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Kplc restructure plan out
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mwanahisa
#211 Posted : Monday, November 22, 2010 3:36:51 PM
Rank: Elder

Joined: 6/2/2008
Posts: 1,438
guru267 wrote:
mwanahisa wrote:

I don't think this will last long. Prepare for the share to come down to the 27 - 30 range cum-rights and sub 25 after going ex-rights


@mwanahisa its these kind of predictions that make me wonder if calculators are standardized...


@g267, valuations are not based purely on intrinsic factors, and hence 2 analysts will arrive at different valuations depending on the weight they give to different considerations.

The cum-rights price for KPLC today ranged between 27 and 30 with an average price of 28. At 28, the weighted average of both the share and the right is Kshs 25.61; while at 27, it is 24.89, which is sub 25. If I can get the share at this price ex-rights, it means I will be indifferent between buying the share cum-rights or buying it ex-rights.

Any shareholder who manages to get an allocation that is disproportionate to their current holding will lower their cost to a price approaching the 19.50 price. What is to prevent such a shareholder from selling at 24 and taking a quick 20% profit? I believe that this will hold back the price for a while.

I however expect this scenario to change once the excess shares from the rights issue are mopped up through profit taking.

I think KenGen is valued at a much higher PE than KPLC, partly because of where the share price has come from - a high of 40+ at the IPO level. The bulk of non-IPO shareholders hold the share at a much higher price than today's price while IPO shareholders look at the price they could have sold it. That keeps the KenGen price much higher than it should be.
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  | | Edit by user: Monday, November 22, 2010 3:51 PM | Reason: Grammar
My 2 cents
#212 Posted : Monday, November 22, 2010 3:43:36 PM
Rank: Veteran

Joined: 6/2/2010
Posts: 1,091
These debates on what the share price is going to be are always very amusing. Truth is no one can tell; all the above predictions are based on assumptions which may or may not hold. For exaple predictions of growth rates of 20% year on year are rather optimistic....
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stocksmaster
#213 Posted : Monday, November 22, 2010 3:50:03 PM
Rank: Member

Joined: 9/26/2006
Posts: 463
Location: CENTRAL PROVINCE
mwanahisa wrote:
guru267 wrote:
mwanahisa wrote:

I don't think this will last long. Prepare for the share to come down to the 27 - 30 range cum-rights and sub 25 after going ex-rights


@mwanahisa its these kind of predictions that make me wonder if calculators are standardized...


@g267, valuations are not based purely on intrinsic factors, and hence 2 analysts will arrive at different valuations depending on the weight they give to different considerations.

The cum-rights price for KPLC today ranged between 27 and 30 with an average price of 28. At 28 the weighted average of the both the share and the right is Kshs 25.61 while at 27 it is 24.89, which is sub 25. If I can get the share at this price ex-rights it means I will be indifferent between buying the share cum-rights or buying it ex-rights.

Any shareholder who manages to get a more than an allocation that is disproportionate to their current holding will lower their cost to a price approaching the 19.50 price. What is to prevent such a shareholder from selling at 24 and taking a quick 20% profit? I believe that this will hold back the price for a while.

I however expect this scenario to change once the excess shares from the rights issue are wiped out through profit taking.

I think KenGen is valued at a much higher PE partly because of where the share price has come from - a high of 40+ at the IPO level. The bulk of non-IPO shareholders hold the share at a much higher price than today's price while IPO shareholders look at the price they could have sold it. That keeps the KenGen price much higher than it should be.


@ Mwanahisa: Very true.

At current prices, the 'benefits" accruing from the rights are factored. Once the share goes ex rights, this benefits will dissapear (just like a share going ex dividend). This is when the share will dip to below Ksh 25.

If i was a short term speculator holding the shares currently; It would make sense to sell at even Ksh 24 once the shares go ex-rights, then use the cash to pick up my 40% rights at Ksh 19.50.

Happy hunting.
x handle: @stocksmaster79
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VituVingiSana
#214 Posted : Monday, November 22, 2010 3:59:22 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,354
Location: Nairobi
@PeniMbili - LOL... 20% growth in PAT is a given for FY 2010-11 [barring a huge disaster]

At the AGM, the MD mentioned that units sold had increased 10%+ since Jan 2010 so KPLC is pushing 10%+ more units [BTW, still suppressed peak demand] using the SAME infrastructure... Marginal profits would rise faster than costs...

Given the rains & increased generation capacity, there is scope for increased sales in FY 2010-11. If we add 2011-12 then we are talking even better numbers!
[If it rains... If more projects come online... If, if, if...] But I am an optimist!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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  | | Edit by user: Monday, November 22, 2010 4:11 PM | Reason: Not specified
guru267
#215 Posted : Monday, November 22, 2010 4:11:13 PM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
@mwanahisa and @stocksmaster you Guys I now see what you guys are saying... In the very short term especially as soon as it goes ex rights it might see some some profit taking...


But so did STAN CHART(fell to 250 after rights)
TPS(momentarily hit 55 after rights)
KCB (hit 17.65 after rights)

Though we all know where ALL these stocks are trading now so if the same happens to KPLC i'm piling in... simple....

Currently I'm averaging 15.5 on the stock and after the rights it will rise to 16.75 so I dont stand to lose anything.....


@mwanahisa Kengen is valued with that P/E because investors see it as the ultimate growth stock not because of the I.P.O biz....


If they double their supply by 2015 as is their goal their profits will soar but better still KPLC's profits will ROOOOAAAARRR
because at least they don't have a 27billion loan to service at 12.5% p.a
Mark 12:29
Deuteronomy 4:16
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Aguytrying
#216 Posted : Tuesday, November 23, 2010 8:35:55 AM
Rank: Elder

Joined: 7/11/2010
Posts: 5,040
guru267 wrote:
@mwanahisa and @stocksmaster you Guys I now see what you guys are saying... In the very short term especially as soon as it goes ex rights it might see some some profit taking...


But so did STAN CHART(fell to 250 after rights)
TPS(momentarily hit 55 after rights)
KCB (hit 17.65 after rights)

Though we all know where ALL these stocks are trading now so if the same happens to KPLC i'm piling in... simple....

Currently I'm averaging 15.5 on the stock and after the rights it will rise to 16.75 so I dont stand to lose anything.....


@mwanahisa Kengen is valued with that P/E because investors see it as the ultimate growth stock not because of the I.P.O biz....


If they double their supply by 2015 as is their goal their profits will soar but better still KPLC's profits will ROOOOAAAARRR
because at least they don't have a 27billion loan to service at 12.5% p.a

@ guru. He! kwani at what price did u get in, must have been a while back. U have all to gain. Even your mumias entry was low. U must be looking at 100% return at that entry. kudos(wish it was me)
The investor's chief problem - and even his worst enemy - is likely to be himself
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Aguytrying
#217 Posted : Tuesday, November 23, 2010 8:43:10 AM
Rank: Elder

Joined: 7/11/2010
Posts: 5,040
This is my strategy:

I'm not currently a shareholder of Kplc. I will not buy kplc shares before the book closure of the rights(unless the price goes to 25-which will be too low to resist). Between 1-23 dec. i will buy the rights at a premium of 4 shillings or less. maximum 5(if above 5, i wont buy them at all).

I will exercise my rights when it is time. When the share gets diluted after the rights issue, I will buy more kplc shares off the market at a price of 25 or below. My target average price of my rights and shares will be 25 or better inclusive of commissions.

As i dont intend to stay in the counter for long. I will wait to sell the shares at around 30/- bringing it to a capital gain of ~20%.
The investor's chief problem - and even his worst enemy - is likely to be himself
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  | | Edit by user: Tuesday, November 23, 2010 8:49 AM | Reason: Not specified
VituVingiSana
#218 Posted : Tuesday, November 23, 2010 10:03:28 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,354
Location: Nairobi
30/- Cum Rights today... I guess Equity & Centum made some easy money on the Underwriting...

107,000 shares sold... Sounds a lot but divide by 8 to get the 'old' shares. Of course, the other '7' split shares will not be uploaded until Thursday...
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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  | | Edit by user: Tuesday, November 23, 2010 12:04 PM | Reason: Not specified
VituVingiSana
#219 Posted : Tuesday, November 23, 2010 1:48:55 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,354
Location: Nairobi
Every little bit helps!

http://www.standardmedia...20energy%20independence

Ignore the bit about the whiners... So more electricity to sell...
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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guru267
#220 Posted : Tuesday, November 23, 2010 3:37:23 PM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
@aguytrying I like your strategy of getting the rights from the market but those hoping to buy the shares at 25 I hope you plan to do so for a looooonngg time...
Mark 12:29
Deuteronomy 4:16
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