Category Archives: ICDCI

November Investments

The middle of November brings a choice of three new investment options to look at:

Eveready OFS
At 9.50 shillings per share this is the cheapest to buy. Others have gone through the prospectus. prospectus

This is a company that will largely depend on rural areas to remain in the dark i.e. anti KPLC. But the company needs top get into new products such as batteries for solar gadgets and laptop’s batteries- things that will provide future customers. But when asked about R&D on Capital FM this week, the MD mentioned that this is something they rely on Eveready US to do. So the views of an African country will not rank up there. Also watch to see if ICDCI retains it stake or takes advantage of the euphoria of retail investors buying in at the front to walk out of the back door (like Uchumi).

The shares are likely to be over-subscribed and I still maintain that the hassle of time spent visiting stockbrokers coupled with the inevitable refund of most of your money in a month’s time is not an enticing option. So I’ll wait till December, or opt for the bare minimum (500 1,000 shares at 9,500 shillings). Going by other offers this year (Kengen, Scangroup), the shares may double or triple in price in the first week and then stabilize after a month.

Diamond Trust rights issue
Priced at 50/=, good outlook for a bank looking to expand regionally and possibly absorb another bank next year. I have had the shares for over a year bought at 27/= now trading at about 76=. With the rights being sold at 50, that means one can get an immediate 50% return by flipping them immediately. I’ll probably buy my rights, and more, and hold.

Family Finance Building Society (FFBS)
This fast rising building society that intends to become a bank next year. Shares are priced at 60/= and are open to account holders, but anyone can open an account and buy the shares.

Like Equity: In preparing to become a bank, they have dutifully being publishing their quarterly accounts. Equity grew by 20% while FFBS grew its assets by 18% by June 2006 and both achieved their entire 2005 profits in the first half year of 06. FFBS is about 3.5X smaller than Equity, less efficient (operating costs are about 25% higher), and mobilises deposits similarly, but their fast growing loan book, like Equity’s, also comes with growing NPA’s.

Equity raised capital to become a bank in a private placement at 136/=. Thereafter the shares went to the OTC where I had a chance to buy, but passed on, the shares at 75/=. They were listed in 2006 at 90/= shillings and have settled in the 100 – 130 range.

Difficult to judge, but I’d rate it as a buy even though they have been very slow to provide information for new investors e.g. on who others shareholders are, when we’ll know about allocations, refunds, listing etc.

Equity or Uchumi?

Uchumi
Bad timing for Uchumi whose private placement to raise 300 million shillings from shareholders draws to a close on August 15, which is when we are making investment decisions about Equity Bank shares.

The minimum investment of 10,000 shillings, approximately equals my loss, and I have to say no thanks this time – I am not going to put another 10,000 into Uchumi. It’s too soon to come back begging, the company’s status is unclear, and there are too many investment options out there.

Shareholders who take part will be on par with the government’s rescue loan but rank behind after banks and suppliers. And we know how poor parastatals are at repaying government loans. Also, there are many investigations pending, and no one has yet come out and clearly reported why the 1.2 billion shillings raised 9 months ago was not enough or where it was spent.

Yes, I will shop at Uchumi as much as I can, but that’s the extent of my support this time.

Equity
With the August 7 listing of Equity Bank shares just a week away, one of the company’s prominent directors has resigned from the Board.

We have to take note of what directors do in a company and it remains to be seen why a director at Equity made this decision so late in the game. We all remember how ICDCI duped the public they were not taking part in the Uchumi rights issue, as a way to reduce their stake in the company when all along they planned, and did sell out of the company completely soon after.

Got Milk
It’s a good time for milk drinkers as prices have dropped and all the major dairies have positioned salespeople at supermarkets to hawk their milk. Many of them are selling 500ml packs at 20/= (down from 25/= a few months ago) and also give away a free 200ml pack as well. The oversupply of milk is likely to reduce prices paid to farmers – a situation that no one wants, and so milk companies are giving away their surplus for free.

Bio-diesel
Nice feature on KTN/Standard over the weekend about efforts to produce bio-diesel in Kenya. Kenyatta University is pioneering a scheme in which 200 farmers in Kitui, Bondo, and Rachuonyo are cultivating jatropha curcas which takes 2 months to grow and can be used to produce diesel, which should reduce the country’s fuel bill.

a dollar a day

Have been running Google advertisements for a few months, and “earning” just under a dollar a day which is an international poverty line measure for individual income.

Over the weekend I received my first cheque from Google for $100 dollars (about 7,100 shillings). Not bad but it’s a start, because sometimes blogging is time consuming and it’s good to get some cash from some non-intrusive advertising.

Unfortunately Kenya is not one of the few countries that Google has selected to make payments in local currency. Am off now to look for a bank that will enable me to cash the cheque drawn in New York with a minimum of bank charges and fees.

Sad News
– Military Plane crash has kiled 4 MP’s including assistant minister Mirugi Kariuki and former Foreign Affairs minister Bonaya Godana as well as at least 14 other people.

– Head of the Kenya Bureau of Standards (KBS) , Eng. Masila also passed away in a road accident over the weekend. He had steered his organization to enforce some stringent quality measures leading to higher quality of imports into the country.

NSE rumbles
Two stories in the East African today:
(i) The Transcentury Group, which recently acquired 4% of KPLC, is at an advanced stage to take over 25% of Housing Finance Company of Kenya. Two years ago they took over East African Cables and shareholders of that company saw their shares shoot from 10/- to over 160/- today.

(ii) Sameer Africa has sold its 10% in Uchumi, just three months after buying them from ICDCI and also resigned their position on the board. The Uchumi Board has since appointed Albert Ruruti, former KCB operations manager to the board and also as Chairman of the company.

March 1

Banking
After Barclays last week, three other Banks have just published their results and with 30 days to go in the month, daily newspapers will have at least one bank printing their 2005 results each day by the March 31 deadline.

Those who have done well will publish their results in two or more newspapers (for 300,000 per color page) while the few who have performed poorly can get away with publishing the results in the lower circulation Kenya Times or People newspapers.

Kenya Commercial Bank (Ranked No.3 in assets): Barclays posted a 5% return on assets (ROA) and 47% on return on equity (ROE), while KCB had a 1.9 billion pre-tax profit, 3% ROA and 20% ROE in 2005. The Bank will pay a 1st and final dividend of 4 shillings per share to shareholders after their AGM to be held at KICC on June 16.

Even though customer deposits grew from 52b to 60billion shillings during the year, their loan portfolio remained at 33 billion. The Bank also had to restate their 2004 results as their other income was 477 million and not 785 million shillings.

National Industrial Credit Bank (NIC) (No. 8 in assets): The Ndegwa-controlled NIC Bank posted a 403 million profit before tax, 2% ROA and 16% ROE. The bank’s assets stood at 20.6 billion with customer deposits of 16.6 billion and 14.1 billion in loans at the end of the year. Shareholders will be paid a final dividend of 1.8 shillings per share after their AGM on May 17.

Equatorial Bank (No. 29 in assets): The Merali-controlled Equatorial Bank (109 million profit before tax, 3% ROA and 19% ROE) ended the year with 3.7b assets, 3b in deposits and 1.8b of loans.

Credit Bank (No 32 in assets): The Nyachae-controlled Credit Bank (90 million profit before tax, 3% ROA and 19% ROE) ended the year with 2.8b in assets, 2b of customer deposits and 1.7b worth of loans.

Bank Jobs

Kenya’s next bank is expected to be Family Finance which plans to convert from a building society into a Bank by June 2006. With assets of 3.2 billion in June 2005, they will rank as about Bank No. 30 in the country and hired Mr. S. T. Wainaina as their new general manager this week. As such they are hiring;
– Branch managers
– Assistant branch manager
– Branch accountants / supervisors
– Credit officers

Apply by 16 March to the HR manager at info@familyfinance.co.ke. Applicants must be aged 26 – 35 with a business degree and 3 years of relevant experience.

ATM Wars: Pesa Point has put up 80 ATM’s in 4 months, surpassing Kenswitch’s 45 set up over almost 3 years.

Stanbic: Stanbic which plans to acquire some Kenyan banks, has mini-branches at several Uchumi outlets and now offers a finance plan for Uchumi customers to buy household items such as TV’s, washing machines, cookers, fridges, and furniture.

Finance

Sameer: Turnover was flat – a slight increase from 3.27b to 3.36 billion shillings in a year in which the company broke away from the Bridgestone-Firestone company. The change, which entailed increased advertising revenue of the new brands, caused after tax profit to drop from 275m to 205 million. The company’s AGM will be held on March 31 at 11 and a dividend of 0.5 shillings per share has been declared.

Oddly enough, the register for payment of dividends will close on April 5 – after the AGM, not before/on the day of the AGM as is the trend at most companies here. Sameer has also announced that it will cross-list its shares on the Uganda stock exchange.

ICDCI: ICDCI’s six month results showed that investment income increased from 133m to 278m shillings, largely as a result of their off-loading shares in Uchumi. The company also bought 4% of K-Rep Bank in a continuing diversification program.

Coffee industry: The Coffee Board of Kenya launched a new website on February 24. It has up to date results of weekly coffee auctions but some links not working though. Hopefully, this will shine a light on an industry that is booming around the world but collapsing in Kenya (to a point where farmers are uprooting their trees) where it is tightly controlled by an endless cartel of middlemen who shun new ideas (Tetu) and who suffocate and frustrate farmers and new investors.

Future of Giant Parastatals: The Daily Nation looks at the future prospects of Telkom Kenya and the Kenya Power & Lighting Company

Jobs:  The Standard is hiring business executives. Applicants must have business degrees, 1- 3 years work experience, and be aged under than 30. Apply to hrd@eastandard.net by March 8.

Opportunities

– Transport/distribute sodas for Softa bottlers and collect empties nationwide. Email info@kuguru.com
– Manage catering facilities at the UN including quality value menu. E-mail by March 3 to cps.registration@unon.org
– Owing to great international demand, Farmers’ Choice is urgently seeking pigs and paying cash for each delivered for slaughter.

Bank Barons

Jaindi Kisero points out that commercial banks borrow money from you at 2% and lend it to the government at 8%.

Year end
ICDCI closed the year with a profit after tax of 295 million, up from 241m in 2004. While investment income dropped sharply from 355m to 240m, expenses remained flat at 80m. The increased profit comes from the 1st time inclusion of UAP Insurance results (ICDCI owns 24% of UAP which returned a profit of 334m) and this lifted up income from share of associated companies from 72m to 245m. In addition to a reduced stake in Uchumi, ICDCI also owns 1% of KCB and EA Breweries, among other investments. The company will pay a dividend of 3 shillings per share (same as in ’04) on December 7 to shareholders of record as at November 10th.

New Uni
The Great Lakes University of Kisumu, a new institution, is being built in Kisumu by the Tropical Institute of Community Health & Development (TICH) in Africa.

Flight plan
The Standard on Saturday reported that Air Kenya had cleared a 333 million shilling debt with Barclays bank to avoid being placed under receivership. In May, Barclays had appointed a Statutoty Manager when the airline defaulted on its debt.

Ugly face of food aid
American generosity must be good, not just for the world’s hungry, but also for American agriculture.