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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
Pros:
  • 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.
Cons:
  • 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!
Bottomline:

Working on it! Check back later

8 comments:

Anonymous said...

Hey, do u have a prospectus for this? I saw today on Standard that they've got investment plans over the next 3 years i.e. its not just an exit position for some of their current shareholders? Also, they are trying to entice guys buy offering potential dividend payments in January...

Anonymous said...

Re the prospectus thing-I am surprised by the fact that they were allowed to list without having prepared this?

coldtusker said...

There is a prospectus on their website. Click on the "headline" which will lead you there...

They have to provide a Prospectus otherwise they can't offer the shares to the Public.

Their is an abridged version in Monday's Nation & Standard newspapers.

coldtusker said...

Those who buy shares during the Offer for Sale will get dividends for the year ending 30 Sep 2006.

I would have rather they gave a "discount" on the share price since dividends are taxable!

Anonymous said...

True, but how many newish investors know that? Plus, the stock is fairly low priced even given that the upside is unlikely to be anything like KenGen.

Another thing on prospectus-like KenGen, they never really highlighted how this dispute is integral to their busi. I worry that CMA/NSe don't punishing guys who basically put BS in the prospectus...

kenyanentrepreneur said...

annon:
what kind of information do you hope to gather from a prospectus?

Anonymous said...

Where's the website?

roughalmasis said...

Eveready offer
Rationale for the offer:"providing the Company with a marketable security which can act as acquisition currency should the Company be involved in a merger or acquisition" –don’t understand this, anybody out there?
Financials; Trend: Sales –flat, Cosales – 2001 cf 2005 rising, Gross margin – 2001 cf 2005 falling, Admin Expenses- rising, Net Profit 2001 cf 2005 falling. Not a growth company. Basically on same level over the years.

Political risk: Owners politically savvy. Huge dividend chunk paid out in 2002 leading to BS shrinkage probably in preparation for political change. Offer could be in preparation of 2007.

Future Dividend: Attractive – but directors reserve right to declare

Future potential: Secondary batteries: Not alluded to, but thought with envisaged exponential growth in mobiles, Company would seek franchise to make mobile batteries.