Blog Archive

Thursday, August 24, 2006

ScanGroup Announces 1H 2006 Results

ScanGroup announces their 1H 2006 results which are much better than 1H 2005 ahead of commencement of the initial trading on Aug 29 2006.

Gross Revenues: 1.39B vs 1.13B (+23%)
PBT: 89M vs 75M (+19%)
PAT (Ordinary Shareholders): 0.41 vs 0.34 (30%+) *based on 150M shares (currently there are 159M shares)

No Interim Dividend - most firms have this policy to cut down on costs. In SG's case, these could mean over 96,000 cheques!

The growth is commendable. I think SG should have sold more shares, eliminating their current debt & have ready cash for new acquisitions. Nevertheless, I think commercial banks will lend to SG based on its current performance.

A significant post-IPO event was the purchase of 70% of FCB (TZ) by ScanGroup through LoweScanAd (TZ). I think that will open the doors for SG to acquire more firms using a combination of cash & stock.

ScanGroup expects better trading results during 2H 2006 coz of cyclical factors. Kenyans have more holidays to shop in 2H esp the Xmas season when the big guns advertise ad nauseum.

Bottomline
After the measly allocation, TZ news & 1H results, I expect a strong opening for the shares on Aug 29 2006.

Just a guess BUT I think the shares will open at 15/- +. The shares will be heavily supported by Institutional buying at reasonable P/Es. This will enable SG reduce their shareholder count to manageable levels.

I expect SG to take a hit in their 2H 2006 results relating to the IPO costs e.g. additional registrar fees for the shareholder listings and administration & maintenance costs relating to the refunds.

2007 will see additional line items including printing & mailing 90,000 Annual Reports and the hire of a huge hall (Bomas or Kasarani)...

18 comments:

Jakarumba said...

Coldtusker, considering the irrational exuberance currently at the NSE, don't you find Ksh.15 an underestimation?

bankelele said...

Bharat Thakrar, the Scangroup CEO was at the KQ AGM this mornign to see what kind of shareholders he'll be facing in a few months

coldtusker said...

Banks - I am waiting for your take on the KQ AGM!!! I bet it will be good!

I wish I had known u were attending... I would have zapped you a few questions to ask!

Pls keep us informed (if u don't mind) on the AGMs you plan on attending... perhaps we can give you questions to ask or focus on!

coldtusker said...

Well... SG could open higher BUT my point is that long-term sustainability of the price lies with Institutional Buyers who will generally NOT overpay unlike Retail speculators.

Example: Equity opened at 166/- but dropped to 120/- by 25 Aug 2006. Unless their profits ramp by 20% for each next 2 years, the price could stagnate or drop.

Kudrinketh said...

Good stuff coldtusker, wish SG would actually use their website to release such info in the future for the diaspora shareholders.

I sure hope Bharat took notes at the KQ AGM, hopefully the average shareholders financial IQ has improved.

Anyone knows when Kengen will be holding their AGM(at a stadium probably!) coz smart shareholders will definitely questing this KPL agreement concidering that share value was based on discontinuance of the discount.

entrepkik said...

My guese: ScanG will open at 25 but in the next two weeks come down to 20 eventually settling at 15-18 for the longrun(pre full 2006 financial results announcement. Just a guese!

kenyanentrepreneur said...

coldtusker:

how can I get you to stop trying to make these predictions?

"Just a guess BUT I think the shares will open at 15/- +".

for the love of God, I beg you dear brother...stop

gathinga said...

this company is showing some organic growth devoid of acqusitions....may be its not that bad after all. Initially i elected to sell immediately on listing, but i might just consider holding....

coldtusker said...

@KE - For emphasis... I "predicted" twice in the sentence! I guess... I think...

Predictions are opinions...

To your request, pray, I ask, why?

Jakarumba said...

ke, you got it. News just in says its up by 34%, thats Ksh. 14.

Nelie said...

Right on target! Opened at 14, high of 20 and closed at 15.

coldtusker said...

Jakarumba & Nelie - Well, purely on an ego trip, I am glad I got this prediction right!

Of course, it means nothing unless I get the next one!

Anyway, it was a guesstimate based on multiple sellers with few shares & expected institutional support!

BTW, Equity is down to 100/- as supply comes in & we get closer to the holiday season!

Jakarumba said...

Coldtusker, did you say you ar waitintg for Equity in December Holiday season? Am sure it will hit Ksh.50!

coldtusker said...

Jakarumba - If Equity falls to 50/- but maintains its current earnings streak then I would recommend BUY!

I had "predicted" - since KE hates the word! - that Equity would hit 100/- by Xmas. Well, it has hit 100/- way before Xmas.

I doubt Equity's price will fall much further - pari passu - coz lots of shares are "locked in" for 2 years.

Nevertheless, I expect sellers to pile in around Xmas which is good for buyers with cash.

Jakarumba said...

Tuskr, was it you or Banks who whose blog had issues on Equity. If that is to go by, the by X-mas it will be less than 50 considering other opportunities.

coldtusker said...

Must b Banks & Gathinga who did Equity write-ups.

50/- for Equity is unlikely - pari passu - considering the good profits in 1H 2006, expected economic growth & publicity surrounding the Listing.

The price dipped below the psychological 100/- mark today.

SG is up 10% to 16.50... will it continue rising?

Kudrinketh said...

If Equity dips below 75 I'll start buying and increase my allocation as the price falls even further.I think we small investors should start emulating the fund managers, just wait it out and pounce when the farmers cannot hold on any longer.These speculators, or shall we call them day traders,have shown in the past that they're ready to dump stocks if it encounters a small hiccup,aka KQ and Mumias.

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