Rank: Elder Joined: 7/11/2010 Posts: 5,040
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Aguytrying wrote:Why I'm buying mumias at 3.30-2.50.
Ever since Kdro left, mumias has been on a downward spiral. I've gone through this thread. when it was started mumias was at 6-8 bob. this was before the profit warning and 2b loss.
There are two people who know the truth about mumias here and you know them. you May know the obvious one but there's another one.
Anyway I'm buying mumias for the recovery. how do I know there will be a recovery?
the NAV is 9.00 bob. the company made a small loss last fy. yes small. compare with kq, kk. the issue was primarily lower cane deliveries and something one of the two said.
The recovery in profits began in H2 2012-2013 fy. cane deliveries according to KNBS(thanks Cde) have picked up in 2013 especially june onwards.
The management (I don't trust so much) are under fire from shareholders and kakamega religious leaders to leave office. what more motivation does one need. they have even vowed to return to profitability, they have to. or else. Ill join the religious leaders in having them out.
If cane deliveries are good and the miller is efficient it will turn a profit. good cane deliveries also improves the co-generation, ethanol production and water. all which are full fledged this fy.
Are there risks?
yes plenty. first of comesa safeguards lifting is impending in march.
The way I see it. its a threat ad well as an opportunity. cheap imports if not regulated will leave mumias with nowhere to sell the sugar it produces, something that happened last year to some extent.
Gov can't let mumias die. why? they recently injected 500m into the company. They were quoted as saying they can't let the company die under their watch. the company is responsible for the livelihood of many people in western kenya. the efforts in shielding the company are already being seen with new regulations about tightening registration of import companies and distribution.
one way or another mumias will thrive post comesa, even if not at its former glory.
omnicane a new entrant has taken a masive loan 10b shillings to start a miller in kenya a few months back. that tells you there's money to be made in sugar buisness, though they will grow their own cane. but still they are investing billions just before the safeguards are lifted. This safeguards thing may not be as debilitating as it is thought to be.
More risks. falling international sugar prices. causing millers to shut in brazil in India. basically there's oversupply of sugar in the world with cost of sugar lower than production cost. But mumias doesn't export sugar. the risk is that cheap sugar can be sold here and lower sugar prices here in Kenya. Mumias can also import sugar and sell it here, infact last year they imported 10,000 tones. its in the FY report for 2013. I need clarification on effect of low sugar prices on mumias sales. @thedeal. help.
Opportunity? yes . the smaller millers are unlikely to survive post safeguards and mumias should buy these firms out. infact its one of the conditions that warranted an extension. mumias is in the process of shifting its farmers to the fast maturing cane.
today I read that the vision 2030 1 million acre self irrigated farming project in kilfi, tana will have 300,000 acres dedicated to sugar. how I wish that can be under mumias somehow.
So, that's why im buying Mumias.
The cartoons according to senior chartist hisah point downwards, but i think we near the bottom.
On recovery I dont see any reason i cant sell this share at 10.00 in maybe 2-3 years.
Sugar gurus and other gurus please let me know your thoughts. Tu wazue pamoja Too soon?  ( to post this) The investor's chief problem - and even his worst enemy - is likely to be himself
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