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KPC IPO - Bearish Noise
Rank: Member Joined: 4/15/2008 Posts: 238
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Current date check: Jan 26, 2026 – IPO still wide open (closes Feb 19), so plenty of time. I'm going contrarian here. Yeah, most analysts and pundits are bearish on this KPC IPO. High valuation chatter (on twitter there's talk of 22x P/E looks stretched, low dividend yield compared to peers like KenGen at around 9%, transparency/legal concerns floating around, and fears of post-listing drop once reality hits). My Play - long-term upside in Kenya's energy/transport backbone. Pipelines aren't sexy, but they're monopoly-ish and steady Plus, KPC's dividend policy commits to paying out 50% of net earnings as dividends, which does make it attractive-ish. Bullish on Kes 12.0 by 31st Dec. (Based on the fact that NSE will be on a bullish trend this year) Jumping out at 7.00 if it starts goin Bearish, then i jump back in. (I missed safaricom at 2bob) Do it today! Tomorrow is promise to no-one.
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Rank: Elder Joined: 7/22/2009 Posts: 7,827
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That P/E is a huge no for me! There are many other stocks in the NSE with way better valuation with a number trading below book value!!! This one I sit out and watch! I will be buying another bank starting this week. I am too over invested in banks but it still makes sense investing in them. Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Member Joined: 1/13/2014 Posts: 398 Location: Denmark
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mufasa wrote:Current date check: Jan 26, 2026 – IPO still wide open (closes Feb 19), so plenty of time.
I'm going contrarian here. Yeah, most analysts and pundits are bearish on this KPC IPO.
High valuation chatter (on twitter there's talk of 22x P/E looks stretched, low dividend yield compared to peers like KenGen at around 9%, transparency/legal concerns floating around, and fears of post-listing drop once reality hits).
My Play - long-term upside in Kenya's energy/transport backbone. Pipelines aren't sexy, but they're monopoly-ish and steady
Plus, KPC's dividend policy commits to paying out 50% of net earnings as dividends, which does make it attractive-ish.
Bullish on Kes 12.0 by 31st Dec. (Based on the fact that NSE will be on a bullish trend this year)
Jumping out at 7.00 if it starts goin Bearish, then i jump back in. (I missed safaricom at 2bob)
"Based on the fact that NSE will be on a bullish trend this year"..... that's a very risky assumption. Seeing is believing
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Rank: Elder Joined: 7/22/2009 Posts: 7,827
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The price of KPC might go up but the value will remain low. OMCs will have to buy, NSSF might be forced to buy etc. Given that these are not traders/short term investors, available volumes might be low thereby supporting the price. But I still would rather buy value!!! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Member Joined: 4/15/2008 Posts: 238
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MaichBlack wrote:The price of KPC might go up but the value will remain low.
OMC will have to buy, NSSF might be forced to buy etc. Given that these are not traders/short term investors, available volumes might be low thereby supporting the price.
But I still would rather buy value!!! Spot on. institutions could soak up big chunks as long-term holders. No real short-term traders dumping, which might keep the floor higher than pure fundamentals suggest, at least initially. The 50% net earnings dividend policy - tick, monopoly -tick At 22x trailing P/E it's premium, sure, but if FY2026 EPS hits KSh 0.44–0.50 with modest growth, and they deliver on dividends (DPS KSh 0.22+), the yield could appeal Do it today! Tomorrow is promise to no-one.
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Rank: Member Joined: 4/15/2008 Posts: 238
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From the wall of #TheKenyanWallstreet Dr. Kenne Belgrade of Faida Investment Bank, the Lead Transaction Advisor, speaks on the KPC IPO Valuation. • Three methods used: income, assets, peer comparison. • Independent asset valuer priced KPC assets at ~KSh 124Bn. • EV to EBITDA chosen to reflect operating cash flow. • Peer set drawn from India and developed markets. • Peer median EV to EBITDA ~9.56x. • IPO priced at ~8.1x EV to EBITDA to support wide Kenyan ownership. Dr. Kenne Belgrade on post-listing price dynamics. - Sees upside adjustment after listing, not downside correction. - Pushes back on narratives of a sharp post-IPO price fall. - Points to unmet institutional demand at the offer stage. - Expects secondary-market buying from investors excluded in the primary. - Long-term capital positioned to absorb any retail exits. Kenya Pipeline growth, margins, and comparables. ◉ Kenya Pipeline CAGR about 8.4%, versus KenGen and KPLC near 2%. ◉ Growth viewed as more critical than headline margins. ◉ Dividend yield alone seen as an incomplete return measure. ◉ Safaricom identified as the closest local comparable by scale and economics. ◉ Safaricom five-year CAGR around 8.8% versus Kenya Pipeline at 8.4%. ◉ EBITDA margins similar, Safaricom near 50%, Kenya Pipeline near 49%. ◉ Dividend yields comparable, Kenya Pipeline about 3.9%, Safaricom about 4.1%. ◉ Valuation gap highlighted, Kenya Pipeline around 1.7x book versus Safaricom near 5x. *Why Kenya Pipeline does not belong in the same valuation bucket as KenGen, KPLC, or TotalEnergies.* ➠ TotalEnergies Kenya not comparable, market cap about KSh 6Bn versus KPC cash of KSh 16.2Bn. ➠ KPC operates a midstream monopoly, Total is a downstream oil marketer among 140+ competitors. ➠ KPLC trades near 0.22x book, implying asset pricing unsuitable for a strategic national asset like KPC. ➠ Low PE at KPLC and KenGen reflects weak growth and structural constraints, not undervaluation. ➠ PE ratios must adjust for both margins and growth, not viewed in isolation. ➠ KPC projected FY revenue about KSh 41Bn and net profit about KSh 9.6Bn. ➠ Implied net margin around 24–25%, materially above most listed utilities. ➠ Strong margins and faster growth fundamentally separate KPC from KenGen and KPLC. Do it today! Tomorrow is promise to no-one.
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Rank: Elder Joined: 7/22/2009 Posts: 7,827
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mufasa wrote:From the wall of #TheKenyanWallstreet
Dr. Kenne Belgrade of Faida Investment Bank, the Lead Transaction Advisor, speaks on the KPC IPO Valuation.
• Three methods used: income, assets, peer comparison.
• Independent asset valuer priced KPC assets at ~KSh 124Bn.
• EV to EBITDA chosen to reflect operating cash flow.
• Peer set drawn from India and developed markets.
• Peer median EV to EBITDA ~9.56x.
• IPO priced at ~8.1x EV to EBITDA to support wide Kenyan ownership.
Dr. Kenne Belgrade on post-listing price dynamics.
- Sees upside adjustment after listing, not downside correction.
- Pushes back on narratives of a sharp post-IPO price fall.
- Points to unmet institutional demand at the offer stage.
- Expects secondary-market buying from investors excluded in the primary.
- Long-term capital positioned to absorb any retail exits.
Kenya Pipeline growth, margins, and comparables.
◉ Kenya Pipeline CAGR about 8.4%, versus KenGen and KPLC near 2%.
◉ Growth viewed as more critical than headline margins.
◉ Dividend yield alone seen as an incomplete return measure.
◉ Safaricom identified as the closest local comparable by scale and economics.
◉ Safaricom five-year CAGR around 8.8% versus Kenya Pipeline at 8.4%.
◉ EBITDA margins similar, Safaricom near 50%, Kenya Pipeline near 49%.
◉ Dividend yields comparable, Kenya Pipeline about 3.9%, Safaricom about 4.1%.
◉ Valuation gap highlighted, Kenya Pipeline around 1.7x book versus Safaricom near 5x.
*Why Kenya Pipeline does not belong in the same valuation bucket as KenGen, KPLC, or TotalEnergies.*
➠ TotalEnergies Kenya not comparable, market cap about KSh 6Bn versus KPC cash of KSh 16.2Bn.
➠ KPC operates a midstream monopoly, Total is a downstream oil marketer among 140+ competitors.
➠ KPLC trades near 0.22x book, implying asset pricing unsuitable for a strategic national asset like KPC.
➠ Low PE at KPLC and KenGen reflects weak growth and structural constraints, not undervaluation.
➠ PE ratios must adjust for both margins and growth, not viewed in isolation.
➠ KPC projected FY revenue about KSh 41Bn and net profit about KSh 9.6Bn.
➠ Implied net margin around 24–25%, materially above most listed utilities.
➠ Strong margins and faster growth fundamentally separate KPC from KenGen and KPLC.
What else do you expect the lead transactional advisor to say? Hii maneno yake ni ile tuliambiwa in professional/technical terms inaitwa hot air!!! Talking exactly how one would expect a primary beneficiary of the 3 Billion transaction fees to!! What else would he say?? Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Veteran Joined: 11/13/2015 Posts: 1,652
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I decided to ignore the noise and throw some idle cash here. My thesis is to have hard assets in the portfolio.
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Rank: Veteran Joined: 4/23/2014 Posts: 931
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wukan wrote:I decided to ignore the noise and throw some idle cash here. My thesis is to have hard assets in the portfolio.  I'm with you on this one. Any Idle cash is thrown in. “You can get in way more trouble with a good idea than a bad idea, because you forget that the good idea has limits.” - Ben Graham
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Rank: Elder Joined: 6/23/2009 Posts: 14,205 Location: nairobi
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jawgey wrote:mufasa wrote:Current date check: Jan 26, 2026 – IPO still wide open (closes Feb 19), so plenty of time.
I'm going contrarian here. Yeah, most analysts and pundits are bearish on this KPC IPO.
High valuation chatter (on twitter there's talk of 22x P/E looks stretched, low dividend yield compared to peers like KenGen at around 9%, transparency/legal concerns floating around, and fears of post-listing drop once reality hits).
My Play - long-term upside in Kenya's energy/transport backbone. Pipelines aren't sexy, but they're monopoly-ish and steady
Plus, KPC's dividend policy commits to paying out 50% of net earnings as dividends, which does make it attractive-ish.
Bullish on Kes 12.0 by 31st Dec. (Based on the fact that NSE will be on a bullish trend this year)
Jumping out at 7.00 if it starts goin Bearish, then i jump back in. (I missed safaricom at 2bob)
"Based on the fact that NSE will be on a bullish trend this year"..... that's a very risky assumption. Highly risky
KQ ABP 4.26
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Rank: Elder Joined: 7/22/2009 Posts: 7,827
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HaMaina wrote:wukan wrote:I decided to ignore the noise and throw some idle cash here. My thesis is to have hard assets in the portfolio. I'm with you on this one. Any Idle cash is thrown in. @HaMaina, @Wunkan et. al - The sh!t has hit the fan big time! Natuliwa wuon!!! I understand only 20% has been taken up and the deadline has been pushed to Tuesday. I don't know what magic will be done between now and then. The only thing you can hope for now is for the subscription to stay below 50% and the IPO be declared a failed IPO and you get your money back!! Otherwise we will buy this share off you at between 3/= and 4/= upon listing. For your sake I hope it fails and you get all your money back!! Otherwise kitaeleweka!!! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 7/22/2009 Posts: 7,827
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MaichBlack wrote:mufasa wrote:From the wall of #TheKenyanWallstreet
Dr. Kenne Belgrade of Faida Investment Bank, the Lead Transaction Advisor, speaks on the KPC IPO Valuation.
• Three methods used: income, assets, peer comparison.
• Independent asset valuer priced KPC assets at ~KSh 124Bn.
• EV to EBITDA chosen to reflect operating cash flow.
• Peer set drawn from India and developed markets.
• Peer median EV to EBITDA ~9.56x.
• IPO priced at ~8.1x EV to EBITDA to support wide Kenyan ownership.
Dr. Kenne Belgrade on post-listing price dynamics.
- Sees upside adjustment after listing, not downside correction.
- Pushes back on narratives of a sharp post-IPO price fall.
- Points to unmet institutional demand at the offer stage.
- Expects secondary-market buying from investors excluded in the primary.
- Long-term capital positioned to absorb any retail exits.
Kenya Pipeline growth, margins, and comparables.
◉ Kenya Pipeline CAGR about 8.4%, versus KenGen and KPLC near 2%.
◉ Growth viewed as more critical than headline margins.
◉ Dividend yield alone seen as an incomplete return measure.
◉ Safaricom identified as the closest local comparable by scale and economics.
◉ Safaricom five-year CAGR around 8.8% versus Kenya Pipeline at 8.4%.
◉ EBITDA margins similar, Safaricom near 50%, Kenya Pipeline near 49%.
◉ Dividend yields comparable, Kenya Pipeline about 3.9%, Safaricom about 4.1%.
◉ Valuation gap highlighted, Kenya Pipeline around 1.7x book versus Safaricom near 5x.
*Why Kenya Pipeline does not belong in the same valuation bucket as KenGen, KPLC, or TotalEnergies.*
➠ TotalEnergies Kenya not comparable, market cap about KSh 6Bn versus KPC cash of KSh 16.2Bn.
➠ KPC operates a midstream monopoly, Total is a downstream oil marketer among 140+ competitors.
➠ KPLC trades near 0.22x book, implying asset pricing unsuitable for a strategic national asset like KPC.
➠ Low PE at KPLC and KenGen reflects weak growth and structural constraints, not undervaluation.
➠ PE ratios must adjust for both margins and growth, not viewed in isolation.
➠ KPC projected FY revenue about KSh 41Bn and net profit about KSh 9.6Bn.
➠ Implied net margin around 24–25%, materially above most listed utilities.
➠ Strong margins and faster growth fundamentally separate KPC from KenGen and KPLC.
What else do you expect the lead transactional advisor to say? Hii maneno yake ni ile tuliambiwa in professional/technical terms inaitwa hot air!!! Talking exactly how one would expect a primary beneficiary of the 3 Billion transaction fees to!! What else would he say?? I asked you a simple question @Mufasa. Don't take advice from someone who is greatly benefiting from your actions which they are trying to influence! At the very least get a second opinion. Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 7/22/2009 Posts: 7,827
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MaichBlack wrote:That P/E is a huge no for me! There are many other stocks in the NSE with way better valuation with a number trading below book value!!!
This one I sit out and watch!
I will be buying another bank starting this week. I am too over invested in banks but it still makes sense investing in them. This IPO was dead on arrival!!! Ridiculous valuation with numerous (other) bargains in the market. Growth stocks trading below book value. I didn't even think twice about the KPC IPO after seeing the valuation!! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Veteran Joined: 11/13/2015 Posts: 1,652
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MaichBlack wrote:HaMaina wrote:wukan wrote:I decided to ignore the noise and throw some idle cash here. My thesis is to have hard assets in the portfolio. I'm with you on this one. Any Idle cash is thrown in. @HaMaina, @Wunkan et. al - The sh!t has hit the fan big time! Natuliwa wuon!!! I understand only 20% has been taken up and the deadline has been pushed to Tuesday. I don't know what magic will be done between now and then. The only thing you can hope for now is for the subscription to stay below 50% and the IPO be declared a failed IPO and you get your money back!! Otherwise we will buy this share off you at between 3/= and 4/= upon listing. For your sake I hope it fails and you get all your money back!! Otherwise kitaeleweka!!! I have stress-tested my portfolio and it won't affect my balance sheet even if it drops to 1 bob. 106B is small money for hard assets, it does not even come close to the amounts we routinely subscribe for bonds. You will buy from whom if they are no weak hands in the retail pool? We wait for the secondary market 
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Rank: Elder Joined: 7/22/2009 Posts: 7,827
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wukan wrote:MaichBlack wrote:HaMaina wrote:wukan wrote:I decided to ignore the noise and throw some idle cash here. My thesis is to have hard assets in the portfolio. I'm with you on this one. Any Idle cash is thrown in. @HaMaina, @Wunkan et. al - The sh!t has hit the fan big time! Natuliwa wuon!!! I understand only 20% has been taken up and the deadline has been pushed to Tuesday. I don't know what magic will be done between now and then. The only thing you can hope for now is for the subscription to stay below 50% and the IPO be declared a failed IPO and you get your money back!! Otherwise we will buy this share off you at between 3/= and 4/= upon listing. For your sake I hope it fails and you get all your money back!! Otherwise kitaeleweka!!! I have stress-tested my portfolio and it won't affect my balance sheet even if it drops to 1 bob. 106B is small money for hard assets, it does not even come close to the amounts we routinely subscribe for bonds. You will buy from whom if they are no weak hands in the retail pool? We wait for the secondary market Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1". Quote by the one and only Warren Buffet. This philosophy emphasizes capital preservation and avoiding high-risk, speculative, or misunderstood investments to ensure long-term wealth compounding. Even if my portfolio is worth 100m, I am not going to invest 1m in KQ just because if it goes to sh!t I still have 99% left! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 7/22/2009 Posts: 7,827
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wukan wrote:MaichBlack wrote:HaMaina wrote:wukan wrote:I decided to ignore the noise and throw some idle cash here. My thesis is to have hard assets in the portfolio. I'm with you on this one. Any Idle cash is thrown in. @HaMaina, @Wunkan et. al - The sh!t has hit the fan big time! Natuliwa wuon!!! I understand only 20% has been taken up and the deadline has been pushed to Tuesday. I don't know what magic will be done between now and then. The only thing you can hope for now is for the subscription to stay below 50% and the IPO be declared a failed IPO and you get your money back!! Otherwise we will buy this share off you at between 3/= and 4/= upon listing. For your sake I hope it fails and you get all your money back!! Otherwise kitaeleweka!!! I have stress-tested my portfolio and it won't affect my balance sheet even if it drops to 1 bob. 106B is small money for hard assets, it does not even come close to the amounts we routinely subscribe for bonds. You will buy from whom if they are no weak hands in the retail pool? We wait for the secondary market Here is a link...Visit the link above and see what most brokers are saying. High net worth investors are sitting out the KPC IPO!!! Why is this information important? High net worth investors have more access to information, analysis and analysts, experts/consultants etc. than the common mwananchi to guide them through investments decisions. If a majority of them are sutting this one out, then it should tell you something. A lot. And these are not stories. 20% uptake by deadline is beyond dismal performance for the IPO! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 6/2/2011 Posts: 4,824 Location: -1.2107, 36.8831
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HaMaina wrote:wukan wrote:I decided to ignore the noise and throw some idle cash here. My thesis is to have hard assets in the portfolio. I'm with you on this one. Any Idle cash is thrown in. Hii nayo hapana The type of people working there, how they got there and such stuff don't really inspire confidence in long term growth. Hii ni miss Receive with simplicity everything that happens to you.” ― Rashi
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Rank: Veteran Joined: 12/11/2006 Posts: 927
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dunkang wrote:HaMaina wrote:wukan wrote:I decided to ignore the noise and throw some idle cash here. My thesis is to have hard assets in the portfolio. I'm with you on this one. Any Idle cash is thrown in. Hii nayo hapana The type of people working there, how they got there and such stuff don't really inspire confidence in long term growth. Hii ni miss i listened to ndindi nyoro take on this and agreed with him. If you analyse companies inthe energy section at the NSE, there are better value for money than with KPC “Invest in yourself. Your career is the engine of your wealth.”
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Rank: Chief Joined: 1/3/2007 Posts: 18,342 Location: Nairobi
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GoU will take at least 20% in KPC for 2 board seats and veto power on tariff increases. Swazi nunua, already overpriced, KPC shares at 9/- when my upside for dividends is limited by GoU. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 7/22/2009 Posts: 7,827
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Kenya gives Uganda two board seats to avoid KPC IPO from collapse!!!Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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