Tuesday, July 22, 2008

Kutwa Tuesday: Reverse Safaricom IPO and other such tales

Safaricom needs a reverse stock split to get rid of their unhappy shareholders.
- Anyone who has less than 10,000 shares by December should be paid off by the Government or Vodafone at the IPO price of 5 shillings or market price, whichever is lower at the end of the year. Investors will not sell their shares at a loss and the least they can do is recoup their money from this mess (excluding their loans)

Kenol tweak: 36.67 million shares change hands worth 3.3 billion shillings on Friday. Meanwhile kenol/kobil stations have the most expensive fuel in Nairobi. Diesel has hit 101 shilling per litre ($1.55), while petrol is at 108, that’s about 6 shillings more than my station of choice.

Cola tweak: After enduring a difficult first quarter, coca cola is having a bit of a tumble in the second quarter due to to EABL’s Alvaro – at least in urban areas where it has become the non-alcoholic drink of choice for many previous soda (and juice) sippers. Coke has unleashed another multi-million shilling giveaway promotion to win back customers

alvaro cases at Nakumatt

Celtel tweak - More celtel confusion; The ink is not dry on posters for their newest promotion and already the terms have changed (for the better) [for customers to get free calls will now cost 65/= ($1) a day down from 99/=].

August will be a significant month for the mobile sector as Celtel switches to the Zain brand, Safaricom release their first quarterly results after the IPO, and Econet should finaly/hopefuly roll out operations.

Media tweaks: All journalists and correspondents practicing in Kenya must be registered with the Media Council of Kenya – and to do so they must each pay Kshs. 2,000, while foreign journalists will have to pay 10,000 ($154) per year [those on short term assignment of up to 3 months pay 5,000]. Amounts due by 30/9. Television radio and newspaper organizations also have to pay a quarterly fee depending on the number of media outlets

- Standard tweaks Two weeks after the launch of the new Standard, their strap line of the standard has changed;

new standard at launch

standard yesterday

Sunday Nation tweaks now has the best of best of Whispers - favorite columns of the late humorist Wahome Mutahi and some articles of the New York Times

From the blogs
- Pointer for Access Kenya shareholders to read
- There are only 60 lions (adult) in the Mara – but that's an improvement by 50% from year 2001
- How bad are things for those who took IPO loans for Safaricom? Ssembonge shows that small investors are hurting more than bigger borrowers.
- Cautionary tales on life insurance from Tujuane
- Peer pressure: tales of GDP growth of rates of 8% in Ghana and
21% in Angola
- Link to a puff piece in memory of the former finance minister
-US Airways to remove all in-seat movies from their planes, while Emirates is targeting to remove all paper (in-flight magazines and publications) to save a ton of weight on the new A380 (to compensate for a ton of water for showers in first class (from airliners.net)


African Banker Awards. deadline for nominations if 31 July in the following categories: African Banker of the Year, African Bank of the Year, African Investment Bank, Best Development Bank in Africa, African Microfinance Bank, Best Issuing House, Most Innovative Bank, Deal of the Year, Socially Responsible Bank of the Year, Best Global Bank in Africa, Award for Gender Sensitivity

from the daily papers last week
- Aircraft Leasing Services: captains, first officers for Embarer 135. als@als.co.ke
- HR director at Housing Finance. Apply through deloitte esd@deloitte.co.ke by 1/8
- MD of KCB Rwanda. Apply to recruitement@kcb.co.ke by 8/8
- KPMG Uganda: Internal Audit Services manager, Senior Internal Auditor, Internal auditor, forensic auditors. Apply to talentrecruit@kpmg.co.ke by 1/8
- Corporate affairs manager of Nation media group.
- Independent sales agents at Standard Chartered Bank. Apply to Susan.Ombati@ke.standardchartered.com by 31/7

Others vacancies at Kencall, Kenya Airways, and Family Bank [Credit officer, Procurement Officer, Works Officer, Accountant, Accounts Assistant, Administrative Assistant, Assistant Manager, Audit Manager, Branch Accountant]

Beach plots too good to be true? Lots of land available in Mombasa for real estate investment from Datkit agents including 3 acres creek in new Nyali with 120m sea frontage, 1.3 acres over looking Nyali golf club, 5 acre lots in kikambala, 14 acre beach plot next to Neptune beach, 25 acre beach plot next to kaskazi hotel with 168m beach front, 1/3 acre residential plots in shanzu (2nd row from beach)


inspectordanger said...

Reverse Split of shares, is it realistic? I am hearing it for the first time, but I believe that would be a good thing. But can it really happen? If shareholder are paid back the IPO price or the current price whichever is lower, I am sure they will grumble and that will be a negative PR for safcom. Image keeping your money in Safcom stock and then loose after more than six months...

coldtusker said...

Banks... u have the wrong idea about a reverse split... what ur describing is what I had proposed at DTBK... 'housekeeping'

A reverse split is when the price is considered too low so a 5:1 reverse split wud mean SafCon shares trading at 6.50 wud be at 32.50

"housekeeping" would entail a voluntary or involuntary buy-back of all shareholders who have less than x number of shares. I agree for safcon it makes sense to have that at 1,000 shares at current prices.

Of course, u have to restrict the minimum trade quantities which are 100 on the NSE or u will have the same problem!

Mitzy said...

Is there still an Alvaro shortage in Nairobi? I checked 3 establishments and they'd all ran out.
Showers in 1st class? Emirates has done it again, taking commercial flight to a whole new level. I read there are 12 luxurious suites on the Emirates A380 and passengers can sleep on a stand-alone bed rather than one converted from a seat. I eagerly await passenger reviews from the inaugural Dubai - NY flight on 1st Aug. On Singapore Airlines' A380, first-class passengers sleep on sheets made by French fashion house Givenchy, while coach passengers have USB ports for connecting their own electronic devices next to their seat-back video screens.

MainaT said...

Sorry, but is the best you guys can come up with. A share buy-back? How about ignoring what I call short-term noises because this share will still double within the 12 months on fundamentals.
We cry for years about lack of liquidity at the bourse. We get some, now its lets get rid of it?
The issue that drove the share downwards was FFIs who I think have a now downloaded a significant portion of their shares.

andrew@jijinimarkets.com said...

I agree with mainaT, liquidity usually results in more accurate prices. Just like an election, when more people are allowed to participate, the more accurate the results. The price we are seeing for Safcom is probably more accurate than what we'll have when the're fewer shareholders - when it will probably be overpriced.

Anonymous said...

MainaT and andrew@jijinimarkets.com , I actually like your idea of leaving safcom stock as is. But andrew@jijinimarkets.com, do you think the safcom share is already overprice in its state? Consider its per value... it translates to (last trading) Kes 650! a share.

bankelele said...

Inspectordanger: It’s a one time cost to compensate shareholders who will grumble for years to come (endless bad PR which will kill off future IPO’s like pipeline and co-op bank)

Coldtusker: I think we agree, housekeeping is the goal, a reverse split would be the mechanism –ama, what else? Because there are people who will be happy to hold 420 shares of the rest of their lives

Mitzy: No alvaro as Uchumi or tuskys today! I’m dehydrated. Emirates keep setting the standards

MainaT: I have no problem with the price.

Andrew: the liquidity is ok. In fact it’s been an eye-opener (i.e. Safaricom compared to the other 40 companies). Many analysts say NSE shares are over-valued compared to other sub-Saharan Africa ones, and this is a litmus test

tumwijuke said...

The Standard decided under achieving was the way to go, huh?

A banking award in 'gender sensitivity'? (Person in my head laughs and falls off a chair) so much for being politically correct.

More on how that reverse stock split wiould work please. Inspector? Cold Tusker?

Kenyans actually took to Alvaro. Amazing!

Mitzy said...

Banks, is Safari Tea catching on or did Alvaro gobble up their potential market too?

Anonymous said...

Share price has not dipped below 5.95 yet... they could still sell for 5 bob in the open market if they wanted.

Besides, not planned in budget so cannot happen this FY:-)

Anonymous said...

Standard is doing well with 40% increase in market share. This is a tremendous increase in a mostly loyalty business. Reinvention is the way to go with media (the Madonna way)

Anonymous said...

Alvaro is a fantastic product. EABL need to broaden their reach and could be a good product to venture into new countries... they can afford to buy off a bottling company or 2.

This company is 100% a value machine. its not easy to get 22% growth in a large business susch as theirs, but these managers do it year in year out

andrew@jijinimarkets said...

anonymous, whether a stock is overpriced or not is a matter of opinion which is dependent on your holding timeframe, company financials, market outlook, etc.

Having said that, quick look at its P/E ratio tells me the price is reflective of its financials. Market outlook is generally good (and is reflected in the price being many multiples of current earnings). For the longterm I think this is a fair price.

As someone else mentioned about EABL, don't expect price jumps of double-digit-percentages for such stocks. They grow, yes. But steadily and over a long timeframe.

bankelele said...

Tumwijuke: I wonder how many noticed the standard tweak – their sales seem to have picked up also.
- And yes, Alvaro has taken off (bars and super markets can’t stock enough of it)

Mitzy: Never tried that one. I’d have to say that they’d have to market to Kenyans why they should order iced tea, when they are quite capable of ordering chai moto in a bar

andrew@jijinimarkets: EABL is a dependable stock for growth and dividends. BAT and Barclays seem to have slowed down considerably (saturation point)

savvy said...

i am loving this repeats of whispers, i used to read it every sunday, i cant wait for the rereads

no one can ever fit into his shoes

Rafiki said...

It looks like Celtel is launching its Zain brand tomorrow. Did anyone receive an sms like I did?: http://rafiki-kenya.blogspot.com/2008/07/celtel-zain-vs-safaricom.html


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