck to since the onset of the pandemic. So the downside risk is kind of muted. Not planning to hold long term because power utility growth is just 3 - 5% annually
Please criticize my overly optimistic view.
Small update on this: 30th June (date of financial year end). Shilling closed at 130 which means some of the unrealized foreign exchange losses incurred in H1 have been reversed (H1 opened at 140 and closed at 156 as of Dec 31st). Out of the 15 billion charge, around 3bn should be interest charge and others. Without that unrealized forex charge, H1 PBT should be in the range of 10 - 12.5bn. H2 forex charge recoveries were cumulatively approx 60% higher than h1 despite the appreciation of the ksh and heavy rains in Nov, Dec, March, April and May. The extra 10bob appreciation of the ksh means Kenya Power has some unrealized forex gains. However, assuming they book it as a below the line item hence doesn't affect the PBT, I expect PBT for the full year to hit 20 - 25bn (I have also assumed H1 performance is = to H2). Hence PAT of ksh14 - ksh17.5 and EPS of approx 7 - 8.75 for FY24. See you at end of October. End of October is here. Profit after tax surged to KES 30.08B, a substantial recovery from the previous year’s loss of KES 3.2B, driven by 21% revenue growth and lower finance costs. ⚡️ Electricity sales rose 21% to KES 231.12B, boosted by 447,251 new customer connections and manufacturing growth. 💹 Stronger Shilling in the second half limited cost of sales increases, resulting in a higher gross margin relative to revenue growth. 📊 New cost-reflective tariff in April 2023 supported sales growth. 💰 Finance costs dropped by KES 24.84B, with a KES 7.88B foreign exchange gain from Shilling appreciation against the USD and Euro. ⚙️ Power purchase costs increased to KES 150.61B due to higher demand and earlier high exchange rates. 💼 Operating expenses rose to KES 46.28B due to 92% higher wheeling charges and additional technical staff. 📜 Staff costs impacted by 2023 Finance Act and inflation, managed through zero-based budgeting. 🔄 Working capital improved from negative KES 74.85B (FY 2019-2020) to negative KES 27.44B. 💸 Proposed dividend of KES 0.70 per share, payable 31 Jan 2025. So my target exit price will be calculated using a P/E of 1 - 1.5. So with than an EPS of 15, my minimum share price is 15. Otherwise, I can hold with a starting dividend yield of 46%. There is a likelihood of an interim dividend in March. Free Cashflows should drastically improve once all power producer arreas are cleared. Debt payments should also be lower since commercial debt obligations are much lower. Short term, the market seems to prefer valuation based on dividend yield. Using the Tbills as a benchmark (since the KPLC and KenGen shares are most likely competing for investment money with these fixed income instruments),the prevailing rates for 91,183 and 364 days instruments are approximately 14%, 14.5% and 15% respectively. That means the short term price target for KPLC using the average of 14.5% yield at a dividend of Ksh 0.70 is Ksh 4.82 hence most likely a trading range of 4.65-5.00 (for a 14-15% dividend yield). For KenGen, applying same parameters of a trading range of 14-15% dividend yield gives a range of Ksh 4.35-4.65 (Median of Ksh 4.50). Thus, at current prices, KenGen seems to have the more upside potential for short term play (a 10-15% short term upside potential before books closure). Long term, KPLC has much higher potential as the realistic price should be in the Ksh 10-15 region once they wipe out the negative working capital in the next one year and are thus able to improve drastically on the dividends. Happy Hunting Looks like KenGen will have a very good 2024-2025 financial year with Ksh 4.14bn sale in carbon credits to be booked in Jan 2025......that's about 2/3rds of this year's total net earnings being generated from that single transaction. https://www.businessdail...n-credits-sales-4822446
Diamond Trust Bank also looks like it's going to report some muscular Q3 performance based on the DTB Tanzania Q3 results. As the largest Kenyan bank in TZ (both in Assets and Profits), it reported a 331% net earnings with a net profit of Ksh 1.9bn (equivalent to about Ksh 6.80 EPS from just the TZ unit for Q3). https://x.com/TheAbojani...-TaIl6iaf6HQ-w&s=19
My third short term pick (6 months horizon) is Umeme. Their 20 year power concession ends in Feb 2025 (3 months time) with a buyout by the Uganda Govt projected at about USD 255M (about KSh 20.50 per share). Add a final dividend of about Ksh 2-3, and that's a value of about Ksh 23 per share by End of April 2025. Currently trading at Ksh 16-16.50, hence potential capital gains of about Ksh 7 (about 40%) in the next 6 months. Happy Hunting. Easy money right here. The carbon credits cash is enough to fund a large chunk of the current dividend and another thing is that Kengen is sitting on 25bn in cash which should bring in another 3bn in interest income cash if they are not quick to spend it. Check the position of cash going forward.They have capex projects going on which will most likely consume a significant chunk of the cash. Olkaria I modernization Olkaria I unit IV and V Turbine upgrading Gogo falls redevelopment Olkaria VII Since most of these projects are not still some years out, the money will sit in the bank for a while hence the interest income. The dividend won't shoot up drastically but it gives more confidence that they can maintain it despite the heavy capex needed.
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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The Kengen projects are currently ongoing with completion date of 2026 and possibility of spilling to 2027 Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Member Joined: 4/15/2008 Posts: 202
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My 2025 play seems to be around Banks. 1. IMH - 1st bank to pay a 3rd quater interim Div. 2. KCB - Outshining Equity in the regional market. Plus NBK is also doing well. In addition to the fact that it's a gov't preferred Bank 3. Safcom - but later in the 3rd Quater of 2025 (Go big and Hard) 4. DTK - Doing pretty well esp. in Tz. Others of Interest/Watchlist - NMG EABL Kegn and KPLC Do it today! Tomorrow is promise to no-one.
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Rank: Veteran Joined: 11/13/2015 Posts: 1,590
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mufasa wrote:My 2025 play seems to be around Banks.
1. IMH - 1st bank to pay a 3rd quater interim Div.
2. KCB - Outshining Equity in the regional market. Plus NBK is also doing well. In addition to the fact that it's a gov't preferred Bank
3. Safcom - but later in the 3rd Quater of 2025 (Go big and Hard)
4. DTK - Doing pretty well esp. in Tz.
Others of Interest/Watchlist - NMG EABL Kegn and KPLC Banks will get squeezed in the coming years. There's a subtle sophistication building up in our middle class in terms of investment strategy which I think banks are lagging behind or quite not getting it. Majority of Tbills(prime collateral) are now being held by 'others' meaning that households and businesses are managing their liquidity away from the tradition of putting in the bank. You can see it in the market, other sectors outside the banks have delivered outsized gains.
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Rank: Veteran Joined: 8/10/2014 Posts: 969 Location: Kenya
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mufasa wrote:My 2025 play seems to be around Banks.
1. IMH - 1st bank to pay a 3rd quater interim Div.
2. KCB - Outshining Equity in the regional market. Plus NBK is also doing well. In addition to the fact that it's a gov't preferred Bank
3. Safcom - but later in the 3rd Quater of 2025 (Go big and Hard)
4. DTK - Doing pretty well esp. in Tz.
Others of Interest/Watchlist - NMG EABL Kegn and KPLC I am curious, what opportunity do you see in NMG? All I see is contracting revenues
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Rank: Member Joined: 4/15/2008 Posts: 202
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watesh wrote:mufasa wrote:My 2025 play seems to be around Banks.
1. IMH - 1st bank to pay a 3rd quater interim Div.
2. KCB - Outshining Equity in the regional market. Plus NBK is also doing well. In addition to the fact that it's a gov't preferred Bank
3. Safcom - but later in the 3rd Quater of 2025 (Go big and Hard)
4. DTK - Doing pretty well esp. in Tz.
Others of Interest/Watchlist - NMG EABL Kegn and KPLC I am curious, what opportunity do you see in NMG? All I see is contracting revenues NMG recovery is likely to recover as long as it is able to monetize its digital products effectively. Also, they've had two buybacks in the past 3 years in an attempt to get the share to get the correct pricing. I don't think they are done trying to stabilize that Share price to help the share holders get value for money. That's why it's in my watchlist. Do it today! Tomorrow is promise to no-one.
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Rank: Member Joined: 2/15/2010 Posts: 129 Location: Kenya
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mufasa wrote:My 2025 play seems to be around Banks.
1. IMH - 1st bank to pay a 3rd quater interim Div.
2. KCB - Outshining Equity in the regional market. Plus NBK is also doing well. In addition to the fact that it's a gov't preferred Bank
3. Safcom - but later in the 3rd Quater of 2025 (Go big and Hard)
4. DTK - Doing pretty well esp. in Tz.
Others of Interest/Watchlist - NMG EABL Kegn and KPLC Hapo sawa. For saf current price is fair value for KE business with Ethiopia as a bonus. NMG I'm not sure can be saved. If you must do Aga Khan why not Jubilee?
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Rank: Elder Joined: 7/22/2008 Posts: 2,703
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Very interesting Kengen price is not dropping after book closure for dividends on 28/11/2024 It's continuing to trade at Ksh. 4.00. I was expecting at least a 60 cents drop.
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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Kusadikika wrote:Very interesting Kengen price is not dropping after book closure for dividends on 28/11/2024 It's continuing to trade at Ksh. 4.00. I was expecting at least a 60 cents drop. Book dividend closure is today Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Time to play the Market......2024
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