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KA-INVESTOR
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5:12
From: KA-INVESTOR
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Kenya Commercial Bank (KCB) has this week been in the media for all the wrong reasons. The bank seems to have opened another branch in the courts, where it’s fighting to win some very big cases against ‘Grand Corruption’ and its former boss was in the dock for insider trading. Mugoya Constructions: According to this article from the Standard, a case by KCB to put the famous Mugoya construction under receivership for a debt amounting to over Ksh.2.7 billion (over 30% of KCB non-performing loans) was thrown out after the AG entered nolle prosequi on the case. Is this another case of ‘Grand Amnesty’? Apparently while the case was going on, Mugoya paid KCB all the money it’s being sued for…so the case was thrown out. Since when did this become a remedy in Kenyan law? Terry Davidson Woes: KCB’s former CEO, Terry Davidson, was yesterday arraigned in court for insider trading on the Uchumi shares before the supermarket collapsed. After the good work Davidson did to turn around KCB from a loss making parastatal to a profit making giant, its unfortunate that he’s being arraigned in court for insider trading. hope this will restore some sanity in the NSE. Kamlesh Pattin’s Woes: KCB has also been stopped from liquidating Pattin’s assets following a court injunction. (To be updated)
Other info on KCB
KCB Rights 221 million new shares started trading on the NSE on Monday this week at Ksh.28 per share but latter on dropped to 26 and its now edging up slowly. The rights issue was oversubscribed by 47% after it received Ksh.8.1 billion in applications against a target of Ksh.5.5 billion needed. The bank is on an aggressive expansion plan and was recently approved to set their branch in Rwanda. The bank future prospects look good in the medium to long term and I still hold a strong buy on its shares.
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9:52
From: KA-INVESTOR
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 The NSE has been on a downward trend for a little over a month now; I’ve even forgotten the last time my portfolio made a reasonable gain. All but one counter (Stanbic UG) are in the red now and I’m wondering if my investment strategy is working. At some point last months I almost put into practice Aly Khan’s Safaricom stop loss strategy on all the stocks in my portfolio, but decided otherwise since I couldn’t see any fundamental reason to do so. I consoled myself that I’m a long term investor (every stocks investor does this at one point or the other), but how much decline can I take before I wedge in? Several explanations have been given as to why the market is looking so bearish. Optimists see a correction, pessimist see a bear run. But all agree that things are tight in this market. The last time the NSE was this low was during the January post election violence. So what could be causing this now with everything looking fine except for the high inflation.  Talking to a friend the other day I found myself with little to say about the market outlook, the only thing I kept on saying was that the market will rebound sooner than later and the depression in share values present a good opportunity for getting in. I think this make me an optimist or simply in denial. But I want to believe that this will be the case and not the opposite. Like many other investors I would like to face the turn in market trend boldly. This has driven me searching for a simple solution for any investor faced with a bear run in the stocks market. Many investor at the NSE are used to invest in a bullish market, where you buy stocks expecting their price to rise above you buy price for one to make some capital gain. This scenario has turned many retail investors to mere speculators, in for a quick gain here and there without focusing on the long term. And there is where our entire problem lies. Investing in a bear market is far much tricky than one can imagine. MainT of KCIG recently gave some survival strategies for investor in such a market. It’s during a bear market that you’ll differentiate the big boys (true investors) from the kids (speculators). In such a market, the more free & fluid your cash flow the better, since you will be able to position your self and buy at ridiculously cheap prices from bullish speculator scampering to leave the market and save face. Panic in not any investor’s pal. That’s for chicken investors who get slaughtered on their way out. The only thing to do in such a market is keep a level head and seek as much information as you can. It’s at such times that many investors see the importance of investing through an advisor, even if it cost a dime. Good information is worth more than gold in a bear market and will help you a great deal in making strategic moves that will eventually grow your investment, even if its only marginal growth. Be happy with low returns, it could have been worse. Don't feed the bear!  Brokers are known to be very witty and will only advise you to buy in a bear market citing that most shares are selling at a bargain. In most cases that’s not true, the only thing the broker is concerned about is his transaction fee when you trade and will care less when you burn your fingers. You’ll be better off holding cash. Equally, selling at a loss in one counter to jump for what you consider a bargain is a very wrong decision. Although there will be some bargains in a bear market, often it will be a case of catching a falling knife, with only painful results. Some of the industries to invest in a bear market include banking, construction and petroleum, which are most likely to gain from the re-emergence of the economy and in effect the stock market. Hey! This is not advice to buy; it’s only a suggestion that has been proved to work before in bigger and better markets. But for our NSE it’s wise to be patient and wait the correction (bear?) to reach the bottom. For how long it will take for the market to bottom out nobody knows.
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9:26
From: KA-INVESTOR
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KPLC thinks we are morons: In the late 90’s, during the frequent blackouts/power outages, KPLC used to give us flimsy excuses of how the water levels had fallen in the dams due to ‘drought’ even when it was raining heavily, or how sedimentation is reducing the level of power output (during Elnino) or any other thing they could come up with. Now they have just found another excuse, in the name of ‘high petrol prices’, to blame the high electricity bills on. Figure this out; you get a bill reading month consumption – Ksh.454 while the petrol charge is at Ksh.645. Does this mean you consumed more petrol than electricity? So what’s the benefit of using electricity? Sameer Africa (almost) sees red: Sameer Africa pre-tax profit dropped by a whooping 96% in their half year announcement. The company’s earnings dropped to Ksh.2.8 million compared to ksh.84.2 million in the same period last year. Once again this has been blamed on post election violence and increase in production cost due to high oil prices. Econet roll out deadline moved to September: it seems we will have to wait much longer for Econet to roll out their network as now their roll out deadline has been moved to September 30 from July 31, 2008. Once again it has been blamed on post election violence, but I have a strong feeling they will not be rolling out any time this year.
To be launched on August 1st
- Celtel will officially changed its name to Zain
- Nation Media New Radio station that will have Nyambane as its morning host is set to be launched tomorrow.
Almost rhetoric: What’s the probability that Britak and Equity Bank directors won’t offload their stake in the bank after the lock in period is over?
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0:58
From: KA-INVESTOR
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Equity Bank has done it again! If you thought last years result were marvelous then this year’s result will be a great shocker. Though I expected such a performance due to the role the bank played in the Safaricom IPO, I still didn’t expect the bank to hit a near 200% profit increase (197% to be exact). The bank CEO, James Mwangi, attributes the jump to ‘a delicately balanced growth, profitability and good control systems’ (whatever that means) Summary of results: - Profitability tripled to Ksh.3.087 billion from Ksh,1.037 billion same period last year.
- Total assets grew by 143%, from Ksh.29.9 billion to Ksh.72.5 billion
- total operating income increased by 156% to Ksh.6.58 billion
- Total overheads increased by 128% to Ksh.3.5 billion.
- Consolidated loan book increased by 153% from Ksh.14.3 billion Ksh.36.2 billion (probably Ksh.15 billion from IPO loans)
- Despite the post election violence non-performing loans only increased by 3%.
- The bank has 2,456,982 deposit accounts (over 45% of all deposits accounts in the banking industry) and 510,768 loan accounts.
- Equity still remains the biggest bank in terms of market capitalization.
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8:34
From: KA-INVESTOR
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Mid 2008 Green List I’ve been procrastinating on this list for a while now. Of late I’ve been unsure of the future of the NSE and its listed stocks. The market has been on a slump. With one of the highest inflation rate of 29% (from 31% last month) in Kenya, a cash crunch from the Safaricom IPO and rising interest rates the market is facing one of the toughest times since the 2005/2006 bull-run. Some 'strong' counters such as KQ and Safaricom are proving to be anything but the darlings of the market.
last years Green List performed far much better than the market average. In this year’s green list I will mainly focus on counters that show considerable prospect of growth and are undervalued in this respect. The following four stocks will form my 2008 green list, although I still hold my reservation on some: Equity
Never say die for Equity bank. The bank has proved all its critics wrong and there’s not stopping now. At above Ksh300 and a PE of 44, it’s considered one of the most expensive company among the financial stocks on the NSE, followed by Housing Finance. But I still think there is room for this company to improve. The recent acquisition in Uganda and with a very innovative and aggressive expansion plan the bank has some more surprises to give. There have been some insightful analyses of this counter and a share split is more than eminent at Ksh.350. I expect a very impressive half year result announcement soon. Although the lock in period for Equity directors ends this August, a green light is still shining on this stock. KCB
KCB has one of the most aggressive expansion strategies, almost similar to Equity but a little bit inefficient in their service delivery. Their operation in Rwanda was recently approved and the just ended rights issue is a sure over subscription. Although the additional new shares are small in number, I expect the share price to drop considerably once they start trading. Ksh.26 or anything below is a buy position for this counter. The share will be trading in mid 30’s by the end of the year and probably 40’s in the 1st quarter of next year. Safaricom
Safaricom is no Eveready. The hyped IPO pulled in some very strange shareholders, especially the so called ‘foreign investors’. At the moment speculators and loan-investors who bought in this counter during the IPO are selling in panic that the share will drop further for them to make their quick gains. This has dampened the share price as supply is far much more than demand. But in a matter of a few months the speculators would have cashed out and the share will resort to its true value, which is Ksh.10 and above. This is the time to accumulate this share and in six to nine months time it will be a sweet story. I believe Safaricom is no penny stock. Even with the new entries of Econet and Telkom, safaricom’s market share will remain more than intact, if not increase from the new cheaper calling rates. Their 3G internet provision is a good addition although still plagued by their poor customer service. Safaricom is the price setter in this industry and it will take some years before its competitors catch up. Barclays Bank
BBK has been hovering around ksh.68 for some time now. Despite their unimpressive Q1 results this company has great potential to perform. Any price at Ksh.70 and below is a bargain. I believe is just a matter of time before this counter move to mid 70’s and then into 80’s. Its one of the strongest long term counters I can ever advise a serious investor to buy. The sooner you get on board the better. The banks expansion strategy is a bit conservative but generally good. They have opened sales canters in almost all corners of Kenya and have some of the most aggressive sales and marketing agent in town.
Others to watch:
- National Bank
- Total Kenya
- Athi River Mining n Bamburi
Disclaimer: the Green list is a personal list of my preferred stocks in the market. It does not indicate certainty
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9:27
From: KA-INVESTOR
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Former Tigo-Tz CEO, Rene Meza, has been hired as the Managing Director (Not CEO) of Celtel Kenya after the recent exodus of Key staff from the mobile service company, including the former CEO who left in January. Rene brings to Celtel ten years of experience from Managing Tigo in Tanzania. Last year, before he left Tigo, he introduced the Tsh.1 per minute calling rate that revolutionized the mobile service in Tanzania. It’s now official that Celtel Kenya will change its name to Zain as from August. More from Bongo Tanzanians are planning to use the Kimunya saga in Kenya as yard stick against which their own grand corruption victims will be prosecuted. KCB Rwanda Approved KCB has been given a go ahead by Rwandan authorities to start operating the bank branch in the country. The bank plans to open at least five branches in the country. Tornado in Kenya? Apparently, according to this story, there was a tornado in Kenya and funds are being raised to support some victim in Mwamanga village. How come a tornado hit kenya and nobody told me?
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3:40
From: KA-INVESTOR
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 The mobile services wars in Kenya is getting hotter by the day, with Celtel introducing a ‘free’ call service and an internet service, while Safaricom are taking their customers by storm with their hot spot internet service ( supported by 3G technology). However what seems to be tight rivalry for the market share between the two has little to do with competition. It’s all about the entry of Telkom (Orange) and Econet who are set to roll out their services by the end of this year. Even Celtel, whose customer base reduced by 23% last year, seem to be fighting for their share in the market (albeit a confused marketing strategy) and hoping to technically eat into Safaricom’s market share. I like what is happening since only the consumers stand to gain for all these reduced prices and new-better services. I want to believe that by time Econet and Telkom will be fully in business the highest calling rate will be Ksh.5 with the internet going for Ksh.1,000 p.m. lets wait and see.
Even higher food prices:
As if the 50% rise in food prices in Kenya is not enough, a law that all food products sold in Kenya should bear an approval mark from KEBS as from October, is going to increase food prices even higher. I appreciate the noble intentions of the regulation but the timing is so wrong. For a generation that was raised on substandard goods and services – where even the education system was compromised – the KEBS fee can wait for another day.
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7:47
From: KA-INVESTOR
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Last year I picked some stocks that I expected to perform exceptionally and placed them into my ‘green list’. A year later out of the four stocks I picked only one performed dismally while the other three have performed exceptionally, surpassing the market average of 12.30%. In fact they are the best performers for the period. They performed as follows: | Stock | Start price | End Price | % Gain | Other information | | AccessKenya Group | 13.35 | 35.00 | +162.17% | The only post election effects survivor | | Equity Bank | 139.00 | 300.00 | +115.83% | Eminent split | | KCB | 24.00 | 31.50 | +31.25% | Issuing rights | | E.A.Cables | 46.00 | 41.50 | -9.78% | No known activity | 1,000 shares in each counter would have made you Ksh.185K richer, a whooping 83% gain. Who ever says last year was a bad year is a speculator. Considering the little effort it took to analyze the stocks I picked for the green list, then only a speculator could have made losses last year by buying stocks blindly. All an investor need to do is understand the counter he intend to buy in – management, business strategy and numbers (though I’ve discovered that historical numbers don’t count that much) Soon I will post "the 2008 green list" after some analysis. I feel that after the Safaricom IPO there is a small ‘breath’ in the market that may lead to a correction like the one experienced in 2007 March. But no cause for alarm, I could be wrong.
{Disclaimer - this is a personal market opinion and list of my preferred stocks. It does not indicate certainty and anybody reading this should consult their investment advisor/ broker before making any investment decision}
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6:03
From: KA-INVESTOR
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 I have no words for this guy...............................................
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7:10
From: KA-INVESTOR
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Celtel Zambia has started trading on the Lusaka Stock Exchange (LuSE) today concluding the company’s IPO. The share rose 13.3% to highs of 725 kwacha (Ksh.12.50) for the listing price of 640 kwacha (Ksh.11). The IPO was 150% oversubscribed. Allotment preference will be given to the Zambian Public and Zambian institutional investors. On offer were one billion shares, 20% of Celtel Zambia, at a price of 640 kwacha (Ksh.11) per share. Applications for the ordinary shares were for a minimum of 700 ordinary shares and thereafter in multiples of 100 ordinary shares.
Zain, Celtels parent company, is seeking to buy 3 African mobile operators after concluding a US$5 billion IPO in an unspecified European stock exchange. There are possibilities that the multinational may be targeting the South African and Egyptian markets, which are some of the richest on the continent. Zain’s Q1 2008 results indicated that their customer base reached 45.7m, while their net profit rose 10% to US$270 million. Their borderless roaming services, where customers do not pay any premium for using their phones when roaming in certain African countries in East and Central Africa is something watch.
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3:42
From: KA-INVESTOR
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Here are some horrifying facts about inflation in Zimbabwe: - This month two years ago there was alarm in Zimbabwe because the inflation rate had reached 1,000%
- In January 2008 the inflation rate was 100,000%
- This month (June 2008) it reached 1,000,000%. That's over:
- 83,000% per month.
- 2,700% a day.
- 100% an hour.
- 2% per minute
- If you get $1,000 at 2pm today and spend it at 3pm the same day, it will be worth 50% less.
- According to the third source above, a small pack of coffee cost Z$1 billion last week. A decade ago, that would buy 60 new cars.
- A loaf of bread cost Z$200 million last week; enough for 12 new cars a decade ago.
Here's a 1994 Z$50 - now worth less than the ink used for the "50"
Here's a pre-Z$5 note - worth more than US$5 at the time; closer to UK£5. Here's a Z$ 2 note. You need 100,000,000 of these to buy a loaf of bread. 
Here's a Z$ 50,000,000 notes (check the expiry date) 
The Z$ 500,000,000 "bearer cheque" is the biggest denomination at the moment and a Z$1bn note will be issued in the next few days. The Z$ 500,000,000 note is now worth about US$0.20 at the official rate and 2c or so at the black market rate. To make maters worse the note expires at the end of June 2008 (just 5 months after being issued).
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6:54
From: KA-INVESTOR
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What is it with company mergers in Kenya? The recent few mergers have been faced with very gruesome legal battles that have left the merging companies with very heavy bills to foot. In the case of the Stanbic-CFC merger where Stanbic bank lost a court case and was forced to pay Ksh.532 million in fines to their former employees and Ksh.200 million in forced security to a certain creditor who will be paid once the merger is concluded. Another merger that has run into similar trouble is the merger between Ecobank from West Africa and EABS. Ecobank is planning to take over 75% of EABS at a cost that is estimated to be worth over Ksh.1 billion. Similarly, 30% of there employees who were retrenched way back in 1996 have gone to court to block the merger from taking place before they are fully compensated. So is this a new strategy by all former employees to sue their employers once they cite a merger in the offing? It’s widely known that many employers are shrewd when it comes to making contracts that favour the company over its employees. Like in the case of EABS where an employee who had worked for over 5 years was only entitled for 17 days compensation. What a reap-off! But it seems employees are not taking these lightly and companies are paying dearly for not having their contract tight enough.
2007 Government Funds BeneficiariesI’ve been looking around for someone who got the youth or women’s fund or someone who know someone who benefited from these funds. It seems I’m not alone on this quest, Enterprise Kenya are also looking for these funds beneficiaries. If you applied for the youth fund or the women development fund how much did you get? Please send your answer to enterprisekenya@ktnkenya.com and also drop me a mail at kainvestor@gmail.com
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8:44
From: KA-INVESTOR
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The cookie has finally crumbled with the Safaricom IPO being oversubscribed by 532%. Over Ksh.226 billion (Ksh.160.6 billion from local investors and Ksh.76 billion from international investors) was put in applications for the Ksh.50 billion IPO. The allocations were made out has follows: | Type of investor | Amount Allocated | | Local/Retail investors | 21% | | QII’s & Safaricom dealers | 31% | | Safaricom Employees | 84% | | Foreign investors | 15% | Retail investors are now left holding on to a mere 21% of their application (in most cases 420 shares). Sorry for the investors who took loans to finance their applications and for those who opened multiple accounts to ‘maximize’ on their allocations. It is time for them to learn the bitter lessons of the better option IPO. 21% is 21% no matter how many accounts you applied with, the only difference is if you had applied with one account, you would not be chasing around for several refund cheques. Not all those who took loans to finance their application will feel the pain of paying back almost all the money with interest, while their merger allocations are held by the bank as collateral. Borrowing a leaf from Ssembonge its clear that the more an investor borrowed and invested the less the burden and the higher the yield. | loan
amount | cost of
loan | No. of
shares
allocated | Cost of
shares
allocated | Break Even price | Profit at
Ksh. 20 | %
Yield | | | | | | | | | | 10,000.00 | 2,885.60 | 420.00 | 4,985.60 | 11.87 | 3,414.40 | 34.14% | | 20,000.00 | 3,441.20 | 840.00 | 7,641.20 | 9.10 | 9,158.80 | 45.79% | | 50,000.00 | 5,108.00 | 2,100.00 | 15,608.00 | 7.43 | 26,392.00 | 52.78% | | 100,000.00 | 7,886.00 | 4,200.00 | 28,886.00 | 6.88 | 55,114.00 | 55.11% | | 200,000.00 | 13,442.00 | 8,400.00 | 55,442.00 | 6.60 | 112,558.00 | 56.28% | | 500,000.00 | 30,110.00 | 21,000.00 | 135,110.00 | 6.43 | 284,890.00 | 56.98% | | 1,000,000.00 | 57,890.00 | 42,000.00 | 267,890.00 | 6.38 | 572,110.00 | 57.21% | | 2,500,000.00 | 141,230.00 | 105,000.00 | 666,230.00 | 6.35 | 1,433,770.00 | 57.35% | | 5,000,000.00 | 280,130.00 | 210,000.00 | 1,330,130.00 | 6.33 | 2,869,870.00 | 57.40% | | 10,000,000.00 | 557,930.00 | 420,000.00 | 2,657,930.00 | 6.33 | 5,742,070.00 | 57.42% | Form the table its clear that after some point – at about ksh.1,000,000 loans, the incremental value of the yield from loan becomes negligible. This simply confirms that some investors (animals) are more equal than others. Large investors will keep on gaining from the stock market as small investors’ loose out in almost every deal they make. It’s also clear that any price less than Ksh.6.33 will not be good for any one. IPO Politics To some extend the ODM and Africog caveat emptor on the IPO was right. Looking at what has happened to many poor Kenyans who ignored the warnings and went forth to borrow from banks, at hefty interests to be able to participate in the Safaricom IPO; one is only left feeling sorry for them. Contrary to the government promises that Kenyans would be given priority in the event of a massive oversubscription, the same government has ignored them and praised how the IPO has attracted foreign investors (both institutional and retail) at such times is when I wish we had a grand opposition to make noise. Such government excesses will not go unabated with a strong opposition in Kenya.
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7:16
From: KA-INVESTOR
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Profits after tax declined by 5.6%, from Ksh.4.098 billion to Ksh.3.869 billion (this is the third consecutive year that their profits have dipped) Reasons for the drop: - post-election crisis - weaker U.S. dollar - loss of its KQ 507 - net margin dropped 6.4% compared to 7.0% last year operating costs went up by 5.4% the average seat occupancy drop to 70.4% from 73.6% last year. The company reduced its operating capacity (laid off some workers) to save on costs Cash and short-term investments increased marginally from Ksh.12.18 billion to Ksh.12.24 billion Maintained a 25 days credit term with its suppliers Number of passenger increase by 6% to 2.8 million Suspended flights to Paris will be reintroduced on June 10 Europe carryings dropped by 8%, Middle East routes to Mumbai and Dubai dropped by 8, while the Far East to Bangkok, Hong Kong and Guangzhou recorded growth of 7%. West and Central Africa had 24% increase, East Africa 16%, Southern Africa 13% and Northern Africa 10%. Three more plane will be delivered in the course of the year – Embraer 170 (a regional jet) and three Boeing 737-800’s (one to replace KQ 507 whose report is yet to be released ) KQ CEO, Naikuni expressed optimism that the company will be exempted from Value Added Tax (VAT) when the budget is read in mid-June. Apparently this has been the reason behind their increasing their fares. Industry Outlook: The general outlook of the industry is not good with the credit crisis in developed countries (which has affected tourism) and the ever sky rocketing fuel prices in the international market. Dividend KQ board announced a dividend payout of Ksh1.745 per share, to be approved at the AGM on 26th September. A total dividend payment of ksh.808 million Abdulrazaq Adan Ali has been appointed to replace Dr. Gerrishon Ikiara. Click here for the full KQ Results for the year ended March 31st March y 2008
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9:44
From: KA-INVESTOR
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As widely expected Safaricom’s 2007 full-year pre tax profit rose 16% to Ksh19.9 billion with their subscribers’ numbers increased by 68% to 10.2 million. I had expected Safaricom to register a higher profit than that – probably ksh.21 billion. Here are some of the impressive numbers: - Net income grew by 15%, from ksh.12 billion to Ksh. 13.9 billion - Sales jumped by 29.8%, from Ksh.47.4 to ksh.61.4 - Safaricom market share – grew from 73% to 84% (despite Celtel spirited compe) - The company plans to expand their m-pesa client base by 92% by the end of the year, from their current 2.6 million registered clients to 5 million. - Ksh. 3 billion worth of transfers was made in March 2008 alone! - Safaricom seeks to stamp their national foot print with more expansion to the rural areas (to grow by 10% in the next 10 months) – have they not already made the national foot print? - Capital expenditure expected to remain high in the next few years owing to GSM roll out. (not good) Regarding the stiff competition they are facing, Michael Joseph came shot of telling Celtel “it’s on, B*#!”, but said they are more than ready for the competition. So expect some very crazy rates soon.
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4:08
From: KA-INVESTOR
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I had earlier this year blogged about mobile wars and the stiff competition that major players are facing with the entry of France Telcom (by acquiring 51%Telkom Kenya) and Econnet into the market. Initially Safaricom pretended to snub being dragged into meaningless price wars with Celtel (soon to become ‘Zain’), but it seems this was just a bluff. Today as Celtel announced yet another great 3 bob tariff option for their subscriber, the industry leaders have also announced a 10 bob tariff. Clearly, the wars are not yet over, not now. Even the former loss making Telkom Kenya is not being left behind. After a ksh.26 billion buyout by France Telcom, the former government parastatal has gone forth to sign a Ksh.8.9 billion deal with Ericsson to roll out their intended GSM network as from September this year. Econet is planning to roll out its long awaited network in July The stage for a bruising battle for control of the local mobile phone market is now set and the main target is the safaricom’s near monopoly 9.2 million subscribers (although some of them are absentee subscribers). Other battle frontiers are the cash transfer business, internet service provision and even the intra network call charges. To add petrol to the fire the government is seeking to trim down the current 26% airtime tax to less than 10% in the 2008/09 Budget. This will see the mobile phone charges dropping to as low as Ksh.2 per minute. Life can’t get sweeter than this, can it?
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2:18
From: KA-INVESTOR
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 Celtel International, a leading mobile telephone service provider across Africa could be in a major re-branding strategy before the end of this year. The move could see the company drop the Celtel brand and adopt a completely new identity - Zain. The new name is used by celtel’s parent company MTC Group in other nations except the African market. MTC group says the re-branding is meant to re-invent the regional brand into a global brand. Experts described the new logo as too dark and moody. The re-branding process has reportedly begun in Kuwait and is expected to spread to other MTC-branded operations in the Middle East then Africa. Brandscape has more discussions on Celtel re-branding and other branding issues.
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10:02
From: KA-INVESTOR
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Finally, Safaricom IPO has been oversubscribed and we are set for the minute allocations we are used to. Despite the instability witnessed in the country at the beginning of the year, the IPO was surprisingly oversubscribed by 382% - raising Ksh.119 billion. To some extend I feel duped. I was basing my investment decision on the fact that many people will not buy into it because of the post election chaos. So what could have happened if these IPO had come last year when everybody was itching for it? What about if BoT had allowed Tanzanians to participate in the IPO? Probably we would have seen a 500% oversubscription.
With Ksh.50 billion safely in the net, the IPO has surpassed its goals; namely: maximizing revenues for the Treasury, increasing international investor interest in the NSE and deepening the market. Safaricom IPO is now the Largest Sub-Saharan IPO ever completed (previously SANLAM and Telkom S. A from South Africa were the largest). In Africa as a whole it’s now the third largest IPO after those of Maroc Telecom and Telecom Egypt. Safaricom will most probably announce their ever impressive year end results this May. The company had Ksh.16 billion profits before tax for the 9 month ended December 2007 (almost equal to ksh.17 billion full years profit in 2007), up from Ksh.12 billion last year – 2008 full year pre-tax profit may hit ksh.22 billion. So will the dividend only accrue to the old shareholders (GoK, Vodafone & Mobitelea) or will the new shareholders also be included? I would advocate for the latter to sooth the bitter retail investors – like me - that feel they have been taken for a ride.
What options do retail investors have now? Looking at the small number of shares we will be allocated we don’t have many options: Option 1
Stay put – the bog boys and the QII will – and then when short term speculators will be selling @Ksh.10, top up your account with as many shares as you can using your refund. Then enjoy the ride to supernormal gains. Option 2
Swallow your anger (asira za chura na ng’ombe) and reinvest your refund in the shares once they start trading on June 9th and wait for an opportune time (probably before Telkom K and Celtel K catch up) and price to cash out. Option 3
Wait for your CDS account to be credited and sell the shares as soon as they hit Ksh.10. then chase around for your refund and invest in the next big thing (Coop bank IPO, KCB & HFCK right issues, NMG share split or Equity bank, which is definitely headed for a split).
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9:45
From: KA-INVESTOR
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 Starting at 18:00 GMT on May 10, 2008, locations in Cairo, Kigali, London, Los Angeles, Mumbai, and Rio de Janeiro will be linked for a live program of powerful films, live music, and visionary speakers. The entire program will be broadcast – in seven languages – to millions of people worldwide through the internet, television, and mobile phones.
The 24 short films to be featured have been selected from an international competition that generated more than 2,500 submissions from over one hundred countries. The films were chosen based on their ability to inspire, transform, and allow us see the world through another person's eyes. Details on the Pangea Day films can be viewed here. The program will also include a number of exceptional speakers and musical performers. Queen Noor of Jordan, CNN's Christiane Amanpour, musician/activist Bob Geldof, and Iranian rock phenom Hypernova are among those taking part. About Pangea Day: Inspired by the 2006 TED Prize wish of documentary filmmaker Jehane Noujaim, Pangea Day endeavors to bring the world together and promote understanding and tolerance through film. Pangea Day is a celebration of what unites us, rather than what divides us. Movies can't change the world. But the people who watch them can. After May 10, Pangea Day organizers will facilitate community-building activities around the world by connecting inspired viewers with organizations doing groundbreaking work. For more information, please visit For more information see; http://www.pangeaday.org/
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9:15
From: KA-INVESTOR
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 (This post is in memory of all the 114 passengers who perished in the crash) It’s exactly one year since KQ flight 507 went down in Duala – Cameroon. Up to now, no official report has been released on the real cause of the crash. Kenya Airways is now seeking the help of the Kenya government and the US Administration, manufacturers of the Boeing, to compel the Cameroonian authorities to release the one year old report. The Boeing 737-800 series was only 6 months old and so the issue of a technical hitch could not arise. Two weeks ago, another 737-800 series belonging to KQ overshot the runway at the Entebbe International Airport in Uganda, and once again the incident was blamed on bad weather. On Friday last week, a Kenya Airways flight from Kisumu to Nairobi aborted after what the airline said was a small technical hitch (what hitch?) Although KQ CEO, Titus Naikuni, came out defending his company’s record and said that such hitches are expected taking into account the volume of flights KQ covers, it leaves a lot to beg. The frequency of the recent incidences does not look normal at all. Could this be a case of mismanagement? It’s clearly understood that workers at this flight company are quite overworked and may be under performing not due to laziness, but fatigue. What KQ needs is a complete overhaul and not a re-branding, hiking fares or cancellation of partnerships. The whole management team needs to be replaced with a new one with more stringent performance contracts. Without this the inefficient rot in there will never be dealt with and more disappointing things will happen. We cannot afford to lose more lives just because we want to serve vested interests. Our African Pride is bigger than that. The company is faced with very tough industry times (increased fuel prices, stringent terrorism laws and stiff competition from international Airlines) and cannot afford to goof around. I think making the KQ private owned or fully owned by the public will make it more efficient and accountable to its customers. Things like 48 hours delays of flights will be a thing of the past.
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9:31
From: KA-INVESTOR
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Safaricom has partner with DSTV to provide Mobile TV to their subscribers. Mobile TV is a technology that allows people to view regular live television content on their mobile phones or other mobile devices that they get through traditional cable or pay TV subscriptions at home. 
Research indicate that mobile phones will remain the central multi-purpose device for the foreseeable future, outnumbering any other mobile devices like digital media players and pocket PCs. 84% of mobile phone users in countries where Mobile TV has been launched are interested in using Mobile TV Service provided it is commonly available and affordable. Close to 60% of these will prefer watching the same content that they get on TV at home. News, sports, music videos and Game shows are the four dominant types of content that the surveyed users will prefer watching on mobile TV. Personally I would go for it, if the subscription costs are affordable. The possibilities are tremendous. Getting up-to-date news on the go, watching a live soccer matches when you are in the rural or even following your favorite series anywhere you are. It’s just amazing, I bet the service will be quite popular. The big question however is the pricing, which in turns depends on how much it will cost the mobile services provider. Safaricom plans to price it at Ksh.1,000 as from 1st July, but it will be free before June 30. This will be a boon for high end mobile handsets as most of the users will upgrade their handsets specifically to get mobile TV on their handsets. The recommended phone type by Safaricom cost at least Ksh.25,000 per set. The success however, will be dependent on content offered and price charged for the service Would you go for mobile TV if the prices are kept in the range of Ksh.1,000 per month?
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5:37
From: KA-INVESTOR
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Now that the window of application for the Safaricom IPO has finally closed, everybody is waiting to cash-in in one of the ‘biggest bets’ of the year. Most of the optimists that queued up for hours just to get a piece of this giant offer are now crossing their fingers that the share price will double or triple {to ksh.10, 15 ….or even 20} once the share hit the trading floor on May 9 th. On the other hand, pessimists or mere IPO-refund-adverse investors who by-passed the IPO hope that many retail investors will off-load in the 1st week so that the share price won’t appreciate that much {hover around Ksh.6 or 7} and they can buy as many shares as possible for the long term. In my view the possibility of this is quite minimal, but I’m ready to get more shares in case it happens. With an oversubscription being more than likely to be the case {even with Tanzanians out}, I hope it will be over 200% so that we claw back more shares from the foreign lot. Anything less than this will mean having your monies tied up in refund cheques. With over 2 million shareholders in their register, Safaricom is in for more headaches during their AGM’s. And I don’t understand how foreign shareholders will be handled when it comes to this. 
The waiting has been long and I’m glad that at last this is behind us. For over two years, the debate on Safaricom the company and Safaricom the IPO, its Mobitelea connections and many other things have been making rounds in the blogs. Some heated discussions have taken place, but after all is said and done the Mobitelea culprits are still untouchables. So forgetting about them is the only feasible option.
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3:51
From: KA-INVESTOR
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Confused investors: there seems to be too much information flowing around (Brokers advert and bank loans) and many investors are left confused on what is right and what isn’t. The fact is, where money is involved the truth is usually the first casualty. Many applicants have been misadvised into taking loans without proper analysis (IPO euphoria), opening multiple accounts to ‘maximize’ on allocations and some are even wondering who’s telling the truth after read caveat emptor on the IPO from ODM and Africog. As Concept will put it, there is too much information noise to understand who is saying it right.
‘ Undugu’ keeps Tanzanians out: The Bank of Tanzania (BoT) barred Tanzanians against participating in the Safaricom IPO. The main reason being that Safaricom had not made any commitment to cross-listing at the DSE (I believe this could have been done later on). But it’s evident that brokers there are not taking it in good faith. They have questioned the legality of the directive by BoT. And even after the CMA chairman, Jimnah, tried to lure the BoT to rescind on its decision, Kenyan brokers are saying the Tanzanian snub will not dent the IPO hopes. But the rejection by BoT is a clear blow to the regions integration.
1.65 million applications … and counting: data available at Nation media indicate that over 1.65 million applications have been made for the Safaricom IPO, with 50,000 being online application. Taking into account the enormous amount of applications to be made, I preferred the manual application for my shares over the online one. With the inefficiencies our brokers have I’m skeptical that the online applications will be handled well. But let’s wait and see. One of the leading banks has also issued over ksh15 billion in loans to applicants (could this be Equity bank…and is it the reason behind the recent rally in its share price to Ksh.185?)
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6:40
From: KA-INVESTOR
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Another week has opened for the Safaricom IPO with more investors rushing to apply for the shares. I hope the number of applications will increase this week as most investors have read the prospectus and sourced for enough funds. Last week was a little bit slow, with most applications coming from non-Kenyans. There are several conflicting analysis on the expected peak for the shares once they hit the trading floor on May 9th. But my prediction is the price will settle some where between Ksh.10 and Ksh.15. Applicants who have been going for loans being hawked by banks for the IPO have learned the tricks of the banks to reap them off. Apart from the interest being charged on the loans, loan applicants have to incur several hidden charges before the loan is awarded. Some of the banks claiming to finance 100% of the IPO application are forcing applicants to open new CDS accounts with them, hence cashing in on the transaction charges too. In Uganda, investors are wary of the Safaricom IPO citing the political uncertainness of Kenya. For a country like Uganda that is quite used to violence than Kenya, it’s really ironical. Most Ugandans are in favour of alternative investments on the Uganda Securities Exchange such as the Uganda Clays rights issue that ended just before Easter and the upcoming New Vision rights issue. In other developments:
- Gold production at Lolgorien, Kenya, by Goldplat Plc. (a UK firm that specialize in producing precious metals like gold, silver and platinum group metals, on the African continent) may commence in the second half of 2008.
-The Uganda Securities Exchange (USE) is planning to immobilize their listed companies share certificates so as to increase on the bourse liquidity. Similarly several firms are set to have rights issues and stock splits to increase on the share supply at the USE.
- ZTE Corporation, China's largest listed telecommunications manufacturer and wireless solutions provider, has signed a deal with the Kenya government to construct an optical network covering the western part of Kenya.
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5:16
From: KA-INVESTOR
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 {an article I wrote for the African Executive early last year...might be turning out to be true!} As some stock exchanges, Kenya and South Africa, around Africa are taking a bear turn an unlikely bourse is on a bull run and going even stronger. The Zimbabwe Stocks Exchange {ZSE} has ballooned to phenomenal levels as a result of the bullish patterns dominating the stock market this year. Most of the counters in ZSE have recorded enormous gains with the mainstream industrial index growing by over 600% Despite the big economic crisis that has been facing Zimbabwe; the ZSE has managed to post very impressive performance two years in a row, 2005 and 2006, beating the high inflation rate that plagues the country according to The Africa Stock Exchanges Association (ASEA). Thanks to the on going stocks rally, the ZSE market is now worth a staggering Z$405 trillion in market capitalization, after rising a steep 275 percent in just three days this week. While market capitalization (value of a company calculated by multiplying the number of shares in issue by the current stock price) does not reflect the actual performance of a company, it provides a useful guide to movements in the share price of a listed company. The huge increase in the market capitalization of the 75 listed companies in ZSE suggests, obviously, that the amount of trade is so high. This begs the question; why does the ZSE perform so well when everything is apparently in turmoil? Ideologically, a country’s stock market performance should reflect the performance of the economy. But in the case of Zimbabwe, this does not apply. Institutional investors and individuals from South Africa and Britain are simply eyeing the stock market in the belief that
 The remaining three constituencies (out of the 210 that exist) will be determined by by-elections following the deaths of three candidates prior to the March 29th elections: Pelandaba/Mpopoma, Gwanda South, and Redcliff
prices will soar if and when Mr. Mugabe steps down and investors regain confidence in the country. This has therefore led to a mad rush for the listed stocks, making the market to have an exceptional bull run in a slump economy. Further more, negative interest rates and inflation have caused a stampede for assets, which have driven share prices to record highs, even in real terms. To these investors – both legitimate and crooks – the early bird catches the worm, and in this case there are too many birds that came in early. The ZSE boom simply reflects profits that have been made on paper while, on the ground, several businesses have gone bankrupt. This pseudo profits, for the foreign investors, could yet vanish into thin air because of currency controls that make it difficult to take money out of the country. The stocks rally may also be because there are very few investment options that can provide real returns in Zimbabwe. Most of the other investment options like mining and land ownership lost their value after most of the European investors moved out due to the turbulent political climate in the country. Hard-line policies by the Zimbabwe government created an inherent risk that most investors were left with the stocks market as the only viable investment. Investors know where good returns are, and the ZSE is one of them. This is why it’s performing above all markets in Africa. The ZSE’s future in the short run indicates a continued upside. Equities are the only other best form of investment in a hyperinflationary environment such as the one existing in Zimbabwe. At the moment, there is no reason for an immediate stop in the Bull Run. But as the demand for stocks continue to sore, the market capitalization will eventually reduce. Stocks which are absurdly overvalued will lose more than proportionately when normalcy returns and the market may even be faced with an eminent crash. The viability of the decision to invest in the future of Mugabe’s tenure in power is simply a wrong investment factor. It is not a good sign for the ZSE, especially for a country whose economy is indicating otherwise. It’s only a matter of time before the stocks market follows the downward trend that the Zimbabwe economy has taken, and when that happens there will be no redeeming of losses.
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7:00
From: KA-INVESTOR
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 Subscribers in the coming Safaricom IPO will now be able to make their applications on-line. This is expected to reduce the work load and queues at the brokers’ offices. But already the site is inaccessible only two days after being launched. Then again with the ‘computer problems’ KNEC has been having over last year KCSE results, I’m really worried with what kind of short comings we should expect from this on-line application system. I hope it works out well. The IPO is widely expected to be oversubscribed by over 200% with cold tusker even giving a detailed projection of how this could happen. The IPO is expected to atrract over a million applications from all over the world. As much as retail investors would have wished for the Delivery Versus Payment (DVP) Method to be applied on all subscribers, this will not be possible and they have been left out to run around after their refunds for the next few weeks after the IPO. Luckily, incase of an oversubscription the shares will be allocated pro-rata and if the oversubscription is over 200% some of the share allocated to foreign investors will be ploughed back to the local investors. My caution goes to anyone hoping to buy into the IPO using a bank loan, which most banks are more than willing to give out. CCsf had a very appealing Safaricom IPO leverage product last year, but I’m unsure if they still have it on offer this time.
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6:34
From: KA-INVESTOR
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Safari Park hotel in conjuction with KBC have this Easter special offer with the proceeds going towards helping the IDP. If you believe in helping our brothers and sisters in the camps, please get yourself their for a fun filled family day. Talk of killing two birds with one stone. 
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7:07
From: KA-INVESTOR
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BD indicated in their paper today that investor are selling off their stocks in preparation for the Safaricom IPO at the end of this months or first week of April. Already some stockbrokers (read Dyer & Blair) are recruiting more staff in preparation for the heavy work load. The IPO is most likely to be priced at ksh.5 per share with a minimum application 1,000 shares, to attract more retail investors and build the badly damaged confidence in the market. Get yourself ready!
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3:05
From: KA-INVESTOR
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Brokers have chosen a very wrong time to screw up. And they are doing it big time! Lucky for them, there are several banks (Equity, KCB, Chase, HFCK, Family, NIC, Old Mutual et. al.) out there hawking for a place on the NSE and are more than ready to snatch up their trading licenses and compensate their disgruntled investors no matter how much that will cost. I believe this has made the perpetrators of these hideous crimes against investors to continue with unabated impunity, knowing the tradition of not being charged in court will be upheld. Coming to think of it, it seems there is more than enough demand for a position on the stocks market. WHY not then allow more brokers to be registered or easily license some banks to trade for their clients? The idea of holding the bourse hostage to a few old boys clubs is not working and its time they let free markets set the course or else NSE is doomed. Mumias transport/farmers crisis Mumias Sugar Company is advertising for track transporters for their canes, after falling out with their current transports over payments. The sugar manufacturer is facing another crisis from its out-grower farmers who are threatening to join the striking transporters if the payment per tonnage is not increased soon. 2008 Young Global Leaders The World Economic Forum has announced its list of 2008 Young Global Leaders. Last year Binyavanga Wainaina was nominated but declined the award. You've got to read his letter. Widget Obsession I don’t know if it’s only me, or all bloggers love widgets? I’m not so much into high-tech stuff, but widgets have got me obsessed and I try all the widgets I can get. I like how White African, Afromusing and mental have their IT thing going, although some of those terms they use leave my head spinning. I recently stumbled on FEEDJIT and neoworx.net which have very great live statistics and pimp-my-blog stuff that you can try, although neoworx is not free.
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8:35
From: KA-INVESTOR
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Written by James Shikwati in the Business DailyI joined Kenyans in celebrating our new found power of the ballot in December 30 2002; the surging crowds exhibited decades of energy that had been held hostage by the Moi regime. We put faith in individuals and were disappointed in 2007. In 2006, hundreds of Kenyans queued outside stock brokerage houses to partake of shares in the country’s biggest Initial Public Offering. Bottled investment thirst by Kenyans was exhibited with little time invested in evaluating the existing capital markets institutions. Again, investors are getting disappointed by the day. The Capital Markets Authority (CMA), the sector regulator, has joined the political elites in giving Kenyans a blank cheque. Reports that individuals at the Nairobi Stock Exchange (NSE) had sought to hush up the weak financial position of the Nyaga Stock Brokers, and that the NSE went ahead to advance Sh100 million only for the CMA to later declare the broker was under receivership must be condemned. The collapse of Francis Thuo and Partners was yet to clear the doubts on the suspicion that Kenya’s stock market is a preserve of 18 brokers who seem keen to stifle competition at all costs. According to the Kenyan Capital Markets Eligibility requirements, for a company to be listed at the NSE, it must, among other factors, have net assets immediately before public offer of not less than Sh20 million. The minimum authorised, issued and fully paid capital should be Sh20 million. These, of course, are regulations that were put in place to ensure that the bourse meets international standards while securing the investments of individual shareholders. The requirements seem to be silent on medium sized or small businesses. Studies show that the majority of Kenyan entrepreneurs are locked up in the micro and small enterprises partly due to the inability to mobilise financial capital. Can the policy makers reform the law to permit parallel stock markets that target such groups? It will be easier for the public to invest in such groups as long as they meet the other non-monetary requirements. Stock brokers could engage in over the counter trading, mobilise stocks for medium-sized businesses and assist entrepreneurs to clear cash-flow headache. Kenya should develop three levels of stock markets; the existing stock market, for big companies, medium level market, and low level market complete with graduation eligibility to the next level. The same can be said for the rest of Africa to allow majority to trade in stocks in whichever country. There are many positive side effects of such a venture. For instance, land grabbing, hurried buildings that do not meet architectural standards will reduce because many people will find other ways to invest their money. Businesses will be assured of capital and the resultant investment diver | |
