Monday, September 29, 2008

Bad News Bears

Correction Window: At the beginning of the month it was Crown Berger shares that did a swan dance on some pedestrian financial results and last week it was the turn for Portland cement (EAPC) shares to take a drastic dip in value with the announcement of reduced profits.

This has generally been a tough year for manufacturing stocks and the next few days should see year end results of both Kengen and KPLC who have been battling over tariffs and leaving consumers suffering and manufacturing companies & industries threatening to shut down or decamp owing to high electrical costs.

There are some shares on the NSE that are perceived to be under-valued and some that are over-valued (don’t pay dividends, appreciate on speculation, limited trading activity) - and the announcement of financial results (with the waiver of the 10% daily share price rule) gives the market the chance to correct/adjust share prices. But will these share drop? Do they have any reason to? Their P/E ratios are already so low.

Already Safaricom CEO Michael Joseph has said that the price dip of Safaricom shares have no impact on the company’s performance (their quarterly results will also be tricking in soon)

6 comments:

adam cartwright said...

HIYA BANKS! LONG TIME. ABOUT THE CROWN BERGER, CMA CLASSIFIED THE TRADE AS AN ERROR AND SAID IT WAS LATER CORRECTED. BUT THE NSE DATA STILL RECORDS THE 8 BOB AS THE LOWEST TRADE ON THAT SHARE ON THE DAY. QUESTION ... WAS THE OWNER OF THE 10K SHARES INDEMNIFIED.... DEMAND SHOT UP ON THE SHARE, DYU THINK THAT WAS THE ORIGINAL INTENTION? IF YOU LOOK AT THE STATISTICS, NO HUGE SUPPLY WAS FORTHCOMING SO TWO THINGS.... NO DUMPING BY PANICKY INVESTORS.. AND NO SELL OFFS AFTER PRICE CORRECTION AS IT WENT BACK TO 'NORMAL'.... EAPCC ACTUALLY SAID THEY WOULD SUE.. THIS WOULD ENABLE TRANSPARENCY OVER WHO IS EXPERIMENTING WITH PUSHING THE LIMITS OF THE MARKET... I BELIEVE WE ARE BEING SET UP FOR SOMETHING SPECTACULAR SOON.

ABOUT COOPERATIVE BANK... SOMETHING I HEARD ON MY GRAPE VINE.. ORIGNINAL IPO WAS FOR 5 BILLION. AFTER TRYING TO IMMOBILIZE SHARES, A NEGLIGIBLE NUMBER TURNED UP. SOME BRIGNT SPARK HIT ON THE IDEA OF DOUBLING THE IPO AMOUNT TO 10 BILLION. ONLY THAT THE FIRST FIVE BILLION WAS THE ONLY ONE CREDITED TO ORIGINAL INVESTORS. 5 BILLION WORTH OF NEW SHAREHOLDING OF DIFFERENT CLASSES WAS CREATED FOR A SELECT GROUP OF 14 GENTLEMENT WHO NOW OWN VIRTUALLY HALF OF THE BANK WITHOUT HAVING HAD TO OWN IT FOR YEARS LIKE EVERYONE ELSE. ASK THE MD WHETHER TERE IS AN ESOP IN PLACE AND WHERE THE SHARES HAVE COME FROM, WHOSE SHARES ARE BEING SOLD OFF AND THE CLINCHER WHAY THE EXEMPTION GRANTED BY THE MINISTER FOR FINANCE ON THE DECLARATION OF THE OWNERSHIP OF THE BANK

adam23 said...

Hey A.C,

What up with caps...it is hard to read text in caps no matter the content...why are you shouting?

MainaT said...

AC-good pt about Co-op. Was wondering why the exemption was done for a Co-op of all companies...

On the 10% thing, some dudes in the brokers' offices are clearly playing the game without any worries. This was one of my fears about giving the CMA job to an insider. A very good candidate for the job had been competitively sourced, but Kimunya had to be seen to be putting a non-Kiuk in.

adam cartwright said...

SORRY ABOUT THE CAPS sorry just the way i was trained :)
if any one can access the list of shares being sold off in the ipo, that is where the real story is.. of course... where are the shares being sold come from what class? a, b or the new class what ever... does any one know the total worth of the whole company? what percentage is being sold of?

inspectordanger said...

Ok, I don't understand any of the gargon said about the Coop IPO, what i am glad of is that I am not participating in it. It looks like another Safcom in the making. I just want to talk about Banks highlights. I hope the end year/quarterly or semi result of the blue chip company come out smelling good. We need something to make the market bullish. I have a reservation for Kengen Results. I am surprised MSC this time didn't make public their result announcements. The dividend is higher than last year but their share prices are still hurting.

emanu said...

Hi A.C,
I heard something else from a reliable source. None of the existing shares are being sold. Put simply, it's not an offer for sale, but an initial public offer. To this end, they created an addional 700 million shares so as to increase the capital of the bank. Originally there were 2.8Billion shares (after factoring in split). The new shares will be offered at a certain price in the market and will be all new shares. CMA doesnt allow for class A or B. They have to rank pari pasu when listed and the large chunk of the shares will be held by Co-Opbank Holdings (62%). Now Co-opbank holdings includes 50,000+ SACCOs and since CBK requires any large shareholder (i think above 20%) to be disclosed, they were guarding against listing 50,000 societies.

It looks straight from where I sit... Only issue is the new shareholder will easily sell their shares while the societies will find it difficult as they have to do it within the co-op holdings vehicle. But what the heck - the bank needs capital and has to make it attractive for new shareholders!

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