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.

7 comments:

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

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

Baltic Amber 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?

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).

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.

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