Monthly Archives: March 2006

All Kengen

What
All about the Kenya Electricity Generating Company (KENGEN) IPO through which it will transform into a public company that will be listed on the Nairobi Stock Exchange (NSE).

Opens: Monday, March 20
Closes: Wednesday, April 12
On offer: 659 million shares (par value 2.5sh) at 11.9 sh per share (minimum lot is 500 shares at 5,950 shillings)

How & Where to buy shares
All share buying now starts with the opening of a CDS account with any stockbroker, and after March 20, you can register and pay for your allocation of shares. In addition, several banks and credit institutions will even finance the purchase of Kengen shares.

Over the next month, all their offices will be full of investors opening CDS accounts and placing orders for shares. Customer service for retail investors is marginal at best at most stockbrokers, but it will be even worse during the IPO period as overworked staff rush to beat the deadline.

However, I have a bias towards stockbrokers/investment banks, which enable online account management and trading. These include;

Dyer & Blair
Faida
Francis Drummond

Why buy?
Some KBW analysis of Kengen here.

Pro: Kengen is already profitable, still a monopoly and energy sector shares are hot right now. E.g E. A. Cables, KPLC.

Con: Have a single customer (KPLC), is a capital intensive company that can be affected by drought, will still be 70% government-owned & prone to interference (e.g. KPLC), lopsided IPO that favours employees, and past large IPO’s have taken many years for investors to achieve high returns e. g. KQ and Mumias.

Still, the upside is good, but only as part of a balanced portfolio. I recommend an investment of not more than 1/3 of shares in Kengen, and every day I caution people who are setting aside their entire savings/investments to buy Kengen shares to, in addition, seek value in other companies as well.

In the week since the Kengen IPO was announced, other companies have lost their share values as follows; Express -14.29%, Rea Vipingo -13.82%, Sasini -13.04%, Housing Finance -13.01%, Sameer Africa -12.94%, Diamond Trust -11.73%, National Bank -11.45%, Athi River Mining -10.27%, Uchumi -8.66%, Total -8.28%, Mumias -7.88%, and Kenya Airways -6.91%.

What Else?

Shares of the new Serena will be listed on the NSE starting tomorrow (March 15).

Cuts

Safaricom
Last Friday, some post-paid Safaricom customers got a rude shock when their phone lines were cut off for non-payment. For many of them, this was on the day their bills arrived in the mail, or were yet to arrive. The cuts may have been triggered by change in billing system/cycle at Safaricom Usually a reminder is sent out warning the customer that a bill is due, but this time, even the reminders were SMS’d to their phones, after they paid their bills and their lines and been re-connected.

KPLC
I got my electricity bill on Friday, and it was a bit of a shocker.

I had earlier complained about the high bill incurred, for such a small apartment and which was driving me crazy. On some weekends, I had measured every activity e.g. run my laptop or watched TV for an hour, heated water or blended juice – after which I’d run down to the basement and check my 2 meters (electricity & water heater) for the electricity consumed by each action.

My amateur research found that it was the usual suspect – water heater (for showering) that contributed to most of the bill. I then complained to landlord about my meter which I said was faulty and they referred me to KPLC. I turned to KPLC and visited many offices before I reached a helpful manager who eventually sent out a team to verify the accuracy of my meters – which turned out to be ok. That was a few months ago and I have suffered in silence.

Then, in January, we had a change of maid, and the February bill for electricity, which arrived on Friday, was 55% lower than the January bill.

Ceteris paribus (a phrase I have not used since high school), I have to blame the maid. When you have someone, in your house for half the day, and she’s not very forthcoming about what goes on in the 10 hours you’re absent, I have to conclude that perhaps she took too many very long, very hot showers…

UN
It looks like time is up for Kofi Annan after the UN staff union passed a no confidence vote against his plant to overhaul the UN bureaucracy. This was not unexpected since staff are always opposed to changes which involves outsourcing and job cuts.

Safaricom jobs & other business

Jobs

Safaricom: Kenya’s most profitable company is hiring various positions in information technology, information security, networks, marketing, finance, human resource and risk management. No word yet on the expected vacancy of managing director.

AAR: are recruiting management trainees. Apply to recruit@aar.co.ke.

Fairmont Hotels which has assumed management of the Norfolk, Mt. Kenya Safari Club, Aberdare Country Club, the Ark and Mara Safari Club is hiring group director – sales & marketing, group director – finance, human resource manager, conference service manager and catering services manager. Apply to nayima.sadique@fairmont.com.

Higher Education Loans Board is hiring an account relationship assistant. Apply to helb@helb.co.ke by March 28.

Corporate briefs

Bamburi Cement: Turnover increased from 12.3b in ’04 to 15 billion shillings in 2005, resulting in increased after tax profit up from 1.9b to 2.2 billion shillings.

BOC Gases: An extraordinary general meeting of shareholders will be held on April 3 to approve the acquisition of Carbacid Kenya.

Equity bank: Loans doubled from 2,874, to 5,524 million shillings in 2005, but NPA likewise doubled from 246m to 519m. The Bank returned a pre tax profit of 501 million, which translated to an EPS of 3.77, up, from 2.51 the year before. (Dividend will be 2 sh per share, same as in 2004)

Nation Media Group: Crossed the 1 billion shilling mark for in pre tax profit (1.01b) which was up from 895 m in 2004, on increased turnover of 5.6 billion shillings (up from 4.9b in ’04).

Serena: Turnover increased by 18% to 1.97 billion shillings and after tax profit increased by 47% to 192 million. The company, which paid 256m in various taxes and 81m to local authorities during the year, will pay shareholders a dividend of 1.25 sh per share. AGM to be held on April 26, and following 93% acceptance by shareholders, shares of the new Serena will begin trading on March 15 at the NSE.

Tea slump: Sister tea companies, Limuru Tea, and Unilever Tea, reported much poorer results in 2005. turnover at Unilever was flat at 4.6b while Limuru dropped by 34% to 37m. Limuru went from a 2004 profit of 9.7m to a loss of 3.1m while Unilever’s after tax profit dropped by 81% to 68m. Both companies will still pay out dividend despite the bad year; Limuru will pay 5 sh per share out of EPS of –5.27, while Unilever will pay 2 sh per share out of EPS of 1.41. Limuru’s AGM will be held on May 4, while Unilever’s will be held on May 5.

Housing: Elan Park will put up 240 maisonettes in Mlolongo area, Athi River which is about 15km from Nairobi.

Looking Back: When KQ was K7

Today, I visited my stockbroker to collect a check from selling Kenya Airways stock that I got in their IPO 10 years ago. I found that the place was even more crowded by people opening CDS accounts, and most of the people coming in from downstairs were all asking watchmen and clerks, “Where do I register for the Kengen IPO?”

The lobby has several annual reports for people to peruse, one of them being the Kenya Airways annual report & accounts from 1996, and which I found to be a nice read. Some highlights;

  • 1996 was a momentous year, in which KLM had bought 26% of the airline (Dec ’95) after which the Government sold a further 51% to both Kenyan and overseas investors.
  • KQ was K7: Kenya Airways was and still is branded the “PRIDE OF AFRICA”
  • Turnover for the year was 10 billion shillings, and after-tax profit was 1.5 billion. This was down from 2.2 billion the year before and was largely attributed to an exceptional payment of 411 million to settle pilot salary arrears.
  • Employees were each given 1,000 shares alongside a subsided loan scheme to enable them to buy more shares- resulting in k7 employees owning 3% of the company.
  • Isaac Omolo Okero was chairman of a board that included, among others, Benjamin Kipkulei, Amos Wako, Hosea Kiplagat, Stanley Murage and the late Phillip Ndegwa who had passed away in January 96.
  • Effects of the gulf war were subsiding and Sub-Saharan economies were projected to grow at 7% over the next five years.
  • Issues of concern at the airline were punctuality (K7 trumpeted that “punctuality improved to reach its target of 90% of flights departing within 15 minutes of schedule) and passenger complaints (“There was a 20% reduction in pax complaints from the year before”).
  • In IT, K7 was working to switch to KLM computer check-in systems by December 1996. Also, to improve customer service, new telephone PABX systems had been installed at Nairobi and Mombasa airports to take advantage of a new fibre-optic link installed by KP&TC. Also, all switchboard personnel had been trained in customer service and the number of staff answering calls had been increased.
  • Kenya Airways frequent flyer program or Msafiri had 765 members.
  • Two 737-700 had been ordered to cater for regional expansion services and which would replace 737-200. The premier class cabins of the Airbus planes had been expanded form 12 to 18 seats and a new in-flight entertainment system had been installed, mainly to serve the Heathrow – Nairobi route where K7 was the only airline offering non-stop service.

March 8: From Dreams to Women’s Day

Dreams
One day I’d like to buy an airline for 5 shillings!

Kengen sucks
According to Jaindi Kisero demand for Kengen shares is dragging down other share prices as shareholders are cashing out other shares to build up cash positions in anticipation of Kengen opening on March 20.

Opportunities
How to go from blog writer to magazine writer ( from low culture). The humorous article also helps explain what the myriad job titles at media houses mean and show exactly who does what

Jobs Regional HR manager at the British Council Kenya. Details at www.britishcouncil.org/kenya and application deadline is March 17.

2007 elections: It was a pleasant surprise to find that the Electoral Commission of Kenya is now carrying out year round voter registrations, an exercise which used to be a closely guarded secret that was manipulated in the past to handicap election results. But nothing yet on overseas registration and voting.

Sponsor a starehe girl: At a cost of 65,000 (about $900) per year for everything. All cheques should be made payable to Starehe Girls Center P O Box 6847-00200 Nairobi.

Writing: The World Bank has launched an International Essay Competition for 2006. The Bank and its partners are inviting young people 18 to 25 years old to share their experiences and ideas on community work and participation in public life. The deadline for submission of essays is April 2 and finalists shall be announced on May 1 and invited to present their essays to the jury from May 29 – 30.

Bar talk
Men gossip as much as women after a few tuskers as we socialize in bars. Here are the gathering over one evening, with some names omitted.

– How can members of parliament take 5 month Christmas holiday? I have about 5 friends who are seriously planning to run for parliament in 2012.

– Even as Kenya and Sudan move to sign a trade agreement, the Kenyan side has let go the architect of the Sudan peace process.

– The Governor of the Central Bank of Kenya could face corruption charges following some allegations which are not new.

– How the latest multi year and multi-million shilling corruption awareness campaign is being handled by a company associated with the President’s buddy.

– how can someone suspeneded over corruption allegations be rewarded with a new job in charge of food security at the time when there is starvation in the country?

My contribution to women’s day is that the above mentioned corruption allegations may result in Kenya having it’s first female Governor at the Central Bank and first female chancellor at a public university.