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Unga FY 2015-16
VituVingiSana
#1 Posted : Friday, September 30, 2016 10:18:28 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,118
Location: Nairobi
Unga has released decent, not spectacular, results for FY 2015-16 (year end 30th June). I hope someone can post the results on here.

EPS 4.32 [FY 2015 was 3.70 (Continuing Ops) + 1.57 (Discontinued Ops)]
NAV 5.7bn [includes non-controlling shareholders] vs 5.32bn
Dividend 1/-


That's history. The future looks good [but feel free to poke holes].

- Challenges in getting "good" maize in 2H but maize harvests and cheaper imports from UG will help.
- VAT exemptions for certain animal feed inputs in 2H and rolling into 2016-17.
- Silo rehab, new silos and grain intake improvements for further efficiencies as well as better storage capacity. 2H 2016-17.
- Expenses for ICT system upgrades, new HR hires and "brand equity" though I have no idea what "brand equity" means for Unga. I hope the ICT upgrades help in cutting down losses.

The abridged info does not specify what the financing costs were but I hope Unga benefits from the lower(ed) interest rates as well as the stable KES/USD.

Waiting for the Annual Report and AGM for more info!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Pesa Nane
#2 Posted : Friday, September 30, 2016 10:28:28 AM
Rank: Elder


Joined: 5/25/2012
Posts: 4,105
Location: 08c
Pesa Nane plans to be shilingi when he grows up.
Pesa Nane
#3 Posted : Friday, September 30, 2016 10:33:49 AM
Rank: Elder


Joined: 5/25/2012
Posts: 4,105
Location: 08c
Dividend Ksh. 1 Per Share

Payable 11 January 2017
Closure 01 December 2016

AGM 01 December 2016
Pesa Nane plans to be shilingi when he grows up.
Pesa Nane
#4 Posted : Friday, September 30, 2016 10:35:25 AM
Rank: Elder


Joined: 5/25/2012
Posts: 4,105
Location: 08c
@Vitu, check header. It's FY 2015-16.
Pesa Nane plans to be shilingi when he grows up.
Pesa Nane
#5 Posted : Friday, September 30, 2016 10:37:50 AM
Rank: Elder


Joined: 5/25/2012
Posts: 4,105
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Appointment of Director:
The Board is pleased to announce the appointment of Ms. Shilpa Haria to the Board of Directors with effect from 29 September 2016.
Pesa Nane plans to be shilingi when he grows up.
VituVingiSana
#6 Posted : Friday, September 30, 2016 11:14:50 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,118
Location: Nairobi
Pesa Nane wrote:
@Vitu, check header. It's FY 2015-16.
I am looking ahead. The results [as you know & thanks for posting] for 2015-16 have been released. So what now for 2016-17?
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
VituVingiSana
#7 Posted : Friday, September 30, 2016 11:17:31 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,118
Location: Nairobi
Pesa Nane wrote:
Appointment of Director:
The Board is pleased to announce the appointment of Ms. Shilpa Haria to the Board of Directors with effect from 29 September 2016.

Who is she? Any info on her? Is she another Ndegwa proxy?

@Aguy - Check this out. She is also connected to FTG.
http://www.bloomberg.com...&privcapId=275812554
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Elephant Man
#8 Posted : Friday, September 30, 2016 3:36:21 PM
Rank: Member


Joined: 12/24/2008
Posts: 112
At last year's AGM they banged on about Ennsvalley and how it was the best thing since sliced bread(!) as a justification for the purchase of this company from the Ndegwa's, so I'll be interested in seeing it's contribution to revenue and profit once they publish their full report. Pity that they haven't published the notice (or a full report) of these results on their website at the time of this posting - an indication of their 'efficiency'?

Last year's Annual Report mentioned the availability of their Amana brand of pulses - my own observation in the supermarkets in the area that I live and shop, is that the product is either not stocked or when it is, it's crowded out by in-house store brands.

Like @VVS, I'm not sure what this investment in 'brand equity' entails, as their company name 'Unga' and flagship product 'Jogoo' are in Kenya almost generic names for maize meal - if you go to a kiosk and ask for 'Jogoo' you'll be offered maize meal (not soap, cooking oil, razor blades or petroleum jelly) even if it's of a different brand...

In my view, for a company that generates close to Kshs. 20 billion in annual turnover, with good management, their is huge room for improvement in their operating profit - unfortunately, I don't have access to the results of competing companies to prove this point.

'Small' investors will be disappointed at the dividend payout policy (if it exists) of this company...
VituVingiSana
#9 Posted : Friday, September 30, 2016 6:52:03 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,118
Location: Nairobi
@ElepantMan - I am OK with the low dividend coz Unga is still expanding its portfolio of brands and distribution reach which needs money. Better to use the cash to expand & reduce debt rather than pay a dividend and take on more loans in this economy headed into an election year. Or come for a Rights Issue.

"Since sliced bread" Laughing out loudly Applause Laughing out loudly Applause

Amana - Spot on! I think they are trying to build a name but in-house brands are killing off the rest in pricing and visibility.

Brand Equity - "Unga" has cachet. We know "Unga" and "Jogoo" even "Exe" but there is a LOT of competition. Unga refuses to mill poor quality maize [I support the move] & that means reduced sales. I only buy Unga products. So what is the expense on "Brand Equity"???

Competitors - None are listed. I think most competitors are family-owned [so no data] & some will die off as the 2nd & 3rd generations start mis-managing them. Isn't the TSS empire in trouble?

Ennsvalley - I have been skeptical. The +ve is it's a small entity within Unga. The -ve is it might take up more time & resources of Unga's senior management than it's worth.

The new and upgraded silos should do a lot for Unga's competitiveness & ability to store more grain when it is cheaper. There's also talk of a new wheat mill in Eldoret to cater for a growing urban, wheat-eating population.

Like you, I hope to see a separate breakdown of Ennsvalley comparing 2016 vs 2015.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Elephant Man
#10 Posted : Saturday, October 01, 2016 1:04:50 PM
Rank: Member


Joined: 12/24/2008
Posts: 112
@VVS - Unga as a company, is over 100 years old in Kenya so the story of expanding their portfolio of brands and distribution reach sounds rather dated! My yardstick for dividends is whether the funds are better off in the company or in the pocket of the investor - probably the same thinking that informed Safaricom's special dividend. For as long as I've held this stock (about a decade), the directors retain the bulk of the profits in the business for 'investment'. My fear is that they really don't have a solid strategic plan (I've not seen one articulated) for these funds and that they will get tempted to 'buy' another Ennsvalley - mind you this investment (or anything like it) was probably not even on their radar five to six years ago! This is a mature company in a mature industry (and the barriers to entry are low) - it would need a sea change in their thinking and innovation to justify the level of retained profits. Probably a reason why they're ceding market share to upstarts like Capwell (established 1999) and supermarket brands (which are a very recent phenomenon in our retail economy) is their slow response to changing market dynamics.

As you say most competitors are family-owned businesses, which rather than die off, may even get listed (like Flame Tree), OR the 2nd and 3rd generations take them up to the next level in terms of 'brand portfolio expansion and distribution reach'.

My thinking is that they should now consider a glide path whereby they completely outsource milling of human foods (some of their product is currently milled by Rafiki Millers), stocking, packing and distribution of the finished product (under proper supervision and controls to ensure quality is maintained), and invest heavily in advertising and marketing the brands (brand equity?) throughout the region, while exploring new products and opportunities (did you know that Kenya has the 5th highest population of camels in Africa and along with Somalia and Ethiopia are among the leading exporters of these animals to the Middle East? Or that 5 million head of livestock are exported annually from Greater Somalia to the Middle East?). Food for thought....

VituVingiSana
#11 Posted : Sunday, October 02, 2016 2:50:55 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,118
Location: Nairobi
@ElephantMan

Great points!

1) When did Nick Hutchinson become the MD? I think he helped stabilize the firm. Is he seconded from Seaboard OR became CEO coz of Seaboard?

2) I recall a question by a shareholders about 2 years ago re: outsourced milling. Unga had challenges with quality BUT I agree with you. Perhaps with better controls, for some low value products, Unga can outsource milling and concentrate on marketing.

3) Wheat is where Unga is putting in a lot of investment. New silos in Eldoret, a new/upgraded wheat plant in Nairobi in 2014 and I believe a new/upgraded wheat plant in Eldoret slated for 2017-18. Cash intensive.

4) Ennsvalley - I hope it pans out like they thought it will. I think one reason Unga bought it was because the Ndegwas were on the selling side. I still think the sale of (profitable & dividend paying) Bullpak at the price they sold it at to buy Ennsvalley was an error.

5) Innovation in required. I see more "ready-to-heat" or "easy-to-cook" products in our stores. Noodles, spaghetti, ready-bake, heat-n-serve, etc should be a categories that Unga should not ignore and, perhaps, partnerships is the way to go.

6) Maize is "dead" for Unga but for spreading fixed costs. Too much competition from other large millers to smaller posho mills who can avoid paying taxes/VAT. Plus Unga's policy of only milling "quality" maize often leaves it without raw materials.

Unga was burnt by taking on too much debt. I don't mind if Unga borrows for expansion but it should keep the borrowing under control. Borrowing for Working Capital is a given when Unga needs to stock up on raw materials and inputs.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Aguytrying
#12 Posted : Sunday, October 02, 2016 8:12:20 AM
Rank: Elder


Joined: 7/11/2010
Posts: 5,040
VituVingiSana wrote:
[quote=Pesa Nane]Appointment of Director:
The Board is pleased to announce the appointment of Ms. Shilpa Haria to the Board of Directors with effect from 29 September 2016.

Who is she? Any info on her? Is she another Ndegwa proxy?

@Aguy - Check this out. She is also connected to FTG.
http://www.bloomberg.com...amp;privcapId=275812554[/quote]

Interesting. She looks experienced. I've never been able to deduce confidently the trustworthiness of fgth. Time will tell. i keep picking them up frequently
The investor's chief problem - and even his worst enemy - is likely to be himself
Elephant Man
#13 Posted : Monday, October 03, 2016 11:07:18 AM
Rank: Member


Joined: 12/24/2008
Posts: 112
@VVS - Nick Hutchinson has been MD for as long as I've held this stock - so for at least a decade. I think he was a Seabord appointment. He's been good for turning it around and stability - but for growth?

I agree with you on the Bulpak vs Ennsvalley investment - something that the directors may regret (or maybe not, as the majority shareholder had a very large interest in Ennsvalley which they have now succeeding in disposing of to a company where they have lower exposure!).

Wheat - is Fanie Kruger (the largest wheat farmer in the Rift) and his family still farming around Eldoret? Last I heard was that he had sold his farm to some local bigwigs to put up a golf estate (Sergoit something or the other). So whether the new investment in Eldoret is prudent remains to be seen. Why did they not consider investing in a new plant in Nakuru where Unga also have a large facility? In my view, it's more central to the wheat growing regions of the North Rift and Narok (also a large wheat growing region), with lower 'political risk', as well as utilise the new SGR to Naivasha for imports and distribution to Nairobi once its complete.

Maize (Jogoo brand) - packaging easy to counterfeit and then fill with maize milled from my local posho mill or Kariobangi Light Industries and distribute to kiosks with a mkokoteni! Capwells's Soko could sound like Jogoo to some people! Ever noticed similarity of the colour on the Soko packaging with that of Jogoo?

Unga's Commercial Street plant is now an expensive piece of real estate - consider selling it and move to Tatu Industrial Park, or Kengen's intended industrial park in Naivasha (lower cost energy and good transportation link once SGR is done). Or alternatively, lease it out (complete with the factory) to one of the millers to whom you will outsource your milling to.

Any one know whether they managed to dispose of their 4 acres on Ngong Road? Should be worth at least a couple of bob a share...





VituVingiSana
#14 Posted : Monday, October 03, 2016 11:47:52 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,118
Location: Nairobi
Elephant Man wrote:
@VVS - Nick Hutchinson has been MD for as long as I've held this stock - so for at least a decade. I think he was a Seabord appointment. He's been good for turning it around and stability - but for growth?

New senior staff has been hired in 2015 and my gut feeling is succession is being thought out with Nick moving into "strategy" from operations. The new hires were mentioned in the 2015 Annual Report. Doesn't Ennsvalley seem a Nick (notwithstanding the sale by the Ndegwas) project?

I agree with you on the Bulpak vs Ennsvalley investment - something that the directors may regret (or maybe not, as the majority shareholder had a very large interest in Ennsvalley which they have now succeeding in disposing of to a company where they have lower exposure!). Bingo! You nailed it. One more acquisition like this and I am bailing out!

Wheat - is Fanie Kruger (the largest wheat farmer in the Rift) and his family still farming around Eldoret? Last I heard was that he had sold his farm to some local bigwigs to put up a golf estate (Sergoit something or the other). So whether the new investment in Eldoret is prudent remains to be seen. Why did they not consider investing in a new plant in Nakuru where Unga also have a large facility? In my view, it's more central to the wheat growing regions of the North Rift and Narok (also a large wheat growing region), with lower 'political risk', as well as utilise the new SGR to Naivasha for imports and distribution to Nairobi once its complete.

My thoughts: Eldoret has an existing mill further away from Nairobi i.e. Unga can supply a larger region from Eldoret including Kitale, Kisumu, Isiolo & Western.
Nairobi can comfortably supply Naivasha (& possibly Nakuru), Ukambani and Kajiado. I believe Nairobi runs on (increasingly) imported wheat since KE wheat production is stagnant/declining.
SGR - I think the plans to expand Eldoret were advanced when the "SGR to Naivasha" was announced. Plus who knows when it will be built.


Maize (Jogoo brand) - packaging easy to counterfeit and then fill with maize milled from my local posho mill or Kariobangi Light Industries and distribute to kiosks with a mkokoteni! Capwells's Soko could sound like Jogoo to some people! Ever noticed similarity of the colour on the Soko packaging with that of Jogoo?

Ouch! Selling Bulpak could expose them to funny business. I think Unga would rather focus on Hostess than Jogoo!

Unga's Commercial Street plant is now an expensive piece of real estate - consider selling it and move to Tatu Industrial Park, or Kengen's intended industrial park in Naivasha (lower cost energy and good transportation link once SGR is done). Or alternatively, lease it out (complete with the factory) to one of the millers to whom you will outsource your milling to.

Yes! There's Tatu among other "industrial parks" being built out of town. Plenty of land. New construction. Better/efficient layouts. At most, retain a wholesale sales outlet on Commercial Street.

Any one know whether they managed to dispose of their 4 acres on Ngong Road? Should be worth at least a couple of bob a share...

Didn't they withdraw it from sale? It has zoning/use restrictions therefore not worth as much. Nevertheless, there's value when the right buyer [even GoK] comes calling. Perhaps the expansion of Ngong Road may increase interest in the property. A bus park?


Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Pesa Nane
#15 Posted : Wednesday, November 30, 2016 7:46:49 PM
Rank: Elder


Joined: 5/25/2012
Posts: 4,105
Location: 08c
Aguytrying wrote:
VituVingiSana wrote:
[quote=Pesa Nane]Appointment of Director:
The Board is pleased to announce the appointment of Ms. Shilpa Haria to the Board of Directors with effect from 29 September 2016.

Who is she? Any info on her? Is she another Ndegwa proxy?

@Aguy - Check this out. She is also connected to FTG.
http://www.bloomberg.com...amp;privcapId=275812554[/quote]

Interesting. She looks experienced. I've never been able to deduce confidently the trustworthiness of fgth. Time will tell. i keep picking them up frequently

Pesa Nane plans to be shilingi when he grows up.
VituVingiSana
#16 Posted : Thursday, December 22, 2016 12:32:55 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,118
Location: Nairobi
Waiting for the dividend. I think it will be paid on/around 11th Jan. Let the good times roll!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Ebenyo
#17 Posted : Thursday, December 22, 2016 6:27:04 AM
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Joined: 4/4/2016
Posts: 1,997
Location: Kitale
VituVingiSana wrote:
Waiting for the dividend. I think it will be paid on/around 11th Jan. Let the good times roll!


A very good timing indeed.Majority of people will be broke around that time especially speculators!
Towards the goal of financial freedom
VituVingiSana
#18 Posted : Thursday, December 22, 2016 10:28:25 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,118
Location: Nairobi
From Bankelele
http://bankelele.co.ke/2016/12/unga2016agm.html
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Ebenyo
#19 Posted : Friday, December 23, 2016 8:25:15 PM
Rank: Veteran


Joined: 4/4/2016
Posts: 1,997
Location: Kitale
VituVingiSana wrote:


what were the resolutions? im having difficulty opening the link.
Towards the goal of financial freedom
VituVingiSana
#20 Posted : Saturday, December 24, 2016 4:09:10 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,118
Location: Nairobi
Ebenyo wrote:
VituVingiSana wrote:


what were the resolutions? im having difficulty opening the link.


http://bankelele.co.ke/2016/12/unga2016agm.html is the only link I have. It opened up easily for me.

Unga Holdings 2016 AGM

The Unga Group had its 2016 AGM at the Intercontinental Hotel today. Revenue and profit were up, but profit was down compared to 2015 which has been boosted by the sale of a Bullpak subsidiary.

In comments at the AGM, the Unga chairman and MD spoke on various issues such as changing food patterns as seen in new products that they are adding to reach consumers and farmer segments, more technology being deployed in agriculture and the rise of young agri-preneurs who may be one day disrupt the food chain, difficulty obtaining quality maize, difficulties with getting timely payments from Nakumatt, and overall as slow down in the economy as seen in lower buying power for their products and a tightening of credit at banks.

Ahead of the usual votes to approve the accounts, directors re-election, dividend (Kshs 1/= share) and re-naming of the company to Unga PLC (as per the 2015 companies act), the shareholders Q&A was the main part of the AGM.unga-2016-agm

Excerpts

Dividends & Bonus: Why no bonus after the Bullpak sale? The money from Bullpak went to buy Ennsvalley Bakery (and shareholders had approved it)
Product reach: Unga is a national brand, that’s sold mainly in supermarkets, but are not in every part of the country. They are seeing challenges with buyers affording products and will introduce smaller packs of some products to remain affordable and within reach of consumers.
Gift items: One shareholder asked for Unga shopping vouchers instead of lunch, and when the Chairman announced that there was a product pack to go with lunch, this got a cheer from the many shareholders, but the very next question was for t-shirts to market the company.
The Chairman said they had made changes based on requests at past AGM’s but that she would endeavor to one day to have everything shareholders wanted – dividends , t-shirt, lunch, and product pack.

Hat tip to @bankelele the blogger

Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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