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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.

4 comments:

kenyanentrepreneur said...

are weather patterns part of your fundamental analysis?

that's very dangerous ct in this era of global warming and all it's unpredictability.

Odegle said...

Coldi, your posts have been greatly inspired of late makes very interesting reading. incidently how is posible that you can grasp such a variety of issues with such finese?

coldtusker said...

Yes.

Global warming/cooling is a "slow" change that happens non-linear fashion over an extended period unless there is a cataclysmic event e.g. mega-eruption spewing ash into the atmosphere.

Too many unknowns... but adjust as needed... Like I said... so far I am enjoying the ride...

Ceteris Paribus - politics, forex, etc... That said... I am pretty confident (year end is Mar 2007)since good rains fell thru Nov 30 will boost Dec 206 production.

"Sufficient" rain expected thru Dec 2006. Williamson has dams to store "excess" water thus production levels will remain "steady" thru March 2007.

Yes... I believe in myself...

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