Category Archives: Unga

Shares Portfolio: November 2014

Comparing shares to last year and last quarter, the portfolio is up 7% in three months (excluding new investments), while the NSE 20 share index is up is up 0.5% since August 2014.

The Stable


Bralirwa (Rwanda) ↓
Centum  (ICDCI) ↑
Diamond Trust ↓
Kenya Airways ↓
Kenya Oil ↑
Mumias Sugar
Nairobi Shares Exchange ↑
Safaricom ↑
Scangroup ↓
Stanbic (Uganda) ↑
Unga ↑
In: Mumias Sugar
Out: None
Increase: Kenya Airways, KCB, Scangroup
Decrease: None
Best performer: NSE Kenya (up 121% since IPO), Centum (16%), (Unga 14%)
Worst performer: Kenya Airways (down 22%) Bralirwa (down 19%)
Unexpected Events:
– Bralirwa share dip which has been linked to the bonus share
– KQ’s loss in the half year. Amid the arrival of a half-dozen new Boeing 787 Dreamliners and other aircraft and long serving CEO Titus Naikuni stepping down there was one more shock from the airline in the form of a half year loss of Kshs 10.45 billion ($116 million)
– Are Kenya bank stocks overvalued as a Citi report says?
– Listings by Kurwitu Ventures (at Kshs 1,500 per share, which was higher than British American Tobacco that’s at 904 now) and Flame Tree (FTG) in recent weeks in the GEMS category of the NSE.
– Both Equity and Housing Finance forming holding companies and transferring banking and mortgage business respectively to the new group parents.
– The vicious fallout between BritAm and Cytonn.
Looking forward to
– Unga’s acquisition of Ennsvalley, a bakery worth Kshs 500 million ($5.55 million)
– Uchumi’s rights issue to raise Kshs 895 million ($10 million) by offering shareholders 3 shares for every 8 held at Kshs 9 per share, with the funds to be used for expansion in East Africa and refurbishment of stores.
– Seeing how Mumias Sugar shares proceed..having gone from highs of Kshs 40 in years past, to 1.4 this month.

Shares Portfolio May 2014

Compared to last quarter  and a year ago, since February, the portfolio is down 12% while the NSE 20 share index is up 2% this quarter. Compared to last May, the portfolio is up 17%. 

The Stable

Barclays ↑
Bralirwa (Rwanda) ↑
Centum  (ICDCI) ↑
Diamond Trust ↑
East African Portland Cement ↑
Kenya Airways  ↑
Kenya Oil ↑
Safaricom ↑
Scangroup ↑
Stanbic (Uganda) ↓
Unga ↑

  • In: None
  • Out: Equity Bank
  • Increase: Kenya Airways
  • Decrease: None
  • Best performers: Unga (up 46% this quarter), Portland Cement, 32%, Safaricom 10%
  • Worst performer: Scangroup (down 0.4% this quarter)
  • Barclays cutting back globally and re-aligning around four pillars, one of which is Africa growth.
  • Bralirwa profit dip (due to economic downturn and new taxes in the DRC)
  • Safaricom Academy student performs at the results
  • Safaricom’s super profits despite another challenging year, but which they ended with $1.7 billion in revenue and and $270 million in profits. The company chairman said that have been Kenya’s largest taxpayer for six straight years (paying $3.6 billion in taxes and fees in ten years) and you can be sure the government will support them, no matter how much the (floundering) competition complains. 

Looking Forward To

  • Kenya Airways getting four more Dreamliners from Boeing this year.
  • More M&A deals that involve listed companies like Centum who are still battling for control of Rea Vipingo.

Unga 2013 AGM

The 2013 annual general meeting (AGM) of Unga Group took place at KICC, Nairobi on November 28.
Finance and Shareholders Q& A 
Milling & Distribution Issues: While wheat is now being milled at 100%, it tends to fluctuate in other months as they compete with other buyers for grain especially during the festive season. Maize is being milled at 60-65% of capacity as more and more, maize is moving to the informal sector, and small Chinese mills.
When asked about product shortages of Exe flour for mandazi and chapati, the MD said when there are shortages of product, they may decide to mill general purpose wheat flour which is 90% of their brand sales. He added that shortages at Uchumi may have been due to that company being outside their credit terms which are enforced strictly.   
Tax Status: What is the effect of the tax reclassification of the company’s products from exempt to zero status? Unga products are now exempt (no longer zero-rated) which means they can no longer reclaim the tax back from the government – so they have to pass it on to consumers (higher prices)
Uganda: The company bought the 40% balance of the business in Uganda they did not own, as the minority shareholders was not willing to put in any more money while the business was struggling.  Since the takeover, they’ve been trying to add value to products, but this is more difficult since July 1  when the Uganda government imposed a 10% duty on wheat imports (all wheat is imported), also have also imposed 18% VAT. The result is that wheat flour is informally imported to Uganda, and big millers are downsizing staff and cutting back on grain procurement. 
Breakdown of Other Income: Other operating income was Kshs 281 million, of which 189M was revaluation of pension assets (thanks to a good the stock market). Directors said the sale of gunny bugs (collected over time) accounted for most of the balance, they will provide a detailed breakdown from next year.
Finance Costs: Why increased borrowings and why the low returns on investments? A new wheat mill was commissioned on November 2 and is producing quality wheat meaning fewer stock-outs. Also, the fixed deposits which were earning 6% in 2012, are now getting 12% this year.  
Volatility: Can the company benefit from Price volatility? There are recoveries sometimes on unrealized forex losses, but since the publication of the report, the shilling has strengthened, nullifying that, until recently.
Swag: As usual, shareholders asked about an increase of dividends, but also for the company to give bales of flour as a Christmas gift to shareholders. The chairlady said that this had been done in past years when the company did not have ample cash for dividends, and the board’s current preference was to work to increase the cash dividend paid out. 
Customer engagement: Some shareholders lamented the company’s low marketing and absence on the web with no information available for investors. The MD lamented that several counties were charging national brands for painting on walls and vehicles in the counties and that many companies are now white-washing their vehicles of any logos. He also said their website is at an advanced stage. A previous one was ready, but scuttled by management almost at the last minute. They also have a call centre at Kencall from July 1 that death with customer questions and also coordinated their orders and distribution. 
Hot Button Issue: Shareholders were concerned that the minority shareholders are being driven out by NSE buyouts at other companies (e.g.Access Kenya, Vipingo, CMC) and wanted the main shareholder (Victus with 51%) to assure other shareholders that there were no plans to buy out minority shareholders at Unga. The chairlady said there’s no evidence from the share register, that the main shareholder is buying shares, but this did not seem to offer absolute comfort as questioner noted that takeover notices appear out of the blue in the newspapers, without any prior notice.
Extras Business:  The proposal to shareholders for the company to purchase Ennsvalley Bakery had been deferred a few days before. The chairlady said that an opportunity to acquire an established bakery had come up and that in view of limited investment cash available, and the high cost of borrowing, a share swap was proposed – however not approvals had been received in time of the complex transaction. She said it would be discussed at an EGM to be called in the near future but before next year’s AGM.
The other extra business item – the sale of the company’s stake in Bullpak Ltd (a company that provides high-quality packaging material) was approved – with the board intention to redeploy the cash in the company’s core businesses of food and animal feed.

Unga 2012 AGM

The annual general meeting of Unga Limited, which is listed at the Nairobi Shares Exchange (NSE) had some discussion on land sales, the use of genetically modified foods (GM foods), the possible impact of Kenya’s upcoming elections on the company’s operations, and, of course – SWAG. Read more at Coldtusker‘s blog.

Thanksgiving Portfolio November 2012

Compared to last quarter  and four years back.
The Stable
Bralirwa (Rwanda)
Diamond Trust Bank
East African Breweries (EABL)
Equity Bank
Kenya Airways
Kenya Commercial Bank (KCB)
Kenya Oil Company (Kenol)
Stanbic (Uganda)
Unga ↔
What’s changed?
In: Unga
Out: None
Increase: None
Decrease: None
Dividends: Safaricom, KCB, Barclays, EABL
Unexpected gains/losses: Bralirwa’s share price appreciation and Safaricom’s rebound (back up to the Kshs 5/+ IPO price) coupled against another shocking half years Kenya Airways forex loss
New listings not taken on: There are on-going rights issues for Family Bank, UAP Insurance, SMEP Trust, Uchumi and CFC Stanbic

Best performer: Bralirwa’s (up 54% in 3 months) then Safaricom, Diamond Trust, KCB
Worst Performer: Stanbic Uganda (down 33%) 
Performance Summary: The NSE 20 share index is up 10% in the last three months, while this portfolio is up 22%. Compared to four years ago, the NSE Index is up just 6%, but the portfolio only had Diamond TrustKCB SafaricomScangroup Stanbic (Uganda)↓ in 2008, is much larger.