Blog Archive

Tuesday, January 30, 2007

HFCK's MD announces a potential Rights Issue

So HFCK's MD announces a Rights Issue to shore up its finances that has taken a severe beating in the recent past....

I see interesting possibilities here!

Continued on Investing In Africa

Tuesday, January 23, 2007

Kenya Needs Better Lobbyists

I came across this in Gathara's World. Whereas I disagree that it the USA to blame but rather an idiot called enzi who is extremely short-sighted!

The EA Standard also has the story...

Please link to the story and put your comments... do not insult enzi coz they will not post your comment but make your arguments against enzi's pig-headedness!

BTW, you can insult enzi on my blog... LOL...

Politicians the world over are STUPID, STUPID & worse!

Monday, January 22, 2007

VIA Uganda is down but not out!

Its tough for airlines out there... Just as Flamingo folded - reabsorbed into KQ - since it could not sell enough tickets thru the web, VIA Uganda has (temporarily) closed up shop!

I highlighted the fact that most airline startups in East Africa have collapsed. The low internet penetration in Kenya & Uganda as well as fraud & low credit card use makes web bookings difficult for customers/passengers.

The 'collapse' of VIA leaves KQ as the dominant - if not, only carrier - between NBO-EBB. KQ's strengths are:
  • Extensive network. It is estimated that 80% of NBO-EBB flights are connecting not point-to-point flights.
  • Extensive but expensive distribution system including Travel Agents, Web & Sales Offices.
  • Financial strength

Kenya has its Fly 54o which has lucked out since fuel prices have fallen as well as increased tourism on the NBO-MBA route. They have also added KSM but they will face increased competition from KQ's new Embraer Jets coming in mid-2007.

Friday, January 19, 2007

IPO & OFS Allocations - Safaricom

There were interesting comments to my earlier post where I argued Kenyan should be favoured over foreigners (including East Africans).

IPO - Initial Public Offering - The funds raised adds to the equity of the Issuing Firm
OFS - Offer For Sale - The funds raised is paid to the Sellers e.g. Eveready & Mumias (2006)

ScanGroup was a combination of the above.

Let me clairfy WHY I chose the position I took:
  • Stanbic - Kenyans (among other non-Ugandans) were discriminated against i.e. they received a far smaller share of the OFS allocation. There is nothing wrong with the allocation since the Uganda government was selling its shares (10%) at a discount to "market value" thus it should favour its own citizens. It is their money after all!
  • Therefore, the Kenya Govt, should, in the same spirit, give Kenyans preferential treatment in IPOs or OFS where the Kenyan Govt is selling its shares or an IPO at a discount to Market Value.
  • Tanga Cement - Non-Tanzanians were locked out from the IPO/OFS. Valid, yes, but unfair to other East Africans in the spirit of EAC.
  • Therefore, the Kenya Govt, should, in the same spirit, give Kenyans preferential treatment. Shares will only be allocated to foreigners if there is an underscription from Kenyans.
  • Allocation Criteria should be spelt out as I argued in the earlier post by create various classes for the applicants:
  • Class A - Employees - as is they are always favoured especially in a new listing
    Class B - Kenyan Citizens - Since they "own" the government which owns the share so the ultimate owners (the citizens) should get priority
    Class C - Kenyan Residents - Similar argument to B except they are not citizens thus not as vested as citizens
    Class D - Ugandans & others who allow Kenyans to apply for IPOs, incl USA, UK, etc - Since they are part of EAC & have allowed Kenyans in their IPO/OFS (Stanbic)
    Class E - Everyone else (those who restrict Kenyans in IPOs, etc) - Includes the Tanzanians who locked out foreigners including Kenyans.

No, I am not picking on Tanzanians but they need to understand that ALL E.Africans need to cooperate for the greater good. Good progress has been made but nationalistic & populist politics still plays a nasty role. Kenyans can't give all the time while receiving little in exchange. Let's be treated as equals & with respect.

Tanzania for political reasons harassed Kenyan editors & journalists (Nation Media Group) for no good reason & on flimsy excuses! A successful partnership is Precision Air & KQ. KQ owns 49% of PAir while providing the financial & managerial backup needed. PAir has since become the largest Tanzanian airline & flies to the Mid-East while continously expanding its regional footprint.

Kenyans have discovered Uganda & Rwanda to be more hospitable. Increasingly, Kenyans are investing in these countries e.g. Uchumi, Bidco & Jubilee.

Uganda provided better benefits/conditions for Bidco than Kenya there Bidco opened a new factory & plantations in Uganda.

Private Firms (with no or little government stake) e.g. Eveready can do what they want in terms of allocation after all the Kenyan citizen's 'stake' is limited.

Wednesday, January 17, 2007

Safaricom OFS should favour Kenyans over foreigners!

I am disappointed at the gross unfairness of the Stanbic allocations. Kenyans were locked out while Ugandans were heavily favoured.

I propose that in the upcoming IPOs, Kenyans get preferred allocations before any Ugandans are considered. Tanzanians should be barred from Kenyan IPOs.

Why do I take such a stand?

IPOs & new OFS tend to attract lots of Kenyan investors e.g. KenGen, Eveready, etc... so Kenyans should benefit BEFORE foreigners. I am not being xenophobic but the Ugandans did not play fair with Kenyans with Stanbic while the Tanzanians locked out Kenyans from Tanga Cement's IPO.

IPOs esp govt divestiture is at a discount to NAV or market value. Why give away 'free' money to non-Kenyans?
Ug & Tz investors can buy on the secondary market.

Safaricom is coming up... I say CMA needs to address this NOW so that Kenyans benefit first!

Monday, January 15, 2007

NSE woes continue! Again! Again!

As of 8 PM I had not received the NSE pricelist for 15 Jan 2007.
Does anyone have it?

The NSE website (mwebesa, we are waiting for a "new" website per your earlier letter) is still as dark & uninformative as before. I tried to download the latest pricelist but no luck!

Apparently, there was a problem with either the CDS or ATS earlier in the morning & trading did not take off until much later during the day.

I hope the NSE & the brokers can make 2007 their year to deliver solid gains in service - sorely lacking at the moment!

Wednesday, January 10, 2007

2007... Another Year... More Stuff...

As mentioned earlier, I have not been blogging due to time, internet & technology constraints!

I am trying to expand to "Africa" but I am constrained primarily to Kenya. In this regard, I try to post on Investing In Africa.

Investing in Africa has newsletter that provides an analysis on listed African firms from all parts of Sub-Saharan Africa. Even though it is a paid service, it is an excellent resource for those who want to look outside Kenya for investments.

NSE Index- It has risen over the 6000 mark but unless I have the guts on its composition & how it is calculated, I would not place much faith on the Index...

NSE website - Same old pathtic site. All talk, no action!

KPLC - It has shot out of the gate in 2007 in heavy anticipation of a bonus.
CMC - Another bloomer while investors wait for a bonus.

The PE & PEG are getting out of whack (IMHO) but there are a few stocks that seem price laggards even with decent performance.

BOC - Its rather idiotic to have BOC on ice/suspended from trading for over 6 months! It has performed rather well in spite of the drought in early 2005 & the price for BOC is expected to rise when trading resumes.

Carbacid - Its rather idiotic to have Carbacid on ice/suspended from trading for over 6 months! It has performed rather well but until the CMA &/or the tribunal decides on its fate regarding its acquisition by BOC, the shareholders are stuck if they want to sell. The good news is that since it is well managed the firm's shareholders do benefit from larger profits & dividends while trading is suspended.