Shortages Part II

See Part I

We have been taught time & again that shortages are opportunities to be taken advantage of.

Aircraft
Kenya Airways half-year results were released on Friday and the airline's management mentioned plans to replace their Saab turboprops with jet aircraft.

The airline appears to be stretched, as their smallest 737 jets are used for routes such as South Africa, Dubai, India and Turkey, while filled-up 777s to Mombasa are not a rare occurrence. Meanwhile frequent travellers on the Kisumu route, opt for the Fokker 50s of East African Safari Air, which make the flight in 25 minutes compared to the Saab’s of KQ, which do it in about 45 minutes. So regional jet to serve local and short hop regional overland routes would be welcome for KQ.

Cement
(i) When you drive past Athi River, there’s a long line trucks outside Bamburi Cement Company waiting to collect cement from teh company
(ii) EAPC has just advertised for a huge clinker tender
(iii) Floods in Mombasa have washed away two bridges, cutting off the clinker plant of Athi River Mining Company
(iv) Regional problem now as Tororo Cement plans to open a plant next to parent Bamburi (at Athi River) to sevre the Ugandan market where power rationing/shortages have hit the energy intensive cement production industry

Investor information

Total reassures
Total Oil held a cocktail for all shareholders at the Hilton on Friday to review and explain their 9-month performance to September 2006 which they had published earlier in the week.

Management were keen to explain the dip in profits in line with various industry issues and reassure investors that the company was strong. The event immediately made one wish that Uchumi, board and management had done more in terms of informing shareholders when the company’s quarterly results were released after the rights issue.

The company profits dipped about 9% while its inventory and accounts receivable were both up about 80% from a year before. Chairman Nguer of Total mentioned the overall world oil price rise, competitor Kenol’s half year performance (30% down), entry of Tamoil (Libya) into the Kenyan market, government threats to regulate fuel prices, inefficiencies at at Kenya pipeline company and Kenya oil refineries and the new large Kengen contract whose costs were being felt but benefits would accrue later among other issues as he sought to reassure shareholders that Total was a great long term investment.

We need EDGAR
He also mentioned a 100 million shilling court award to be paid to the company by oil marketers, after conferring with his company secretary that the same information would be immediately released to the Nairobi stock exchange (NSE) for other investors not present.

One problem is that corporations like Kenya Airways, EABL and other NSE-listed companies hold briefings for select corporate investors, and the media, the news of which is occasionally posted on their websites (if they exist/are ever updated) and bits of which may appear in the newspapers or on TV news.

What Kenyan investors needs is an EDGAR where all company information sent to the Nairobi Stock Exchange is instantly published, compiled, archived and available for all investors to read/access free so we can understand better how/why shares like Barclays and Sasini both rose 25% in three days this week.

Stockbrokers
Riba Capital has a great review of stockbroker services.

18 stockbroker firms were enough to serve a market a few years ago, but today they are woefully unable to cope,with the flood of new shareholders brought in by Kengen Scangroup and anticipation of Kenya Re, Mumias and Safaricom IPO's.

Nairobi land
Driving through Mlolongo which has been a rapidly growing town, its amazing that it all started with a road block i.e. weigh bridge, where all Nairobi and up-country bound trucks would stop for weight checks.

But, many significant buildings from houses to hotels, schools, nyama choma joints, churches, petrol stations and kiosks now spot distinctive painted X signs indicating that they are marked for demolition by ministry of roads as it seeks to expand the road into a dual carriageway.

The town falls in Mavoko where the county council issued letters of allocation for many years that enabled these settlements near the road that fuelled the towns’ growth. The cost of land appreciated over the years owing to demand, and many of the original allootees sold their land to new owners even though they never got title deeds – which were never issued by the Land ministry since the lots were still marked as road reserve.

The demolition process is likely to be delayed in court as business owners will challenge the outright demolition of their buildings on genuinely, if improperly, allocated land through the courts. The government should do the humane thing and compensate these building owners, using their formula for land buying. That way the politics of the demolitions will be removed.

Next: A popular idea circulating, first mentioned by Karanja Kabage, is that the Nairobi National Park be reduced in size or eliminated, by having the animals relocated to other parks, to increase the land available for Nairobi’s growth.

Water
Water rationing will be effected in various residential estates/zones (typically for ½ a week) of Nairobi and according to the Nairobi water company it is due to unexpected demand for water from unplanned developments. This is expected to continue until the next rains begin (probably November)