Saturday, November 18, 2006

November Investments

The middle of November brings a choice of three new investment options to look at:

Eveready OFS
At 9.50 shillings per share this is the cheapest to buy. Others have gone through the prospectus. prospectus

This is a company that will largely depend on rural areas to remain in the dark i.e. anti KPLC. But the company needs top get into new products such as batteries for solar gadgets and laptop’s batteries- things that will provide future customers. But when asked about R&D on Capital FM this week, the MD mentioned that this is something they rely on Eveready US to do. So the views of an African country will not rank up there. Also watch to see if ICDCI retains it stake or takes advantage of the euphoria of retail investors buying in at the front to walk out of the back door (like Uchumi).

The shares are likely to be over-subscribed and I still maintain that the hassle of time spent visiting stockbrokers coupled with the inevitable refund of most of your money in a month’s time is not an enticing option. So I’ll wait till December, or opt for the bare minimum (500 1,000 shares at 9,500 shillings). Going by other offers this year (Kengen, Scangroup), the shares may double or triple in price in the first week and then stabilize after a month.

Diamond Trust rights issue
Priced at 50/=, good outlook for a bank looking to expand regionally and possibly absorb another bank next year. I have had the shares for over a year bought at 27/= now trading at about 76=. With the rights being sold at 50, that means one can get an immediate 50% return by flipping them immediately. I’ll probably buy my rights, and more, and hold.

Family Finance Building Society (FFBS)
This fast rising building society that intends to become a bank next year. Shares are priced at 60/= and are open to account holders, but anyone can open an account and buy the shares.

Like Equity: In preparing to become a bank, they have dutifully being publishing their quarterly accounts. Equity grew by 20% while FFBS grew its assets by 18% by June 2006 and both achieved their entire 2005 profits in the first half year of 06. FFBS is about 3.5X smaller than Equity, less efficient (operating costs are about 25% higher), and mobilises deposits similarly, but their fast growing loan book, like Equity’s, also comes with growing NPA’s.

Equity raised capital to become a bank in a private placement at 136/=. Thereafter the shares went to the OTC where I had a chance to buy, but passed on, the shares at 75/=. They were listed in 2006 at 90/= shillings and have settled in the 100 – 130 range.

Difficult to judge, but I’d rate it as a buy even though they have been very slow to provide information for new investors e.g. on who others shareholders are, when we’ll know about allocations, refunds, listing etc.

16 comments:

Kudrinketh said...

Neutral on eveready

*Nothing can stop the main shareholders from selling immediately(Uchumi anyone)
*I dont like their charts,revenue has been declining,i dont trust their number on market share.
*Chinese counterfeits,the bottomline for common mwananchi is price,and eveready cannot compete with these counterfeits
*Pending quality IPOs,with mumias and kenya re lined up pretty soon,most will be dumping as soon as it hits the secondary.
*Will be oversubscribed so dont tie your money,will be oversold in the secondary market.

Buy on Diamond Trust rights
*Good long term prospects
*definitely positioning itself for expansion

Buy on Family Finance
*This one looks like its setting itself for NSE listing.Buy if you're ready to hold for longer(2 yrs) just in case listing takes longer.But you'd be rewarded big time when it does get listed(remember equity).

i'd rather risk my money with family finance over eveready,kama mbaya mbaya.

E-Nyce said...

"This is a company that will largely depend on rural areas to remain in the dark i.e. anti KPLC. But the company needs to get into new products such as batteries for solar gadgets and laptop’s batteries- things that will provide future customers."

‘MightyLight' by Cosmos Ignite Innovations, and other LED innovators.

Silly me, if I were smart, i'ld get the capital together, start me's a company, and start pushing these thru-out eastern and southern Afrique. Guaranteed cornered market within 5 yrs - barring kitu kikubwa, of course.

Feel free to steal my idea...

Anonymous said...

@bankelele:Minimum for EVEREADY is 1,000 shares.
Mos def Diamond Trust, it has a future.Family finance=if i had the cash but not sure about fundamentals

Mashatall said...

banks.
seems like investors abroad will have to rely on relas back home filling out their applications. There are no application forms online, apparently CMA rules do not allow stockbrokers to post the form online, thats some cr**, but what to do !!anyways i will get into Family Finance thats the only solid investment out there for this month, as for Diamond trust will give it time to get its act together, if you ask me its already over valued. With the NSE inflating the value of some stocks, its interesting how the money circulating in the economy finds its way from the banks to the market, and vice versa when folks cash out their profits.So most banks profits are directly related to the strong market, only thing is this happened in Japan in the 80's, and the result was severe depression that affected their economy for years to come. CBK has to do a better monetary job of mopping up excessive liquidity within the country, and the Govt. should not get carried away with the elections coming up, to the detriment of all they have achieved since coming to power.

gathinga said...

personally, i think family finace is the bst of the available opportunities. the wind is blowing towards the finance sector and i think they're positioning themselves for listing.

Eveready: has posted negative cash flows for 5yrs!! will buy minimum for offload @ 16/= on 18th Dec

kenya77 said...

Story by NATION Correspondents
Publication Date: 11/20/2006

Corrupt people are using millions of shillings obtained through the sale of drugs to invest in the stock market, Lang'ata MP Raila Odinga claimed yet again.
The Orange Democratic Movement leader said that millions of shillings acquired through sale of drugs was being wired back into the country. Mr Odinga, who made similar claims while on a recent trip abroad, did not, however, offer any proof or names.

But the MP said that unless action was taken to curb the abuse, drug dealers will destroy the country's economy.

The ODM-K leader was speaking in Nandi South at the weekend. He was accompanied by a group of five MPs and councillors.

The ODM-K leader said the party was not going to break up as prophets of doom want, adding that it had support of most wananchi.

kenyanentrepreneur said...

kudrinketh:
interesting...you've already made a determination that diamond trust has "good long term prospects" - how do you know what the future holds?

Buy family finance? how do you know where the price will be in 2 years?

bankelele said...

Kudrinketh: Same here, will pass on this IPO. Eng. Masila (the last boss of Kenya Bureau of Standards) once said KBS powerless to stop counterfiets as wananchi demanded the cheapest batteries & mitumbas in rural areas.

E-Nyce: Thanks for the tips

pesa tu: Thanks for the correction

Mashatall; Sorry, i was sure tghe forms would be online. I guess for this IPO, despite the retail crowds, banks & brokers are not goign the extra mile to reach every investor. But I I also don't see how banks profit from this market (besides bankers cheques and occational loans for shares), except for CFC who are the only banks also stockbrokers currently

gathinga: Fast growing, like Equity. Question is will the shares perform as well? Also we don't know their EPS or DPS, unlike Equity pre-listing

kenya77: Raila is Raila the politican. I don't have drug money. do you?

Kudrinketh said...

For all diaspora investors who will be sending tons of money home for IPO investment,i have a money saving tip.DO NOT USE MONEYGRAM OR WESTERN UNION.

I have been preaching this for years yet people still burn money through these sharks.here's how you send money home for free,with the best rate.Bank of America(BOA) and Barclays bank have an agreement whereby one can use either bank's ATM for free.so what i do is open a BOA acct in U.S,send the debit card home and whenever i want to send money i simply deposit money in my BOA acct and instruct the recipient to widthraw cash from Barclays atm.No fees,you get market exchange rates,no hassle,you can get money 24/7.I have been doing this since 1998 and i can say i've saved a ton of money

Another money saving tip,y'all know how most banks charge foreign transaction(2-3%) fees when you use your credit card when you travel abroad.well,Capital One credit card waives this fee so you can swipe you card anywehere in the world wothout extra penalty.

@Bankelele,CT and all other bloggers.Could yall post this money saving idea in you blogs coz i'm sure there are lots of people who continue to loose tons of money through money transfer.

Kudrinketh said...

I said diaspora yet i only mentioned america,sorry.Here's the full list of the members of the Global ATM Alliance
U.S-Bank of America
U.K-Barcklays Bank
Canada-Scotiabank
Australia-Westpac
France-BNP Paribas
Germany-Deutsche Bank
China-China Construction Bank
and of couse
Africa-anywhere where Barclays bank operates.

E-Nyce said...

@kudrinketh: you just made a friend for life!

{Well, not really. Maybe.}

Both W.U. and Moneygram have been equal-opportunity rapers for years, charging 10-20% in fees. I'll be glad to stick it to them for a change.

Gonna setup an ONLINE account with BofA today!

BTW Commerce Bank credit card also does *not* charge foreign transaction fees - confirmed from a trip this past summer - and supposedly not even for money withdrawals (although never tried this to prove).

kenya77 said...
This comment has been removed by a blog administrator.
kenya77 said...

ok i dont have drugs but how about the 5% of safaricom owned by the kanu wing of odm.what do you have to say about thatand the possibility it was usedin the referendum financing

bankelele said...

kenyanentrepreneur: sorry I missed your earlier comment. we don't know what the future holds, no one does, but we have to make decisions on what we know & expect, and D-Trust and FFBS look better than Equity

Kudrinketh: Nice tip. Money transfer is a very expensive thing & we need more alternatives. We have a free method for local transfers i.e. deposit money in other people's accounts where they access it free around the country



E-Nyce: Cost of transfer is too hight, but at least it is borne by the sender.

kenya77: am sure whoever owns Mobitelea had better things to do than buy oranges or bananas.

kenya77 said...

Bankele you really seem non commital when it comes to odm and raila. surely the illigal sale of one of kenyans profitable companies shares by politicians deserves a robast analysis from you ,or claims of drug money in the nse.dont you think. but since it will probably wont happen i think this is not the right forum for my questions .i think your position is well answered by your silence.

xtra-cash said...

kenya77...looks like you trying to push an angle here. If there's something you know spill it, otherwise this is not the right topic or forum for your agenda.

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