Friday, May 09, 2008

Regional diversification

Taking regional investments a step further - how are various local listed companies doing on the regional front? January 2008 showed that having a focus on Kenya alone could be an Achilles heel despite it being considered one of the strongest economies in the region. Various listed companies are making pushes in East and Central Africa – however many of these countries are all dependent on Kenyan access, hence its not really true diversification of political risk. In that sense, Olympia Capital, an NSE laggard may be ahead of its peers with its tangled Botswana and South African corporate moves.

here’s a recap:

- CMC says regional sales are on target in Uganda and Tanzania (from ½ year results this week)
- Diamond Trust has set its sights on Burundi (adding to Uganda and Tanzania) while many other banks have targeted Rwanda
- East Africa Cables attribute good performance to their subsidiaries in Uganda, Rwanda and Tanzania
- KCB has subsidiaries in Uganda, Tanzania and S. Sudan (though it wrongly had the flag of Sudan on its’ annual report cover. These countries contribute less than 10% to their income and Ug had a loss of 49 million (setup costs) while Tz barely broke even with a profit of 0.2m in 2007. KCB opened in Kampala in November 07 and will open 6 more Ug branches in 2008, 4 new ones in S. Sudan in 08, and another 20 new branches in Tz over the next two years according to their annual report
- Kenol who after acquiring Kobil could be the first 100 billion shilling turnover company, have subsidiaries in Uganda, Tanzania, Rwanda, Zambia and Ethiopia. 80% of their sales are from Kenya, while the other countries contribute about 20%.
- TPS East Africa acquired 8% of Serena Rwanda which includes Kigali Serena and Lake Kivu Serena. Of Serena's 2007 sales of Kshs. 3.7 billion (~60 million), Kenya accounted for 64% and Tanzania 36%.
- Total Oil Kenya has sister companies in Uganda, Tanzania Congo Rwanda so essentially remain a Kenyan company with 97% of their sales being local. They however complain in their 2007 report that other countries who should be buying from Kenya are (because of our tax regulations) buying offshore and shipping through Kenya instead.
- Sameer Africa are looking for transporters to Somalia, DRC, Ethiopia, Rwanda, Sudan, Burundi, Mozambique, Zambia, Malawi Uganda and Tanzania for their products.

6 comments:

Anonymous said...

Nationmedia.com has been down for over 12hrs...

Does anyone know what's up?

Anonymous said...

Hey banks, lets expose the actual techniques and reasons/motivations/temptations that lead rogue brokers to trade illegally in shares. Shortcoming in our current laws and the effectiveness of regulatory bodies...

Plus - proposed solutions e.g. laws on shorting, online trading, authorization and verification of orders etc that ensure the customer is always protected.

How to strengthen CMA and how to minimize conflict of interest at NSE.

This would be like a blog exclusive over and above bdafrica's rather feeble but laudable attempt...

As bloggers we dont get adverts from the brokers so we can hit harderas there is no conflict of interest!

Anonymous said...

Olympia has lagged the market since the Rights Issue. I wonder how they will perform in 2008. I understand the year end was changed to something weird from the sensible Dec year end.

More information, anyone?

MainaT said...

You missed out Equity and NMG.
As far as I have been able to understand it, Olympia in Kenya is just a holding group.

coldtusker said...

MainaT: Equity is in Uganda and NMG in Uganda and Tz. Banks was talking about more than the EAC...

bankelele said...

Maishinski: Coming up soon. But broker advertising is welcome here too!

MainaT: Coming up in Part II. I was disapointed that NMG report did not provided a breakdown for Ug and Tz - saying that 'risks and returns were similar to kenya!' how - considering that happened in kenya in january 2008, last year when M7 shut down their TV station and in 2006 when their reporters were bundled out of Tz?

coldtusker: Even tz and Ug qualify as regional diversification, though Equity's performance can't be measured, till next year

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