Blog Archive

Friday, December 22, 2006

NSE Website woes continue...

Njuguna of Atlanta, Georgia sent this letter to the EA Standard on 6 Dec 2006.

Mwebesa of the NSE commented on 14 Dec 2006 but IMHO never addressed the real issue but obfuscated it by attacking Njuguna.

As usual, my comments in RED.

NSE is a disappointment to investors in, out of Kenya

Note that the EA Standard can edit your subject header. Njuguna has little control over the letter's heading.
The Nairobi Stock Exchange’s website is a disappointment yet again. I am an avid investor in the US, and have been doing research on the stock market. I thought the best place to get the NSE’s daily progress was its website.
But anyone who frequents it can testify to its lack of innovation, information and creativity. The home page is poor in graphics, the picture’s resolution poor and most of the information is outdated.

Monday was December 4, but the daily market report was for November 30. The annual report on the website is 2004’s! Is it believable that last year’s information is not available?

How can the NSE have any moral fibre for insisting listed firms publish Financial Statements in a timely manner if the NSE does not do so? Even if the NSE is not a "public" company there is a duty of care (fiduciary responsiblity). Is the NSE insolvent?

The NSE Daily Price List for November 30, a Thursday, was not updated until the close of business on Monday. Does the NSE take a five-day weekend?

mwebesa... we are waiting???

Are investors supposed to wait until it is convenient for NSE to post the price list?


The NSE Handbook is available, but can’t there be online purchase? The last update of current events was in May, last year!

Still waiting???

How can the NSE and the economy grow if the nation’s only stock exchange fails investors?

mwebesa NEVER addressed any of the issues in his letter but sought to "blame" Njuguna for his letter!

I thought automation of the trading system would boost the stock exchange. This was not to be. The NSE, under the stewardship of respected professionals, including the chairman Mr Jimnah Mbaru, should update its information technology.

Hoseah Njuguna,
Atlanta, Georgia

NEXT: chris mwebesa's non-answer on 14 Dec 2006

Letter not a true picture of the NSE

A letter to the editor in The Standard on December 6 was misleading.
Huh? There is nothing misleading in the letter!

The headline, ‘NSE is a disappointment to investors in, out of Kenya’, implied that the bourse is a disappointment to all yet the letter from Mr Hosea Njuguna of Atlanta, US, was a comment on the Nairobi Stock Exchange’s website.
There were multiple issues addressed. There were questions not just a "comment". Addrress the "headline" to EA Standard.

However, we are the first to admit that technical problems with our website have frustrated the public. We commissioned a new website and it will be handed to the NSE tomorrow.
What does "first to admit" mean to them?
The lousy website has not been "upgraded" for years. What were they doing for the past few years. mwebesa has been CEO for a while!
As of 22 Dec 2006, the same old lousy website is available! Of course, I expect nothing until 2007.

What is the point of "reaching out" to the Diaspora if they can't get the relevant information?

Chris Mwebesa,NSE chief executive

Thursday, December 21, 2006

More despairing stories from Land of the Kleptos


Why should dan moi get a free pass?

dan moi screwed Kenyan left, right & centre - including Nairobi with his moinomics.
moinomics = rape & pillage the country then "retire" with a huge pension, new cars, office & house.

To add insult to injury, the idiots in the Nairobi City Council that has a deficit of KES 23 Billion (US$300 Million) happily spends scarce money - with plans to raise parking fees - on useless awards to useless folk like dan moi!

Nepostism & the downfall of Nairobi started with margaret kenyatta... so they give her freebies as well! Then the "councillors" will award themselves & their cronies more freebies!

As is margaret's father (klepto wa ngengi) looted enough to his grandkids' grandkids. Surely, she does not need the "free" benefits! Whole chunks of Central, Thika & Coast "belong" to the kenyatta family!

Anyway, why am I, a tax & rate payer, being treated as a 2nd class citizen?


Wednesday, December 20, 2006

Discount Airlines - Not all is roses

Does this fate await passengers of the "new" airlines in Kenya?

The emergence of airlines like Fly54o has brought a new level of competition within Kenya but as seen in the past the competition can be tough especially after the honeymoon period.

East African Safari Air, which collapsed in 2005, left hundreds of passengers stranded in London & Nairobi.

Other collapsed airlines in East Africa include:

Air Tanzania (State-owned)
Uganda Airlines (State-owned)
Alliance One

A. Baumann Price Spikes - Is it for real?

A. Baumann price spiked 241% on 20 Dec 2006 on the NSE.
Follow the link for more...

Investing In Africa

This seems reminiscent of the price of City Trust spiking 350%, on the announcement of a KES 3.10 dividend, to 500/-. The price has since fallen to 86/-

Please let me know if there is a substantial announcement on ABCO.

Monday, December 18, 2006

Sasini announces a Bonus & Split

Sasini Ramblings from an earlier post.

Something was definitely in the works... IMHO some people were in the know thus the rapid fire increase in the stock price...

Anyway, so there was a 1:5 Bonus followed by a 5:1 Split thus 1 "old" share = 6 "new" shares.

More Info on InvestingInAfrica

Olympia Capital Expands Its Portfolio

You need to click on the link below to get to the post.

Please note that for the pan-African Readers - OCC is listed in Botswana & OCH listed in Kenya.

The price of OCHL has been fluctuating substantially (15-40) since the initial acquisition announcement.

Olympia Capital

Tuesday, December 12, 2006

Co-authoring blogs

Dear Readers & fellow Bloggers,

I will not be able to keep up with blogging regularly going forward but I still want to do so in a limited fashion.

I have been inspired by a stable of blogs that are a must read for me & these include:
Nevertheless, there is one blog that had caught my (investing) eye & I RAVED about it in an earlier blog entry... Investing In Africa. It is an offshoot of a website that promotes an Investing In Africa newsletter.

Ryan (the blog's owner) has kindly allowed me to post on his blog. Not being "tech-savvy" & with limited decent internet service in the near future, I shall send him my entries on an ocassional basis which he will (hopefully) post...

I will try to link my contributions to this blog... I think it is called a "Trackback"...

Ryan's blog focuses on Africa, unlike my Kenya-centric focus, thus I think it will broaden the horizons for investors.

In addition, I am passionate about politics & tend to mix the economics with politics thus I will try & limit my contributions to Investing In Africa to economic & financial discussions.

Thanks & keep on blogging!

Thursday, December 07, 2006

Kibz gets undeserved raise!

Kibz - Kenya - GDP $12.65 Billion - Base Salary: KES 24 Million = $342,857 - GDP Per Capita (PPP) $1,200

So Kibz base salary is 286x the Per Capita GDP for Kenyans!

Bush - USA - GDP $12,470 Billion - Base Salary: KES 28 Million = $400,000 - GDP Per Capita (PPP) $42,000

Bush' base salary is 9.5x the Per Capita GDP for Americans!

So Kibz will make 86% of what the US Prez makes but the USA Prez presides over an economy that is 76600% larger than Kenya's!

Kenya's GDP is LESS than 1% of the USA's GDP... which means a 1% economic growth in the USA = entire amount of the Kenya's GDP...


PPP Link
GDP Link
US President Salary Link
Kenya President Salary Link

Of course, the MPs will now want their salaries increased...

Tuesday, December 05, 2006

Land Grab in Progress

STOP the Land Grab... by the "authorities" for a "favoured project" from land belonging to Lenana School...

Additional News Item on the Land Grab

My comments in RED

Board had agreed to give land, says Mugo
Well, the new Board has reviewed the decision... which is NO... Lenana Students on the Board have made the difference

Story by NATION Reporter (Publication Date: 12/6/2006)

Lenana High School board had consented to give 40 acres for the construction of an education centre, Dagoretti MP Beth Mugo said yesterday.

That is 20% of the total land! Leave the school alone! Alternatively, rent the land from Lenana School but do not "grab" it!

However, the new board officials turned down the request, Mrs Mugo said.
Good for them...

The request for land was first made on April 29, last year, when President Kibaki led a tree planting exercise at neighbouring Ngong Forest.
So what? Why doesn't the kenyatta family (mugo is a member) return the STOLEN land they have acquired!

The assistant minister for Education was responding to reports that the school's management had declined to set aside part of the land for the centre.

Letter to chairman

In a letter to the board's chairman, Mr Edward Kigen, Mrs Mugo said it was imperative the decision was reversed.
Nothing is imperative. The board should hold firm! In fact the Old Boys association, among others, should gear up for a lawsuit before the land is "forcibly" excised!

The assistant minister said she was surprised the board decided to deal with the Press "while no dispute exists".
Bullshit... there is a dispute. The Press was a choice the Lenana Board had to make since theie pleas would have gone unheeded.

She added that although Lenana was a national institution, few students from the area were admitted there.
Is she an IDIOT?

Precisely, because it is a National Instition that it admits from all over the country & can't favour the "locals". Does Alliance favour those from Kikuyu?

It was not "courteous to go against a noble project such as the education centre because there is a lot of land available," the MP said.
Why doesn't the government repossess GRABBED land? This land belongs to Lenana prior to independence when the Duke of York school was established.

The school has about 200 acres. Mr Kigen had said all the land was being utilised and the board planned to build rental houses to generate income.
The land is not for sale! Period.

Some Lenana School related websites


Old Yorkist

Monday, December 04, 2006

Mumias - Prospectus?

Does Mumias have a Prospectus for the current Offer For Sale available in an electronic format?

Does Mumias have a website?

Friday, December 01, 2006

Kenya beats India in smallholder Tea Investments!

Officials from Assam (a state in India where Tea Growing is big business) wants to "copy" the ideas & innovations of the KTDA & smallholders in Kenya.

KTDA should be extremely circumspect since India - the world's largest tea producer - is aggressively pursuing Kenya's traditional export markets e.g. Pakistan.

Furthermore, the Indians have started buying out "Brand Names" e.g. Tata Tea - listed on the Bombay Stock Exchange - bought Tetley's in the UK... this gives them a leg up since there is more money in the value-added side of the business.

China & Vietnam are also gearing up Tea production. When Vietnam started producing Robusta coffee, they became a huge producer within a short time frame. China has become the #3 exporter of tea & could exceed Kenyan exports by 2010. It scares me to think Kenya will start importing Chinese tea in a few years!

Kenya needs add value to the "raw" tea by investing the Tea Industry. This is not easy but there has to be a concerted effort spearheaded by the government but ultimately run by the private sector.

KTDA factories are farmer/shareholder owned & if these "shares" were floated I feel financing costs would drop enabling factory upgrades & best practices.

Don't let the Indians (Vietnamese or Chinese) take away this hard-earned advantage!

Wednesday, November 29, 2006

Williamson Tea Announces superb 1H 2006-7 Results

Williamson Tea - shares trade on the AIMS board at the Nairobi Stock Exchange - has announced results for 1H 2006-7.

Sales KES 579,477,000 (+10%)
EPS KES 14.82 (Loss 1H 2005-6 was 4.50 thus a huge turnaround)
# of shares = 8,756,320 (The float is relatively small - closely held)

Production was slightly lower than last year - drought in 4Q 2005-6 affected production in the current year - but the resulting higher US$ prices - in spite of the strong KShs - helped boost profits substantially.

Profits from "associates" (including Kapchorua also a large scale Tea Grower) & a substantial gain in "Biological assets" further boosted the bottomline.

Other Investments include 8 floors of Williamson House in Upper Hill. They also invested KShs 24 Million into their farms, KShs 55 Million in "other investments". Plenty of "extra" cash also reduced their net finance costs.

The short rains will help production get back on track in 2H but the strong KShs (vs US$) will hurt. Strong tourist arrivals, commodity exports & diaspora inflows has kept the KShs at the 70/- level.

It will be interesting to see the effects on the forex markets as interest rates fall on Kenya Government Treasuries. The election rhetoric is increasing at a blistering pace as we go into an election year. "Land Distribution" complaints & ethnic clashes come to the fore during this period as politicians blame everyone else for the problems except themselves.

Regardless, if the rains remain steady for the remainder of the year (2006-7), WTK could have a break-even 2H, and will probably match 2004-5 dividend of KES 5/- per share.

Port Privatisation (without hidden shareholdings!) needed asap!

Excuses to maintain the status quo abound BUT they are flawed. KPA is used as a political tool to provide jobs to the favoured few.

Mombasa can cement its reputation as THE PORT for East & Central Africa. South Sudan has the potential to become a huge exporter (oil & minerals) using Mombasa as their route to other countries esp China & India.

Investors will line up if the government floats KPA shares on the Nairobi Stock Exchange since the Port is profitable & has growth prospects.

The "good news" as reported in the Standard:

The Kenya Ports Authority (KPA) has again cast its net wide in Asia for technology and expertise necessary to lift the operational standards at the Mombasa port. The latest strategy is twinning with one of the six high-performing ports in Asia — Port Klang in Malaysia. After a year of talks, Mombasa port finally signed a Memorandum of Understanding (MoU) with the Asian port last Monday.

Apart from Port Klang, Malaysia also has Penang Port, Johor Port, Port of Tanjung Pelepas, Kuantan Port, Kemaman Port and Bintulu Port which are run by private operators under the supervision of port authorities. The Malaysian government’s policy on ports focuses on the provision of ample capacity in ports to ensure that there is no congestion.

Port Klang has developed a super infrastructure for free trade zone that mainly facilitates commercial activities within the port similar to those at Jabal Ali in Dubai, hence increasing cargo volumes.

KPA, Kenya & Mombasa can become a HUGE trade zone by creating a better business environment for African businesses. Mombasa can become the "Dubai" of Africa with superb natural beaches & game parks.

Phang said her country has successfully privatised its six ports and developed a multi-million dollar free trade zone at Port Klang which has increased cargo volumes. She said Mombasa port would benefit from sharing with the developed Malaysian ports but cautioned that privatisation should be given time.

The recent privatisation of KR will lead to efficiency gains thus they will need additional cargo for their network. KPA can benefit from this by providing as much cargo throughput as KR can handle.

If the pipeline is expanded then expect the throughput of oil products to increase to S. Sudan & Central Africa. If Uganda strikes it huge in Lake Alberta (oil discovery?) - perhaps it can be exported using Mombasa.

KPC also needs to be privatised. They have misplaced priorities by building an over-priced HQ instead of using the funds to extend the pipeline to Kisumu! They lack adequate storage facilities in Nairobi & Mombasa. Thus Kenyan Oil Marketers (e.g. Kenol) can't build their market share in Central Africa since they don't have the product to sell.

Tuesday, November 28, 2006

Justice Delayed is Justice Denied!

More BS from Kenya's (un)judicial system!

These guys (in the Ngugi case) have to stay in jail for an extra 2 weeks because the magistrate is "not ready" with the judgement? WTF? What if they are innocent? Will they ever get 2 weeks of their life back?

Kenyan jails are no Club Med... can't the accused sue?
Is the magistrate going on vacation for 2 weeks that she can't write the judgement?

Oh, talking of more WTF... why are "minimum" fees set for lawyers?
There should be "suggested" guidelines but NOT minimum fees which ends up screwing the poor folk!

What happened to COMPETITION...???

Instead of reducing mortgage costs, the use of lawyers in Kenya instead of STANDARD MORTGAGE DOCUMENTS make house ownership much more expensive!

For preparation of mortgages, advocates will charge a fee of Sh62,500 for a property valued at Sh2.5 million. However, for a property worth Sh500 million, the advocate will get Sh2.7 million. (Source: Daily Nation 29 Nov 2006)

For most house buyers this is 2.5%... The buyer who borrows 75% Loan-to-Value pays approx 5% ABOVE the price of the house for the closing costs!

Who pays the commission to the sales agent?

I try to be positive about Kenya but it is every man for himself... the rich get richer.... the lawyers lobby the CJ to raise their MINIMUM FEES... Of course, the CJ who probably has a tax-free salary, tax-free allowances & huge retirement benefits doesn't care!

At this rate... who will want to invest in Kenya for the long-term?

In the USA, borrowing costs are lower since:
  • Documents are standardised
  • Loans are packaged & traded thus lowering rates
  • Attorney fees range between $250-600 on most home purchases
A Kenyan who buys a KES 2.5 Million ($35,000) house pays KES 62,500 ($900) to the lawyer while a US homebuyer pays $250 for $100,000 house! You can buy a $1,000,000 house & pay the attorney $600! Even ALL your closing costs amount to a pittance compared to Kenya!

WTF... I don't know what else to say...

Monday, November 27, 2006

Potholes at Kisumu Airport???

Are these Potholes I see?

As many of you are aware that Google Maps provides excellent views of Kenya esp the major towns - in spite of silly/out-dated laws that "prohibit" such images! - so I zoomed onto Kisumu to check out the runway!

Well, the photo/image seems dated i.e. taken prior to the recent heavy rains but there seem to be POTHOLES on the runway which led to KQ suspending flights about 1 month ago.

The airport is tiny... but has potential if the KAA can get its act together...

The Google Map link might take a while to load depending on your connection speed but enjoy!

If you can't find it on Google Maps, then try this alternate site that also uses Google Maps but "leads" you directly to the airport as long as you continue zooming in. You will need to the satellite/hybrid option.

Saturday, November 25, 2006

Kisumu Airport Closed - Runways washed out!

Runway in "Perfect Condition" washed away! - KAA

The airport has been in the news for the past one month due to the poor condition of its runway, which forced Kenya Airways to suspend flights citing potholes on the runway.

Mr Titus Naikuni, the Kenya Airways chief executive, said the runway was dangerous for both landing and take off. Earlier, the acting Kisumu airport manager, Mr Leonard Rinchuni, had denied the claim saying the airport's runway was in perfect condition and that it did not warrant KA's suspension of flights.

Above as reported in the Daily Nation on 26 Nov 2006 (registration required).

Here is KAA's rebuttal to KQ withdrawing its flights! Less than 10 days later, all flights to Kisumu are "suspended" for runway repairs!

Earlier, I had highlighted the absurdity of KAA's insistence that the runway at Kisumu was in "perfect condition"... Heavy rains are a feature at Kisumu... Couldn't the "perfect condition" runway take it?

Or was it that the runway was shoddily built/maintained by politically connected firms?

There were lots of defenders of KAA, who claimed KQ could not take the heat of competition! I think KQ cares more about the safety of its passengers & reputation!

Bankelele agrees with my assessment. After hearing whoppers for years from Kenyan government functionaries, I am sceptical of what they say.

KAA should be eliminated. The airports should be privatised as is common in many stronger economies including UK & Australia. I say give over the airports to KQ (or some other PRIVATE entity) & you will see a HUGE difference in quality & performance over a relatively short period.

Thursday, November 23, 2006

What is 10% of Safaricom worth?

Let's value Safaricom...

2005-6 Profit After Tax = KES 8.4 Billion.
Fast growing firm with new products esp "banking" thus I will give it a P/E of 20.

8.4 x 20 = KES 168 Billion (US$2.4 Billion)
Mobitelea "stole" 10% = KES 16.8 Billion (US$ 240,000,000)

Kenyan population = approx 33 Million

So moi & kanu & cronies STOLE.... 509/- from EACH Kenyan....

Yes... - I, you & him/her have been screwed out of 509/-....

Standard & Kenya Times silent on Mobitelea scam!

Whereas the East African & Nation have highlighted the "discrepancy" in the Safaricom shareholdings... E.A. Standard & Kenya Times have been SILENT...

E.A. Standard is supposedly controlled by moi, kanu & cronies (Thieves) Ltd while Kenya Times is owned by kanu...

Wednesday, November 22, 2006

The Mystery Deepens while the Government Dithers

There's third Safaricom owner - Vodafone

Publication Date: 11/23/2006 (Daily Nation)

My comments in RED

Vodafone Group of the UK yesterday admitted for the first time that some shares in Kenya's leading mobile phone provider Safaricom are held by another company.

It has been reported as such in the Annual Report among other filings since 2003. Vodafone is a UK publicly listed firm, they had to "show" their hand! If it was a Chinese firm, we would have NEVER found out! The Chinese are the perfect partners for corrupt African politicians!

But the owners of five percent of Safaricom remain a mystery as Vodafone refused to release any details.

Not their responsibility BUT Vodafone should make a PUBLIC disclosure since this is bad for business! Furthermore the Kenyan government should make demand that Vodafone tell us what they know. If the Kenyan government does not OFFICIALLY demand the "truth" then Vodafone could go scot-free. Wako has never been one for the "truth" & ringera is a lame duck!

Vodafone confirmed that a company called Mobitelea Ventures Limited owns the other 5 per cent. "Vodafone Group Plc has a 35 per cent interest in Safaricom held through Vodafone Kenya Limited, a Kenyan holding company," said Mr Phillip Rhys, the company's official in charge of mergers and acquisitions in a statement sent to the Nation.

The other 60 per cent of Safaricom is held by Telkom Kenya. The government has recently been in negotiations with Vodafone which wanted to increase its stake.

The Government has been equally evasive about the identity of Safaricom's mystery shareholder.

This is where it gets interesting!
Why is the Government stalling?
Is this why the kanu & narc governments delayed the privatisation of Safaricom?

Why did moi & kibaki have this meeting all of a sudden?

After the story was broken exclusively by the Nation's sister paper, The EastAfrican, Information and Communications minister Mutahi Kagwe said the government was not interested in the details of the Vodafone shares, but only in the 60 percent held by Telkom.

Kudos to the East African. WTF is kagwe talking about? If Vodaphone would paid $55 Million for 30%, then Kenya lost an additional $5.5 Million from Mobitelea's 10%. Something is FISHY. Some ex-kanu (& current NARC) members are involved!

Contacted by the Nation, Investment Secretary Ms Esther Koimett: "I am not aware. We have got no such information. I have no idea and I'm not sure if the information is true." She said the Treasury did not know of any other arrangement apart from a 2000 shareholders agreement that, she noted, could have been renegotiated to include a third shareholder.

Wow, what insight! I am gagging on this! I see someone hiding the family silver!

Telkom Kenya, the main shareholder in Kenya's biggest mobile company, was equally in the dark. Managing director Sammy Kirui said their records show that Safaricom has two shareholders, themselves and Vodafone. "That was the position in 2000 when Telkom's shares were unbundled . As far as we know, the shareholding portfolios remains that way," the MD said.

Well, he better do some more reading! He should push to "recover" the 5% since Telkom can use the extra cash from the sale! Telkom is borrowing money for its restructuring & the money is being stolen right under their noses!

In Parliament, MPs Justin Muturi (Kanu, Siakago) and Joseph Lagat (Eldoret East, Kanu) differed with Information and Communication minister Mutahi Kagwe over the owners of Safaricom.

But Mr Kagwe said that records at the Registrar of Societies showed that Telkom and Vodafone were the only two companies owning Safaricom. "There are only two shareholders, Telkom and Vodafone," he said.

Well, someone is lying. Can't kagwe get the "ownership" details of Mobitelea?
I am surprised awori isn't making one his idiotic statements to protect the thieves!

I think the anglo-fleecing hyenas are back!

Tuesday, November 21, 2006

Vodafone's 2005 Annual Report


Here is Vodafone's 2005 Annual Report that shows the purchase of 5% of Safaricom from Mobitelea Ventures... It is a large file so download only if you have a speedy connection...

It is on Page 25 (using adobe's page numbering system) which is Page 23 of the Annual Report.

This is a one-pager that shows significant acquisitions in 2003. Go to the bottom of the page.

So does Mobitelea still own 5%?
Who owns Mobitelea?
Did Vodafone essentially "pay" a bribe?
How did Mobitelea acquire the 10%?

WAKO knows... I betcha he knows...

Note that the date of purchase was 10 Jan 2003... just after kanu lost the elections!


Nigeria's State of Aviation - Could this happen to Kenya?

KQ recently suspended flights to Kisumu citing the "poor state of the runway"....

KAA claims the runway is "satisfactory" but by whose -perhaps Nigeria's - standards?
And why isn't the runway "excellent"?

KQ is striving to be a world-class airline while KAA seems to be comparing themselves to Nigeria.
Huh? KAA wants to feel good by comparing themselves against the worst apples in the basket!

Even an excellent airline like Virgin Nigeria might get blacklisted due to the poor state of vaiation in Nigeria - Death by association!

Who says Kenya needs Aid? Just ask gichuru for a loan!

I am glad the Press is digging this stuff up even though I believe divorces are personal matters not for public consumption.

Many successful (real) businessmen have not made what gichuru has made while gichuru "earns/steals" this through a teetering parastatal! That is why I support privatisation.

Furthermore, I think having "foreign" management is a good thing! The managers can be Kenyan (e.g. Barclays, KQ, SCBK) but the "ultimate" management authority lies with someone else.

Why? Look at KQ where Naikuni has done a great job! Moi hated him. In 2003, the kibz' government tried to "install" their men BUT were roundly rejected by KLM & enlightened shareholders.

Back to gichuru
- How much of his wealth is earned legitimately?
- The government used to "crackdown" on foreign accounts for legitimate businesses e.g. tea exporters BUT left its cronies alone!
- What did moi & cronies get from all this?
- Turkwell Gorge has been linked to biwott.
- If the reports of gichuru's shareholdings are true then investigate merali since Yana is a merali firm!

KPLC was milked dry to the bone during the 1997 elections while gichuru was MD. It is known that njenga karume (now in kibz government) was "induced" by gichuru (for kanu & moi) by getting a contract to supply over-priced transformers!

I am sure there are others out there who have this ill-gotten wealth.

There is the kenyatta family with thousands of acres of grabbed land.
There is the moi family with thousands of acres of grabbed land among other shenanigans.
There is the karume family with gains from political backroom deals.
gichuru & his stolen billions!
merali was a moi insider who got favourable treatment. Where did he really get his money & deals?
I wonder where eddy njoroge is in all this?

Just start with the above to finance the budget shortfall!

Monday, November 20, 2006

moi & cronies - Thieves Inc...

Apparently there were some shenanigans - aided by Vodaphone - regarding Safaricom by moi & his henchmen... Of course, that is no surprise but the amounts are staggering!

I am not surprised that the crooks are alive & kicking... what pisses me off is that the NARC government did nothing even to make political capital...

That's why I prefer privatisation... we can ask the hard questions unlike a state-owned or controlled enterprise...

Why does moi even have a say after screwing up Kenya?
Does he feel no shame that such egregious looting went on?
Did moi benefit?
Did moi's kids benefit?
Will Kenyans get restitution?

Sunday, November 19, 2006

Tanzania faces MASSIVE electricty shortage! Kenyans Rejoice!

I have nothing against the Tanzanian people (who are much warmer than Kenyans!) but my rant is about the idiotic policies of the Tanzanian leadership that created the mess.

Kenyan "rulers" are no better but the Kenyan populace has taken trade liberalisation to heart.

No hand-wringing will help TANESCO but I rather Kenyans (& not the Chinese) export to TZ. TZ money flowing to Kenya often flows back to TZ. TZ to China is generally one-way!

Tanzania's (partially) self-inflictedcrippling electricity shortage/crisis elicits little sympathy from me.

Whereas , inadequate rainfall, & low water levels, at some dams forced the shut down of turbines e.g. Mtera, TZ never developed their MASSIVE coal deposits in the south. Why?

Tanzanian politicians & xenophobes consistently refuse to acknowledge that an economic alliance with Kenya will greatly benefit BOTH countries. They feel that SADC has more to offer than a resurgent EAC.

An electricity grid linked with Kenya's grid would provide BOTH countries with the ability to sell/trade surplus electricity. Furthermore, Kenya (through the semi-privatised KenGen) is fast developing alternate sources - geothermal & baggasse - to keep up with the increased demand as well as maintaining "excess" thermal capacity.

Kenya experienced good rains since April 2006 & has surplus capacity, which may be sold to Uganda. Kenya could have sold the excess to the (northern) Tanzanians had they cooperated with Kenya in connecting the grid.

Northern Tanzania is a natural extension of southern Kenya (& vice versa) including the electricity grid, road & rail network and petroleum supply (pipeline). Just look at the National Parks (Masai Mara & Serengeti) or the Masai who live on either side of the border!

Northern TZ has better roads than Kenya but the rest of the infrastructure is of inferior quality. It makes business sense for KenGen/KPLC to extend the network to TZ since it provides both a source & market for electricity.

KPC should (if TZ agrees) to extend the pipeline to Arusha. If KPC is privatised, I expect the pipeline to reach Kampala, possibly Rwanda, so why not Mwanza? Arusha & Mwanza could do with a shot in the arm since they are among Tanzania's largest commerical centers.

Connecting the road network (Kenya needs to do much more on it side) & removing trade barriers will lead to increased cross-border trade esp for fresh fruits & vegetables from TZ to Kenyan towns & lodges.

Mombasa can act as a much more efficient port for TZ users if the rail network is extended to northern TZ. With the recent privatization of KR, it need not cost either government much - since the private sector will pay for it - BUT the benefits are substantial!

Since TZ industries are crippled, as I argued in an earlier blog, the Kenya government needs to turn a blind eye to Kenyan traders who are "exporting" goods to TZ. Let Kenyans "smuggle" local goods e.g. cooking oils, fats, soap, tyres, mabati, etc to the northern TZ. These are essential goods for the Tanzanians while Kenyan industries can get a huge boost.

Kenya needs to improve the roads leading to the Kenya/TZ border. Let the traders figure out how to get the goods from Kenya into TZ. They will find a way... In the meantime, Kenya's factories can start churning out more goods for export!

Friday, November 17, 2006

The Passing of A Giant - Milton Friedman

Milton Friedman was many things and GENIUS is among them.

The "father" of Monetarism for which he won a Nobel Prize in 1976.

Friedman studied, and later taught, at the University of Chicago was a Keynesian at first but then took a different view. According to Friedman, inflation was a monetary phenomenon i.e. when money supply outpaced output = inflation.

One of his best known works is the Theory of the Consumption Function, which says that people's spending habits are shaped by their expectations of future ("permanent") income rather than their current income.

He was very influential in the Reagan Administration since he was a member of President Reagan's Economic Policy Advisory Board. Ben Benarke (current Federl Reserve Chairman) is widely thought to be a Monetarist.

Milton Friedman's colleagues & students (The Chicago Boys) helped Chile turnaround its economy.

Milton, we shall miss you!

How China dominates Manufacturing - The Labour Facet

China supposedly has the lowest wages in the world but it gets worse when the underpaid & overworked are considered in the equation.

China has an aging population that produced more boys than girls after the implementation of One-child Policy. Nevertheless, China's current population still stands at a massive 1.3 Billion people - Kenya has 33 Million.

List of most populous countries

Other countries stand to gain after 30 years when the population ages & there aren't enough "replacements" for the current generation of workers.

An interesting observation made by a very smart gentleman I know was that many Chinese will have to move back to the rural areas to take care of their parents thus depleting the ranks of factory workers even further.

The beneficiaries will be the countries surrounding China and perhaps the African nations.

Nevertheless, the juggernaut is almost unstoppable for now & Africa needs to become more competitive.

Kenya opts for Fibre-optic Undersea Cable System

Exciting news & definitely something Kenya & Telkom should be proud of!

My comments in RED...

Telkom signs Sh5.7bn cable deal

Story by MICHAEL OMONDI (Daily Nation)

Publication Date: 11/18/2006

Telkom Kenya has signed a Sh5.7 billion pact with Etisalat of Dubai paving the way for the construction of an undersea cable linking Mombasa to Fujairah in the United Arab Emirates.

I hope they can complete it by Dec 2007 (they do say Nov 2007 so I am giving them one more month!) just in time to broadcast Kenya's elections' information!

The construction and supply contract will be awarded early next year and the project, dubbed The East African Marine System (Teams), will be ready by November, according to a joint statement issued by both parties from Dubai.
Kenya will have a 40 per cent holding in the project, Etisalat 20 and the remaining will go to investors in the East African region.

I hope they can float shares in such a venture since it allows Kenyans to participate from the ground up in a wonderful project that will show excellent returns if managed well!

A public offer would also open it up to scrutiny thus preventing any shenanigans regarding "corruption"... I hope the "Anglo-Fleecing" crowd are not involved!

Information and Communications permanent secretary Bitange Ndemo said in a statement from Dubai that the deal would create work opportunities for Kenyans especially in the outsourcing business.

Absolutely... Hopefully, we can get some of the jobs going to India! Apart from BPO work there is an expanded scope for IT professionals in Kenya!

Finer details of the pact remained sketchy since Dr Ndemo and the minister, Mr Mutahi Kagwe, are in Dubai.

I hope the Press are all over this story... In fact, Kagwe & Ndemo should give an interview to the bloggers!

The deal comes at a time when Kenya and 15 other African countries are locked in a dispute over the ownership and financing of a separate undersea cable that is set to run from Mtunzini, South Africa, to Mombasa. The under sea cable, commonly known as EASSY project, was started in 2003 by the World Bank at a cost of Sh14.4 billion but has been dogged by controversy with several member countries accusing South Africa of trying to hijack it.

Forget the S.Africans... We are not part of SADC but can create a common bloc with Uganda, Rwanda, Zaire, Burundi & S.Sudan. Note that Tanzania think its closer to S.Africa than to Kenya. Let them be!

EASSY is aimed at connecting eastern and southern African countries through fibre optic cable system to the rest of the world. Dr Ndemo, however, emphasised that Kenya would not abandon the EASSY project, arguing that the Government had invested time and money in it.

Why not pull out of EASSY? Just write it off until the S.Africans come back with a better offer. It's always good to have a backup in EASSy if TEAMS goes down for any reason.

The PS added that the Dubai deal had come about because of delays in concluding the EASSY project, which had made the country miss "huge" business opportunities. "From our estimates, EASSY will take too long to start and may not even take off and that would be a huge risk for our country," Dr Ndemo said, adding that the favourable pricing of the Dubai deal, which came at nearly a third of the EASSY project, would put Kenya in a good position to compete with India and Philippines for the lucrative outsourcing business.

YES... Maybe NARC-K does deserve my vote! If they can get TEAMS up & running by Nov 2007, they will have made a serious effort to earn Kenyan votes!

"The pricing with EASSY does not have these considerations and as a country we need to spur growth with a cheaper bandwidth," Dr Ndemo said.

I am so glad to hear this news... now make it REALITY... India is no longer the cheapest source for BPO & other countries can start chipping away at their dominance.

The gain in BPO jobs will have a positive knock-on effect on other sectors including IT, telecommunications & finance.

African Governments & High Fuel Prices

The Kenyan government INCREASED taxes on petrol just as oil prices peaked.
The Tanzanian government increases bureaukrazy thus increasing the cost of imported fuels.
The Nigerian government imports refined oil products (while exporting Crude Oil).

Thursday, November 16, 2006

Update on the Oil Industry in Kenya

My original post & why fuel prices in Kenya can't drop further... and now this mess at the Refinery...

Sometimes, there are acts of nature but in this case the dilapidated 53 year old water system gave out!
This system was built in the Colonial days & at least it lasted as long as it did!

Don't expect the prices of fuel to reduce any time soon!

Reviewed Site Featured in Barrons!

I had reviewed some websites that I felt provided "missing" information on stocks as well as stockmarkets in Africa.

Anyway, I beat out Barrons! Yahooooo!

Barrons, a prominent national Finance weekly paper in the USA is published by the folks of the Wall Street Journal, quoted Ryan Shen-Hoover of the newletter Investing In Africa. This is a pan-African newsletter thus covers more than just Kenya.

For all the "flaws" in Africa, Africa is a real diamond in the rough... we just need to make the right cuts & then polish it just right... Investing In Africa is like the miner who dsicovers the stones for you!

To my original list I shall add... Jijini Markets. They need to work in more features.

I can't say enough good things about who are far ahead of their competitors with their 15 minute updates... I wish the NSE would "copy" what these entrepreneurs are doing... OR co-opt them... after all it can only help!

My favourite in terms of "presentation" & features is My Stocks.

For content - Nairobist still leads the pack!

Eveready OFS picking up steam

The Eveready OFS (not an IPO since no funds are being raised by Eveready) has started picking up steam 3 days into the offer. The propectus came out on Friday (10 Nov 2006) which was one business day prior to the offer being opened.

The intial reaction was not enthusiastic since only 63 Million shares worth KES 600 Million are being sold. The reason was the allocation levels are expected to be low just like ScanGroup who sold 69 Million shares at 10.45.

In spite of the relatively high PE & low growth prospects, I feel the issue will be oversubscribed since there are many investors who like the price of 9.50.

Mumias OFS was supposed to have started on 1 Dec 2006 but there might be a dealy since we are almost in the Holiday season. Mumias will be more exciting since the govt will sell 92 Million shares. The price is unknown but expected to be sub-50 considering the price on the NSE is hovering at 52/-.

Back to Eveready... the refunds will not be issued until mid December so investors are cautious not to tie up their funds just in case of a massive oversubscription.

Wednesday, November 15, 2006

What are the results of the investigation on City Trust's price rise?

Does anyone know of the results of the supposed investigation into the huge price increase (+325%) of City Trust after the announcement of the dividend?

I have never heard anything on the EA Cables investigation nor any others!

Shouldn't the conclusions be PUBLIC knowledge since the public is affected?

What will happen if there are no trades for City Trust at 407/- or within the 10% band?
Does the price adjust downwards?
How (since bids/offered are not reported on the NSE pricelist)?

Monday, November 13, 2006

Eveready is ready. Are you?

After multiple rumours & false starts, Eveready EA is going to list on the NSE. This is NOT an IPO.

In an IPO, new funds are raised. This is an Admission to Listing & an Offer to Sell. Thus the current shareholders will reduce their shares in the Company by 30%.

Salient Features:
  • 63 Million shares on Offer @ 9.50 each
  • Year-end 30 Sep
  • Implied EPS for 2005-6 = KES 0.70 -> P/E = 13.5
  • Implied EPS for 2006-7 = KES 0.83 -> P/E = 11.4
  • Attractively priced at KES 9.50 (leave out any value considerations)
  • Cash-flow producing firm
  • Expansion to COMESA & EAC in the future
  • IPOs have done well in the past year i.e. the prices have risen due to substantial demand.
  • Compared to KenGen's IPO, the P/E is much higher thus any rise in the post-IPO price will be moderate
  • The market for the core manufactured product (D cells) is shrinking
  • Multiple lawsuits for health-related ailments
  • NAV = KES 1.66/share (Where are those MPs who could not fathom "intellectual property values"). NAV values are tricky to calculate due to assumptions & accounting rules.
  • Less enthusiasm for an IPO this close to the holidays. IMHO, Kenyans generally prefer performing tasks at the last minute!

Working on it! Check back later

Friday, November 10, 2006

A must read for those who love Stock Splits

Stock splits aren't all they are hyped up to be especially for the smart money.

Warren Buffet has NEVER split the shares of his Holding Company - Berkshire Hathaway "A" shares were trading at over $107,000 as of 10 Nov 2006.

Regardless of the all the smokescreens about the real value of a split, the Kenyan retail investor seemingly loves bonuses & splits!

There seems to be a pattern of share prices rising in anticipation of a split. The price hits a new high & the company splits the shares to make them more affordable!
All that has happened is that some folks who owned the shares BEFORE the rally increase the value of their paper holdings.

The really smart ones cash out...

Thursday, November 09, 2006

Banks' profits rise 3Q 2006 vs 3Q 2005

So far most banks are reporting greatly increased profits over the same period in 2005. This could be attributed to larger deposits that Banks have been able to garner.

Barclays (+44%) profit announcement, and subsequent share bonus & split, has boosted the share price to over 600/- on 9 Nov 2006.

KCB & SCBK profits & share prices are at record levels even though they did not announce a bonus or split.

Even laggards like NBK have shown a modest but commendable growth in profitability.

It seems the banks have a better handle on bad debts especially KCB & NBK which suffered from poor loan quality due to political lending.

Bankelele normally does a summary of Banks' profits. Since all banks are required by law to publish quarterly results within 60 days, we can expect other banks to report within the next 3 weeks.

I expect most private & listed banks to continue reporting good profits through 3Q 2006. The elections are in 2007 & it will be an interesting time for banks to competitively grow their asset base.

Competition is heating up for banks as more banks (notably Barclays) targets the "underbanked" population. This puts the larger banks (BBK & KCB) in direct competition with Equity Bank & Family Finance.

Furthmore, there are numerous smaller credit firms that will bear the brunt of the big boys as competition intensifies.

I think the increased competition will benefit Kenyans in the next few years as there will be:
  • Increased credit availability
  • More locations
  • Better deposit rates
  • Credit availability to a larger part of the population

Wednesday, November 08, 2006

Barclays announces Bonus & Rights

Barclays gave with both hands...

A 1:3 Bonus as well as a 5:1 Split. Expect the share price to JUMP on this news since the profits were also up 44%.

The speculators are going to have a field day but the P/E ratios are out of whack & they can also get worse!

I based my earlier comments on Barclays Botswana's split. Pesa Tu did not agree.

Monday, November 06, 2006

Why the price of Petrol remains high

Instinctively, I blamed the Oil Marketers for the high price of petrol but as I delve deeper I realise they are as much victims as the consumers!

As mentioned in my previous post, IMHO is blowing hot air regarding petrol prices. Finally, an Oil Marketer (Kenol/Kobil) has come out fighting the bullying government, putting the record straight while exposing us to the morass that is tax collection.

The Oil Marketers are arguing that since the government's taxes & levies constitute an increasing percentage (40% at the minimum) of the price of Petrol, the government should reduce its profligate ways.

The link below shows 70% of EABL's revenues go to the government in the form of taxes & levies. The government makes 3.3x what the shareholders get!
Essentially, for 100/- EABL gets from the sale of beer, the goverment gets 70/- without doing much! Not 70% of profits but 70% of REVENUES.... What a scam!

EABL's "distribution" graphic go to Page 29

Oil Marketers are in the same boat. Examples:

Refining crude at the Mombasa refinery is mandatory and oil firms must refine at least 70 per cent of their requirements at the facility, under the Baseoad Rule.Kinyua (Kenol-Kobil), however, pointed that two months ago, Kenya Petroleum Refineries Ltd increased its basic refining fee for crude oil processing from $1.75 to $2.15 per barrel, an increase of 22 per cent.

Kimunya (govt stooge) never mentions that the inefficient KPRL gets more for doing less while we (taxpayers) end up footing the bill.
How & why is KPRL allowed to charge more for refining?
Isn't this a subsidy for an inefficient refiner?
Why should taxpayers have to pay for it?
Who owns KPRL?
Isn't this monopolistic behaviour?

He said the adjustment followed an earlier increase last year by Kenya Pipeline Company (KPC) for its charges at the Kipevu Oil Storage Facility from $2 to $3 per cubic metre.

A subsidy for a government owned entity that is mired in scandal. The KACC wants to confiscate the MD's passport.
They now "own" a KES 1 Billion building instead of investing in upgrading the pipeline! Wrong priorities!
The road leading to the Fuel Depot in Nairobi is pathetic (& leads to dangerous situations) but they spend KES 1 Billion on an office building!

BTW, isn't this monopolistic behaviour?
What remedies do we have to reduce the costs inmposed on us as consumers?

Collection of taxes upfront since August last year and delayed tax refunds, he pointed out, had increased the cost of doing business.

So Oil Marketers (via the consumers) further subsidise the government! No wonder the government collection targets are so rosy since they do not refund the money!
Why should consumers have to pay for the excesses (bonuses, perks, outsized salaries, cars of the MPs & ministers?
Why do ministers who STEAL by overinflating their mileage allowances get to go scot-free?
If I file my taxes late, I am penalised but is it OK if the government REFUSES to refund my money?

City Trust hit KES 500 (6 Nov 2006)

I don't know if this is a joke, an error or the real deal but the NSE pricelist had the following for City Trust (listed under AIMS)...

  • Low Price for the day = 120/-
  • High Price for the day = 500/-
  • Avg Price for the day = 407/-
  • Shares traded = 2,600
  • Previous Price = 91.50
That is a humongous 350% increase over the previous price...

There was a dividend of KES 3.10 announced.

Does anyone have any idea what is going on?
Does anyone have access to City Trust's results?

Wednesday, November 01, 2006

Rant - Where is the 1 Nov 2006 NSE price list?

As of 9PM on 1 Nov 2006, I have not received (via e-mail) or been able to download the pricelist.

When I tried to download the pricelist from NSE's website I got the following error message!

Has anyone received the price list?


Tuesday, October 31, 2006

Eveready EA to go public - Offer for Sale

Why would Eveready NOT have a functioning website?

Someone tell Eveready that it makes sense to post info on the company so potential investors can view it?
Or do Kenyan investors not care about information?

At 9.50, I see cucus lining up to buy shares! The minimum applications are:
  • Retail (65% of Offer) 1,000 shares = 9,500/-
  • Corporate (30% of Offer) 10,000 shares = 95,000/-
This is an Offer for Sale thus the Proceeds go into the Seller's pockets NOT to the Company. Merali did the same thing will the ill-fated listing of Firestone (now Sameer Africa).

This is a small issue (KES 600 Million) for Kenya's current bull market thus there is a strong likelihood of an oversubscription going by ScanGroup's IPO.

Opens on Nov 13 - 24

Read the PROSPECTUS...

Monday, October 30, 2006

Oil Majors getting a BUM rap - Its politics not economics!

The Oil Industry in Kenya has had enough BS from the Government. They have started fighting back but still act as wimps.

The Government is successfulyy scoring populist points with the voters by acting tough on Oil Marketers.

The Oil Majors contend they get a maximum of 10% as their margins but this includes all operating costs e.g. salaries, depreciation, maintenance, rent , etc.

Apparently the "cost" of oil is relatively low but the following adds to the cost of petrol.
  • Import Duties (bulk of the added cost)
  • VAT
  • Fuel/Road Levy (3/- per litre)
  • 3/- additional cost of local refining vs importing White Oils - Petrol, Jet Fuel - directly
  • Losses through forced local refining (inefficient process thus 15% lower production of White Oils). Black Oils (Fuel Oil) have a lower sale value
  • Interest costs on late refunds (Kenol & Total borrow at least 11% while they receive 0% on the late refunds)
  • Higher transport costs to Nairobi & Western Kenya - using lorries - since KPC spent KES 1 Billion building a HQ instead of upgrading the pipeline! The cost-benefit from an upgraded pipeline far outweighs savings on rent!
  • Demurrage costs as KPC favours certain players when the ullage (storage) is allocated
  • Pathetic roads means transporters charge "extra" which is then reflected in the price
  • The petrol stations sell petrol at break-even prices while using their convenience stores, garages & restaurants as the profit centers
  • Licenses, municipal taxes & administrative costs
  • Forced imports through OTS i.e. all importers have to buy from the same vendor
  • NEMA certification
Basically, the cost of petrol delivered to the customer costs 35/- per litre (or lower) based on $60 per barrel.

The "gross profit" is KES 3-8 per litre. From this the oil marketers have to pay salaries, rent, maintenance, utilities, etc from that slim profit margin. Safaricom's gross margins are a hefty 50%! Why? Its a duopoly that government turns a blind eye to!

The additional 45/- is skimmed off by the government through taxes, no payments of interest on late refunds, KPRL & KPC's inefficiency. The law does not allow Oil Marketers to sue for timely payment of refunds!

Why aren't NOCK stations selling petrol at larger discounts than the Oil Majors?

I think the Oil Marketers in Kenya are wimps. They need to take the government head on and ask:
  • Where the taxes are going?
  • Why are refunds delayed by 8-12 months (thus adding 11% to the landed cost)
  • Why is KPC not expanding the pipeline asap?
  • Why are the roads leading to & from all major oil depots atrocious?
  • Why do we need more MPs with HUGE perks while refunds are delayed?
Why do we pay taxes (as private firms, listed firms or individuals) without seeing the benefits?

Friday, October 27, 2006

Am I looking at KQ thru rose-coloured glasses?

I have been an effusive supporter of KQ... Now let us be clear on one issue...

Share Price and Company Performance are DIFFERENT... therefore I will discuss what is important... not the share price but
the Company's and Management's Performance.

"Past performance is no predictor of future performance."
True... So true...

KQ is in the same league as Barclays, EABL, SCBK, etc... I did a review of what I think are TRUSTWORTHY MANAGEMENTS...

Business is about risk and vision. Credit goes to KQ's SMART & TRUSTWORTHY MANAGEMENT TEAM... They have not let me down, yet...

KQ has a measured expansion plan that allows them to be either #1 or 2 (remember GE's credo) on most routes they fly... Bilateral agreements make this the only choice (monopolistic or duopolistic) in some cases but let's look deeper....
  • Kenya-Europe -> KLM & KQ dominate the Nairobi-Europe routes. KQ essentially runs the AMS-NBO route for KLM. Intense competition from BA & charter flights. Expect steady growth especially after the new Paris flights open up new tourist markets as well as another European gateway to N.America. Note that KQ uses its regional heft to ferry South & Central African passengers to Europe via JKIA.
  • Kenya-MidEast -> In spite of strong competition from Qatar & Etihad... KQ & Emirates dominate the Kenya-Middle East routes. That said, the competition on these routes is intense. Definitely a challenging market but necessary since lots of traders like visiting Dubai.
  • Kenya-S.Africa -> KQ dominates the business sector. KQ has 2 daily flights vs 1 for SAA. There is no other airline that comes close to SAA or KQ. The growth is limited but KQ can attract (wealthier) S.African passengers to use JKIA as hub to China, Dubai and India.
  • Kenya-Southern Africa -> KQ is dominant in most countries it flies to from Kenya. KQ crushed Air Tanzania while Air Zimbabwe is almost dead. The other airlines are small and inconsequential, as yet, to KQ.
  • Kenya-Central & West Africa -> Slow but surely... expanding. The goal is to connect to China and India using Nairobi was a hub thus the push to enlarge and modernise JKIA. This market is huge esp considering China's push into Africa e.g. Sudan and Zambia.
  • Kenya-China -> KQ will face competition in due course but for now they are the only airline that serves China direct from Nairobi. Plus 3 destinations... Hong Kong, Guangzhou & Shanghai. This is the new market for KQ. There is potential for BUSINESS and TOURISM. Chinese tourists are among the highest spenders. Hong Kong's per capita is at OECD levels.
There are challenges for KQ. I will try and be KQ specific where possible.

Oil Prices
The bane of airlines for many years. KQ will do OK as long as it doesn't rise beyond $80. KQ is in a much HEALTHIER position than most African competitors including SAA and Ethiopian. A privatised SAA could become a formidable competitor but most African countries can't afford to start their own airlines thus there is a larger untapped market as African economies grow.

There is little one can do when idiots want to kill others. Definitely a threat but you have to learn to live with it. After 9/11, New Yorkers (more than ever) live in high-rises. Did the hijackings of 1970s & 1980s kill off air travel? No, coz the easiest way to travel long distances remains air travel.

Important to KQ but less profitable than Business tourism. I think most African travellers are business travellers thus less sensitive on price. The expansion to the Far East to reduce reliance on UK market for tourists while Paris will open new markets.
Kenya can maintain the tourism momentum by improving security & roads. Improved roads and security will boost the market for tourism thus creating a further need for KQ's expansion.

It is good. It is needed and it has forced KQ to be leaner & meaner. All African airlines have a deadline to be E-ticket compliant by 31 Dec 2007. Fewer than 10 airlines have done so by 31 June 2006 & among these are KQ, ET and SA. More airlines will become compliant b 2007 but many will not especially the struggling airlines. This will allow KQ, SA & ET to expand into these markets for international passengers.

KQ's "real" growth can only come from international routes since the local market is "small" in comparison. There are a limited number of Kenyans who can afford the Nbi to Msa/Ksm flights. As the roads and railway get rehabilitated, the local market for KQ will reduce or stagnate on these internal routes. Kenya is a small country and Tanzania has a larger number of towns served by Precision Air than KQ does!

KQ's biggest threat is Emirates, especially in the West African & Dubai markets. Unless KQ is restricted from further African expansion, I do not see SAA & Ethiopian as significant threats yet.

There is little any one airline can do but ALL international airlines will be affected.
For Kenya's part, it needs to ensure that humane rearing methods are used.
I recommend becoming vegetarians... less hassles with Avian Flu, Mad Cow or a host of other emerging diseases!

It seems the pandemics start in Asian countries which means more European tourists will perfer Kenya/Africa as a destination.

Yes, that is a problem.
Sometimes, it is NOT the employees but the vision that drives firms. When things are tough, employees cry about "working conditions" and "low wages" but when things are good they want to share in the pie... QUIT, if you think you are underpaid!

Anyway, whatever the merits of my views, I think KQ should sacrifice short-term gains to crush the unions. Unions generally want to reward "seniority" not productivity. KQ has started traning new staff who will probably supplement the current staff.

Brain drain IS a problem for KQ esp from the Middle Eastern airlines. Nevertheless, I hope Kenya produces more airline staff who can be "exported" since that brings in more forex!

KQ has embarked on recruiting staff fluent in Mandarin, Thai, French and Hindi as those markets become more important.

Mandarin - China (3 cities and counting).
Thai - Thailand is becoming a "hub" for KQ for the Far East e.g. Korea
French - The new Paris route with associated expansion to destinations like Mayotte, Brazzaville & Comoros.
Hindi - Daily flights to Mumbai with Delhi, as a destination, in 2007.

So without worrying about the "share price"... KQ is slowly becoming an engine for some of Kenya's economic gains. I expect the growth to continue with stumbles along the way. One important thing is I TRUST the Management.

Please comment... I do want to know if I am on the wrong track... or have missed an important part of the puzzle.

Rave - KQ has another banner (Half) Year

KQ did not disappoint though the torrid profit growth over the past 3 years has slowed down during 1H 2006-7.

The total passengers carried were up 7% to approx 1.3 Million thus setting the stage for another record for 2006-7.
KQ owns 49% of Precision Air, which has now become the largest Tanzanian airline as well as regional powerhouse for the Tanzanian market.


Turnover (KES Millions):

Passenger 24,237 +10.7%
Cargo and Mail 2,812 +13.5%
Handling 541 -7.8%
Other 876 +129.1%
Total Revenue 28,466 +12.3%

Direct Expenditure 19,803 +15.4%
Overheads 4,572 +11.6%
Total Expenses -Fuel 7,648 +26.3% (The largest cost increase but only 15% attributable to the increase in the cost of fuel thanks to hedging)
Other 16,727 +10.0%

Operating Profit 4,091 +0.2% (Rather disappointing)
Operating Margin (%) 14.4% -1.7% (Not good but fuel costs is the major contributor)
Net Finance Expenses (592) +3.4% (Cash rich but more loans needed to buy more planes)
(Loss) on Foreign Exchange (155) +51.6% (Primarily due to strong KES effect on $ deposits)
Other Non-Operational Items 126 + 223.1% (Precision Air in TZ)

Profit before Tax 3,470 +8.9%
Taxation 1,041 +8.9%
Profit after Tax 2,429 +8.9%

Net Profit Margin (%) 8.5% -0.3%

Earnings per share before tax (KShs) 7.52 +8.9%
Earnings per share after tax (KShs) 5.62 +8.9%

So what do I think?
A commendable performance considering the extremely high fuel prices experienced during the past 6 months. There will be some relief in 2H since fuel prices have dropped since Oct 2006. KQ benefits from the price drop only to the extent of the unhedged portion.

KQ has hedged its fuel thru April 2007 - probably at higher prices than the current $60 per barrel but has already reduced the fuel surcharge on their tickets. This may neutralise any benefit KQ has from the decrease in fuel costs.
  • There is still a 20% unhedged benefit that will flow through in the next 6 months.
  • KQ will replace its 2 SAAB aircraft with new regional jets which increase carrying capacity, range, are faster & have lower costs per km. Of course, they will raise the current debt levels
  • New 777 will be delivered in Feb 2007 for a larger network as well as lower costs per km. Full benefits will flow through in 2007-8.
  • The old 737-200s will be replaced by 3 new 737-800s in 2H 2006-7. Full benefits will flow through in 2007-8 since the capacity is higher.
In spite of the current challenges esp new entrants, I expect KQ to do better in 2H 2006-7 since they will have newer - more efficient - aircraft with a network that is continously being expanded thus reducing costs across the board. New agreements in East Asia will allow for better connections. The Paris sector allows for increased N. American connections (in addition to LHR & AMS) while tapping into a new tourist market.

Over all I expect lower fuel prices will boost KQ's bottomline as it has been subsidising some seats in Economy class on many sectors. Furthermore, KQ will be able to sell more tickets to price-concious travellers. They will have a new 737-800 in time for the Xmas rush

I expect that the general price reduction of air travel, lower fuel costs, winter in the Northern hemisphere and better economic growth in Africa will be the key to KQ's having a better 2H 2006-7.

Premier World Investor (Warren Buffett) does not believe in Share Splits

Splits are all the rage but the way I see it the PRIMARY beneficiaries are your "friends" the stockbrokers...

  • Unlike a Rights Issues, there is capital "raised" by the Listed Firm
  • The trading increases thus raising listing costs for the Listed Firm
  • The costs of maintaining share registers increases
  • The extra trading benefits the brokers who trade in & out for the shareholders!
  • There is a valid point that some investors may not be able to buy the higher-priced shares but they are in a minority.
Mr. Warren Buffett has never "split" the shares of his Investment Firm, Berkshire Hathaway, since he feels it only creates an opportunity for fast money types. This is the 2nd richest man in the world & he "earned" his money unlike some sheiks & crooks.

When Buffett’s Berkshire Hathaway (nyse: BRKA - news - people ) stock reached $1,300 in 1983, Buffett addressed and rebuffed the prospects for a stock split. “We want [shareholders] who think of themselves as business owners and invest in companies with the intention of staying a long time. And, we want those who keep their eyes focused on business results, not market prices,” he wrote in a letter to shareholders that year. Source: Forbes

Note that the current price is over $104,000 per share! Yes, that is over KES 7.25 Million per share!

If Berkshire Hathaway was in Kenya, the shareholders might riot in the streets!

Back to Kenya...

Barclays - They have never split their shares in Kenya but there is a chance they may do so. The majority shareholder does not trade their shares i.e. the share price is less of a concern than the profitability of BBK.
BAT - Unlikely at the moment. They prefer paying "good" dividends. The majority shareholder does not trade their shares i.e. the share price is less of a concern than the profitability of BAT.

E.A.Cables - The majority shareholder (Trans-Century) is an outfit that would probably take profits to re-invest in other businesses OR leverage their EAC holdings. Note that the price of EAC has fallen gradually (I told you so) to more reasonable levels. EA Cables has a bright future but the price reflects that future and more!

ICDCIC - The majority shareholder (Chris Kirubi) is a smart investor who IMHO probably take profits to re-invest in other businesses OR leverage his ICDCIC holdings. Note that the price of ICDCIC has fallen and IMHO will continue to fall to reflect the "truer" value. ICDCIC has a bright future but the price reflects that future and more!

Thursday, October 26, 2006

RAVE - For Ibrahim Mo and his "Best Prez" prize!

Ibrahim Mo (of Celtel fame) has launched a "competition" for best African president... the winner gets $5 Million!

This is a great idea... in spite of the critics objections....

Who do you think will win?
Does someone have a ready list of all African presidents?

Of the presidents I know.... I vote for Paul Kagame (Rwanda)
Others potential winners:
Thabo Mbeki (S. Africa)
Mwanawasa (Zambia)

Those who will definitely NOT win:

muggz mugabe (Zimbabwe) - Human Rights abuses & decrepit economy
bashir (Sudan) - Darfur genocide
geddi or something like that (Somalia) - He is sitting pretty in Kenya!
kikwete (Tanzania) - Short-sightedness in economic matters
museveni - blew it with 3rd term!

Wednesday, October 25, 2006

Can we sue the NSE for their idiotic errors?

How a comma can be very expensive!

From Canada... a story on a comma that could cost C$1 Million...

Blogger Problems --- pondering shift to Vox or WordPress

I am tired of issues with Blogger... they have grown so huge, so fast that it seems they have too many hackers, etc...

Anyway... so I am thinking of moving... I am NOT a techie so I prefer less functionality but easier maintenance/updates!

HASH suggested Vox
m suggested WordPress

Any other suggestions?

I want to keep the old entries when I transfer over... any tips?

Tuesday, October 24, 2006

NSE makes simple (idiotic) errors...

Does the NSE hire folks who flunked their Math classes?

This is NOT calculus but note the following!

October 19th (Thursday) TPS (Serena) share prices were shown as follows:
High - 94
Low - 85
Average - 84

This information was from the Excel File the NSE had on their website for Price & Trades downloads.

Since when was an AVERAGE lower than the minimum value in the data range?

As noted by dudej;
I do not need a Bsc in Maths to show that the if high is 94 and low is 94,the average statistic of 84 is misplaced. Even the lowest weighted average for would have to be 85. Perhaps someone accidentally replaced 94 with 84 on the average price.

It is pathetic to note such errors! What other errors are "hidden" from us?

There was another mega-goof in the past month when the price list had Olympia at 3/-.... Someone could have placed a BUY order at market expecting the maximum 10% to kick in but instead buys at 5x the price coz of a IDIOTIC error!

As dudj asked "Aren't these costly mistakes? and who is paying for them?"

Dudej, all I can say is definitely not the NSE...

Lee Kuan Yew for President (Again)

Apparently, Lee Kuan Yew went to Harvard in the early days to talk to the economists (among others) to figure out HOW he can lead his country to greater heights.

What was kenyatta doing? He was touring Kenya to figure out how much more land he could grab!

moi was no better...

There is a difference between LEADERS (like Yew) and CROOKS who pretend to be leaders (like kenyatta & moi)...

Don't give me the BS about kenyatta dealing with multiple tribes & political expediency.

If Kenya had had leaders, the ethnic problems would not arise. Its the CORRUPT that render Nations apart.

Cosomopolitan leaders like;
Tom Mboya (who was a Nairobi MP thus supported by more than just Luos)
Joseph Murumbi (who quit after seeing how kenyatta & his cronies were out to screw Kenya)
Pio Gama Pinto (the first high-profile politician to be murdered)
JM Kariuki (who was the only prminent Kikuyu politician to go for Mboya's funeral)

were all killed or sidelined...

I hope we choose someone who is a LEADER not of the same mold as the presidents of the past!

Just imagine if we had a Yew as president!

Monday, October 23, 2006

Eveready (among others) prepares for IPO

Updates posted 25 Oct 2006

When is another IPO one too many?

Eveready does not seem to be a "growth" company but it might have its oft-mentioned IPO soon!
We will have to wait for the prospectus but the shareholders in Sameer Africa (formerly Firestone EA) who bought into the IPO almost 10 years ago have little to show!

Will this be any different?
The IPO price was 35.50 & the current price is 16/- thus a DROP of 50% over 10 years!

Family Finance is preparing for a Private Placement but will favor its Account holders (does that include loanees?), Board Members & Staff...

It seems the competition for funds will be intense since the following IPOs/Rights Issues/Private Placements/Offers for Sale are supposed to take place by June 2007:
  • Safaricom {IPO/OfS} for Sale by Mar 2007 (mwasjd tells me it will be delayed thru 2008)
  • KenRe {IPO/OfS} by Dec 2006 but possible delay to 1Q 2007
  • Diamond Trust {Rights Issue} in Nov 2006
  • Olympia {Rights Issue} by Mar 2007
  • Telkom {IPO/OfS} by Jun 2007 (IMHO unlikely to happen till 2009)
  • Mumias {OfS} by Nov 2006
  • Eveready {IPO/OfS} by Dec 2006
  • Family Finance {PP} by Dec 2006
  • Midlands {PP} in Nov 2006
  • Acacia Fund in 2007 (Thanks to Bankelele)
  • Deacons {IPO/OfS} in 2008 (Thanks to Sizzla). They had a private placement in 3Q 2006
  • Nakumatt {IPO/OfS} in 2009 (Thanks to Bankelele)
Please send me additional info if you have better info than my estimates above.

At some point, there will too many IPOs chasing too few funds esp if the mega-IPO of Safaricom sucks up the cash! The cash will recirculate into the economy but the funds will be concentrated in fewer hands.

Wednesday, October 18, 2006

ICDCIC announces a 10:1 split... and great results

On 19 Oct, the next trading day after the announcement, ICDCIC shares traded between 420/- & 800/- for an average price of 553/-.
I am speechless! Well, good luck to the buyers!

Share splits (not banana splits) are all the rage!

Kenol started it off with a 10:1
EABL followed with a 1:5 bonus followed by a 5:1 split
E.A.Cables did a 10:1 split
Now, ICDCIC announces a 10:1 split!

ICDCIC closed at 391/- on 18 Oct 2006...
EPS: 11.03 (+106%)
Div: 4/- (+33%)
NAV: 112/- (+23%)

The AGM is on 12 Jan 2007 (which is quite late considering the year end was June 30 2006) & the split shares start trading on 22 Jan 2007.

Price on 1 Jan 2006 was 72.50 thus the price has increased by 450%, while profits 106% & NAV only 23%.... The "real" NAV is probably higher since they have some great investments whose value does not fully "show" up on the Balance Sheet.

The NAV is probably higher than shown since some assets are shown at "cost" or "directors' valuation" that could be conservative. Included among these unlisted investments are shares in Eveready & General Motors (K) among many others.

ICDCIC did not provide a breakdown of the income from sales of shares. These gains may be one-time gains if ICDCIC cannot replace the "sold" shares with other investments that will attract similar gains/returns in future years.

ICDCIC has indicated a Rights Issue was possible to raise funds. The split will "reduce" the price to "manageable" levels for many investors.

Since it remains an investment firm, the premium to the NAV is (IMHO) too high unless the unlisted firms' are valued at much higher prices/multiples.
Nevertheless, I expect the price to rise on a SPECULATIVE basis.

IMHO there is little value/upside at current prices even though the firm is expected to do well in 2006-7.

Monday, October 16, 2006

Olympia Capital Holdings zooms ahead!

OCHL has been one of the "quietest" counters on the NSE but it has zoomed ahead after the announcement of an acquisition... Now it has become a "hot" stock as the trade volumes have significantly increased.

OCHL has been trading in the KES 14-17 range from 1 Jan 2006 through 8 Oct 2006. The current price rise started on 9 Oct 2006 (16/-) to the current 25/- (16 Oct 2006). The current high is 26/- which beat the 2005 high of 25/-.

I had posted a link that would have provided the 1H 2006 Reports
Here is my original blog entry on 28 July 2006.

OCHL (listed in Kenya) owns 53% of OCC (listed in Botswana).
OCC (B) plans to acquire 74% of Plush Pty Ltd of South Africa.
Price is approx KES 160 Million (depends on the exchange rates). Rand, Pula & KES...

1H 2006 Results for OCHL were released on 28 July 2006. They are available as a free download courtesy of Investing In Africa.

The Kenyan operation performed much better while OCCC (B) posted higher revenues but a lower profit during 1H 2006 vs 1H 2005.

OCC(B) has issued a cationary on the SA acquisition earlier in the year as well as mention it on the 1H 2006 Results' commentary.

OCHL is planning a Rights Issue to fund its portion of the SA acquisition -through a OCC(B) Rights- as well as upgrading its Kenyan manufacturing plant.

S.Africa will host the 2010 FIFA World Cup thus the construction sector is likely to see a boom as roads, buildings, stadiums & other infrastructure is refurbished or newly built.

Fun Stuff
BTW... on Page 18 of Nation's Smart Company (17 Oct 2006), the "Pick of the Week" claims OCHL has a Namibian subsidiary... Hmmm... just coz Namibia borders Botswana does NOT make Botswana part of Naimibia! Is Kenya in Uganda?

Some Kenyans complain that Americans think "Africa" is one country... well some Kenyans think Botswana is in Namibia!

Friday, October 13, 2006

East African Federation - Is this an April 1 joke?

From the Nation (14 October 2006)

My comments & observations in RED

Leaders launch campaign for E. African federation

Publication Date: 10/14/2006

A campaign to rally public support for the proposed East African Federation was yesterday launched in the three countries. President Kibaki set the ball rolling in Nairobi, as Uganda's Yoweri Museveni and Tanzania's Jakaya Kikwete did the same in Kampala and Dar es Salaam, respectively.

The campaign to popularise the plan for political and economic union is scheduled to take six months. The initiative seeks to explain the benefits of the federation to the region's 105 million people, leading to a referendum to be conducted in each of the three countries.

Why bother with a political union between countried when Kenya & Uganda have massive internal political problems including:

  • Lack of true National parties as opposed to tribal gatherings (Kenya)
  • A faulty constitution which needs replacement (Kenya)
  • A constitution that is changed at a whim to let the president "extend" the term of office (Uganda)
  • Tribal clashes even in this day & age (North Eastern Kenya)

If approved at the referendum, then East Africa will become a federation in 2013. The significance of the federation is that the region will have a common president, flag, anthem and currency. The presidency will rotate among the three presidents.

Why should we spend BILLIONS on a referendum that will,IMHO, fail. The EU/EC are still navigating the ECONOMIC federation/union before taking steps to a launch political federation. Furthermore, they have not been able to successfully navigate those waters even after trying for more than 15 years, let alone the 2013 target (only 7 years away)... This is a process & it can't be rushed. These funds need to be spent on improving the infrastructure connecting the various countries. I think a new rail system, better ports & open skies will do more for "natural" integration than a referendum!

The federation president will be a symbolic figure, as each country will retain her president, national flag, national anthem plus its own economy within the union. The federation will have an enlarged Parliament and will allow free movement of people and easy trade among the members.

Apart from the economic factors like free movement of goods & people, there is no benefit but ANOTHER parasitic parliament that will remain toothless.

What is the point of a symbolic president?
Why spend more money on a parliament that will have few powers?

I see more wastefulness as witnessed by the GREEDY MPs in Kenya!

Tanzania has been belligerent towards Kenyan firms, drivers, traders & media. Why would they suddenly give up political control when they can't even loosen the economic chokehold?

Why not strive to ease the economic bottlenecks e.g. investment restrictions first?

Members of the East African Legislative Assembly will be elected directly by the people unlike today, when they are appointed by political parties and approved by respective parliaments.

Please don't waste my time & money! What issues will these MPs run on? Will they have a CDF as well? What more will they want for benefits?

President Kibaki unveils the East African Community flag at the KICC yesterday. Photo by Anthony Kamau
Yesterday, President Kibaki said: "We have committed ourselves to shaping a new future; a future in which East Africans will live together, united in peace and prosperity. "The process we are launching today aims at revitalising the spirit of East African unity in the minds and hearts of our people. We want to shift the discussions on the East African Federation away from conference halls to the urban streets and rural villages of East Africa."

He can't even get this country behind him! Shelve the political federation & work on getting Tanzania back into the EAC & COMESA rather than SADDC. In the meantime, they should open the borders to Kenyan trade.

President Kibaki said even as the national consultative process was rolling out, Kenyans should remember that a political federation "was a complex matter as it involved important issues of sovereignty which the people must decide on." He said during the launch at the Kenyatta International Conference Centre, Nairobi: "It is, therefore, important that the subject of political federation is adequately discussed and appreciated by all the people of East Africa. Thus, we should not forget that the sovereignty of our individual states is derived from the will and self-determination of our people."

This is too complex to handle before we are economically ready. Behemoths like W.Germany had a difficult time with integration. The "stronger" W. Germany was weakened substantially by the cost of the reunification. Kenya has the strongest economy of the 3 but remain minnows in comparison to mnay European & Asian countries.


This is a waste of Taxpayers' money. I think kibz will use this referendum as a means to campaign for himself & his cronies. They will tour the country pushing the referendum but actually raise their profile for the elections!

It is far better to negotiate for favourable trade terms with other countries while following a reciprocal policy of opening our borders completely to economic activities.