This fortnight I stormed the Pearl of Africa in search of value and I believe a gem has been unearthed. I will look at this gem later. First the surprises.
Well, well,well, what do you you know?? My most well kept secret on the Uganda Securities Exchange, Uganda Clays Limited has set up a website(www.ugandaclays.co.ug). Isn't that promising?????? I know what you are thinking! ......so what???? We who have always believed that knowledge is power to the value investor have reason to believe that this represents a major development in terms of the company's investor services. The only problem at the moment is the fact that while the website commendably showcases the company's products, there is no section for INVESTORS YET. As a result, we are unable to review its performance over the years. I'm sure management will say that this is what the website was meant to do. I beg to differ in the current business environment where stakeholders directly affect the fortunes of the business. But hey, I am willing to live with this one little step taken at a time. Hopefully, this will be looked into.
Interesting news from BOBU's AGM/annual report. Shareholders have been asked to consider and approve the splitting of shares, which currently have a face value of UGX100 per share to UGX10 per share during the AGM on 2 June 2008. This might do wonders for the share with respect to affordability. But given the current shareholding structure, I highly doubt that this will do much to improve the liquidity of the share. As I blog, it is trading at UGX4,000. By the time the split is put into effect, moreover the share may have doubled, for what its worth.
On a serious note though, why does BOBU not have an investors website if only to avail the relevant shareholder information to shareholders for just a couple of daysURGHHHHHHHHH.
Companies on the USE should pick a leaf from Stanbic Bank Uganda which has availed the relevant information (Check out www.stanbicbank.co.ug). Thumbs up for Stanbic Bank Uganda for another first in Uganda after the distribution of annual reports to shareholders by email. I reassert that Investor services are key to a company's image. I will demonstrate this in future blogs.
Well, now we know that Safaricom is for tomorrow with refunds of up to Ksh129BN as per Business Daily Africa. Isn't that a downer for retail investors???? Given that the bulk of this will ultimately end up on the Nairobi Stock Exchange (NSE), this has got me thinking about how this will impact the current shares. One thing is for sure, as I mentioned earlier blog, the level of speculation and technicians on the NSE, would suggest that there will be high demand for the low priced shares (low price being in absolute terms). As a result, shares like Mumias Sugar, Centum, and (for investors with some gall, agriculture stocks) will see some upward movements I believe.
NOW 4 THE MAIN MENU
We now know that Crane Bank's IPO is due in September 2008. Looking through their financial statements, its interesting to contrast them with Bank of Baroda (the already listed bank). Now if you thought BOBU was a value investment, take a look at Crane Bank Limited's accounts for the year ended 31 December 2007. The bank's report card paints a really rosy picture (going by the numbers).
Profit Before Tax increased 62.6% from UGX15.4BN to UGX25BN in 2007.
Profit After Tax increased from UGX12.5BN to UGX18.8BN.
Dividend of UGX4BN were declared
Loan loss provisions had a marginal increase from UGX1.7BN to UGX1.9BN (6.98%)
The increase in loan loss provisions did not worry me however given that the bank's advances also increased by a whopping 22% from UGX118BN to UGX144BN.
Customer deposits also increased by 68% to UGX290BN from UGX172BN.
The bank currently has issued and fully paid capital of 34BN shares out of an authorised capital of 50BN shares. The par value is UGX1.
Now for other tidbits worth mentioning;
The bank's auditors are Deloitte though 2007 was their last year. (No disrespect but big 4 audit firms are a plus for me regardless of how shoddy their work may be occasionally).
Managament and Directors have been with the bank for sometime (3 to 4 years at least). With Sudhir Ruparelia as vice chairman. I personally know them to be hands on especially when it comes to customer service.
One minor glitch however is the goodwill carried on the balance sheet which presumably arose from the acquisition of Stanhope Finance Company Limited in 2006. That the directors still consider this worth UGX690M unimpaired (as in 2006) is something I would have wanted explanation for. I still do not believe this would be unchanged. But hey, if the auditors are happy...........................
SO the big question is whether it is a gem
From the above, the key numbers are as follows:
Earnings (PAT) - UGX18,754,195,000
Shares - 34,000,000,000
EPS - 0.53
I would estimate the historical net asset value per share (NAV) based on its December 2007 balance sheet of the bank to fall within the range of UGX5 to UGX7 give or take.
Note ( I am not entirely convinced by the goodwill as explained above hence I have adjusted the PAT/Earnings for it)
Doing the maths, the PE ratio is not bad at all. Not bad at all and I would say this is a gem. So all we have to do is wait.
Next week we'll raid one more market in SubSaharan Africa in search of value....
DISCLAIMER: This blog does not constitute investment advice. Though utmost care has been taken while preparing this blog, I do not accept liability for investment decisions made as a result of this blog.
Showing posts with label NSE. Show all posts
Showing posts with label NSE. Show all posts
Thursday, 29 May 2008
Tuesday, 22 April 2008
To pay or not to pay dividends - Stanbic Uganda's case
Stanbic bank Uganda announced its results today.
Loans and advances grew 20% from 340BN to 478BN
Net Interest Income increased 20% from 89BN to 107BN
Operating expenses grew by only 12% from 112BN to 126BN
Profit before tax increased by 37% from 50BN to 69BN
EPS grew 34% from 7.72 to 10.36
Dividend Per Share grew 9.57% from 6.06 to 6.64
As at 22/4/2008, given that Stanbic is trading at a share price of 230, this implies a dividend yield of 2.89%, PE ratio of 22.2 and a PBV of 9.6.
What can I say? Good results per se! But then again where's the bar set? For the second year running, Stanbic continues to at least meet expectations of shareholders. Other factors constant, this share has potential for appreciation in the near future especially given that the institutional investors will be swooping for all dividend payments in the next 31 days. Place your buy orders now lest you wake up after the share has peaked by doubling the current price.
On a lighter note, the Safaricom IPO comes to an end in less than 24 hours which is quite good since we will be back to the business of considering fundamentals all over the Nairobi and Kampala bourse. Believe me they are quite difficult to identify given the high levels of irrational exuberance.
Elsewhere, in search of growth, we ditched the fundamentals this week and decided to pick up some AccessKenya shares. Given the levels of IT penetration in East Africa and the potential, we believe there is long term value in this little minx of a share and we'll see how it goes.....the key being the investment horizon.
Besides, how bad can it get????????????????????????????????????????Ta
Loans and advances grew 20% from 340BN to 478BN
Net Interest Income increased 20% from 89BN to 107BN
Operating expenses grew by only 12% from 112BN to 126BN
Profit before tax increased by 37% from 50BN to 69BN
EPS grew 34% from 7.72 to 10.36
Dividend Per Share grew 9.57% from 6.06 to 6.64
As at 22/4/2008, given that Stanbic is trading at a share price of 230, this implies a dividend yield of 2.89%, PE ratio of 22.2 and a PBV of 9.6.
What can I say? Good results per se! But then again where's the bar set? For the second year running, Stanbic continues to at least meet expectations of shareholders. Other factors constant, this share has potential for appreciation in the near future especially given that the institutional investors will be swooping for all dividend payments in the next 31 days. Place your buy orders now lest you wake up after the share has peaked by doubling the current price.
On a lighter note, the Safaricom IPO comes to an end in less than 24 hours which is quite good since we will be back to the business of considering fundamentals all over the Nairobi and Kampala bourse. Believe me they are quite difficult to identify given the high levels of irrational exuberance.
Elsewhere, in search of growth, we ditched the fundamentals this week and decided to pick up some AccessKenya shares. Given the levels of IT penetration in East Africa and the potential, we believe there is long term value in this little minx of a share and we'll see how it goes.....the key being the investment horizon.
Besides, how bad can it get????????????????????????????????????????Ta
Wednesday, 16 April 2008
What's happening..............
in Sub Saharan Africa at the moment?
I ran into colleagues of mine over the weekend and I discovered that we all think along the same lines regardless of whether we correspond or interact over issues relating to investment. More often than not, we all believe in investing but are many times dumbfounded when the issue of what to invest in comes up. Nevertheless it was quite nice and intuitive to exchange ideas over the various investment opportunities that are on the table at currently.
Safaricom, the hottest potato at the moment is in its last week with the closing date for applications for individual investors being effectively a week from now (23/4/08). Much has been said about this IPO. Issues such as under/oversubscription, who the hell is Mobitelea, Impact on the Nairobi Stock Exchange and Uganda Stock Exchange, First on line application process in East Africa cetera, cetera. I've personally been privy to the prospectus (as is every eligible potential investor out there) and also IPO research reports and investment recommendations from some respected investment advisors out there. All I can say is that they all seem to say is that they all recommend Safaricom as a long term buy. But the simple advice, without going into technobubble is that one can never go wrong with African IPOs (more over East Africa at that). Whatever happens, the share price will take some pummelling to fall significantly below Ksh5.
Unfortunately, in my view, the factors all point to an undersubscription but hey what's to lose?
On a sad note, the Bank Of Tanzania denied Tanzanians the right to participate in the IPO by refusing to ease the capital market and foreign exchange restrictions. The restrictions have always been there. I remember trying to invest in Tanga Breweries sometime back and my broker telling me that if I bought any shares, it would result in the proportion of foreign ownership of the company exceeding the statutory minimum required for foreign ownership. Duhhhh, I only wanted a few shares!!!!!!!!!!!!!!!! So much for the East African Community/cooperation blah blah blah.
Unfortunately, the same thing just happened with respect to the Celtel Zambia IPO for which the prospectus is expected to be issued on 28/4/2008. Naturally and as I have just explained, one can never go wrong with African IPOs so if you ask me, this is a very strong buy. Save the numbers for the shareholders general meeting.
In Kenya, the only marketing company listed on the exchange SCANGROUP scared the hell out of investors by filing financial results before 31 March but they ultimately were published in today's papers. As an investor and ex-auditor, I am always skeptical when companies do not abide by a financial calendar since after all, it is only financial statements whose audit follows a set timetable, with board approval and ratification. Hopefully, we'll ultimately understand the reasons for these delays.
On the lookout for IPOs, generally, we expect Cooperative Bank, Transcentury to list this year.
Tanzania's NICOL, a microfinance/investment company is also programmed to list if they can overcome procedural hurdles.
There is also Crane Bank in Uganda which should list in the 3rd quarter.
The pressure is on for Ugandan listed banks to publish their results. Again, I must point out that DFCU Ltd, Stanbic Bank, Bank of Baroda Limited need to explain why their financial statements take so long. By the time they are published (25 April) for a December year end, they are no longer useful to decision makers. But the only positive is that at the end of the day, the chickens must come home to roost. DFCU's mid year results portrayed a really negative picture which prompted one of my favorite bloggers to opine that it felt like the bank staff just went on a hiatus for a whole 1.5 years and hence forced him to cut his losses and run. Ouch..that hurt! But hey, on the bright sight, so many things have happened to the bank this second half of the year. We would expect the new MD's fingerprints to be all over every decision that the bank has taken.The effects of the disposal of the subsidiaries which were not in line with the bank's business strategy and vision completely effected and the gains utilised to good effect thus creating value. Lo and behold, the loan book must have improved unlike in the prior year and mid year period where these had no change except for increased provisions.
We will expect some good news from Stanbic and Baroda. (No stories from these two) And we will definitely expect some dividend growth. Given that the value of listed companies on the USE has quadrupled, the PE ratios of Baroda and Stanbic, which stand at about 15 and 30 respectively tell a story. The implication is that Baroda has some room to manoeuvre with less than ideal results. (Come on we always considered management very conservative). However, Stanbic does not have any room to manoeuvre. With its PE at a high of 30, you'd expect significant growth to support the faith that the investing public has vested in Stanbic.
Otherwise the bull run that has befallen the Uganda Stock Exchange will have a rude awakening as institutional investors start applying their irrelevant fundamentals to a nascent exchange.
Oh, and I was alerted by a friend that the USE has redesigned its website which is great in so doing, the daily trade summaries appear to have vanished. We'll keep looking.
I ran into colleagues of mine over the weekend and I discovered that we all think along the same lines regardless of whether we correspond or interact over issues relating to investment. More often than not, we all believe in investing but are many times dumbfounded when the issue of what to invest in comes up. Nevertheless it was quite nice and intuitive to exchange ideas over the various investment opportunities that are on the table at currently.
Safaricom, the hottest potato at the moment is in its last week with the closing date for applications for individual investors being effectively a week from now (23/4/08). Much has been said about this IPO. Issues such as under/oversubscription, who the hell is Mobitelea, Impact on the Nairobi Stock Exchange and Uganda Stock Exchange, First on line application process in East Africa cetera, cetera. I've personally been privy to the prospectus (as is every eligible potential investor out there) and also IPO research reports and investment recommendations from some respected investment advisors out there. All I can say is that they all seem to say is that they all recommend Safaricom as a long term buy. But the simple advice, without going into technobubble is that one can never go wrong with African IPOs (more over East Africa at that). Whatever happens, the share price will take some pummelling to fall significantly below Ksh5.
Unfortunately, in my view, the factors all point to an undersubscription but hey what's to lose?
On a sad note, the Bank Of Tanzania denied Tanzanians the right to participate in the IPO by refusing to ease the capital market and foreign exchange restrictions. The restrictions have always been there. I remember trying to invest in Tanga Breweries sometime back and my broker telling me that if I bought any shares, it would result in the proportion of foreign ownership of the company exceeding the statutory minimum required for foreign ownership. Duhhhh, I only wanted a few shares!!!!!!!!!!!!!!!! So much for the East African Community/cooperation blah blah blah.
Unfortunately, the same thing just happened with respect to the Celtel Zambia IPO for which the prospectus is expected to be issued on 28/4/2008. Naturally and as I have just explained, one can never go wrong with African IPOs so if you ask me, this is a very strong buy. Save the numbers for the shareholders general meeting.
In Kenya, the only marketing company listed on the exchange SCANGROUP scared the hell out of investors by filing financial results before 31 March but they ultimately were published in today's papers. As an investor and ex-auditor, I am always skeptical when companies do not abide by a financial calendar since after all, it is only financial statements whose audit follows a set timetable, with board approval and ratification. Hopefully, we'll ultimately understand the reasons for these delays.
On the lookout for IPOs, generally, we expect Cooperative Bank, Transcentury to list this year.
Tanzania's NICOL, a microfinance/investment company is also programmed to list if they can overcome procedural hurdles.
There is also Crane Bank in Uganda which should list in the 3rd quarter.
The pressure is on for Ugandan listed banks to publish their results. Again, I must point out that DFCU Ltd, Stanbic Bank, Bank of Baroda Limited need to explain why their financial statements take so long. By the time they are published (25 April) for a December year end, they are no longer useful to decision makers. But the only positive is that at the end of the day, the chickens must come home to roost. DFCU's mid year results portrayed a really negative picture which prompted one of my favorite bloggers to opine that it felt like the bank staff just went on a hiatus for a whole 1.5 years and hence forced him to cut his losses and run. Ouch..that hurt! But hey, on the bright sight, so many things have happened to the bank this second half of the year. We would expect the new MD's fingerprints to be all over every decision that the bank has taken.The effects of the disposal of the subsidiaries which were not in line with the bank's business strategy and vision completely effected and the gains utilised to good effect thus creating value. Lo and behold, the loan book must have improved unlike in the prior year and mid year period where these had no change except for increased provisions.
We will expect some good news from Stanbic and Baroda. (No stories from these two) And we will definitely expect some dividend growth. Given that the value of listed companies on the USE has quadrupled, the PE ratios of Baroda and Stanbic, which stand at about 15 and 30 respectively tell a story. The implication is that Baroda has some room to manoeuvre with less than ideal results. (Come on we always considered management very conservative). However, Stanbic does not have any room to manoeuvre. With its PE at a high of 30, you'd expect significant growth to support the faith that the investing public has vested in Stanbic.
Otherwise the bull run that has befallen the Uganda Stock Exchange will have a rude awakening as institutional investors start applying their irrelevant fundamentals to a nascent exchange.
Oh, and I was alerted by a friend that the USE has redesigned its website which is great in so doing, the daily trade summaries appear to have vanished. We'll keep looking.
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