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Bargains to buy from tomorrow???
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Magnetic Touch
#191 Posted : Thursday, March 24, 2011 10:35:23 AM
Rank: Member

Joined: 12/31/2008
Posts: 90
All the group companies (including CFCIH) made a profit, so how do you expect the consolidated EPS for the group to be less than that for the bank?
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mwanahisa
#192 Posted : Thursday, March 24, 2011 11:11:04 AM
Rank: Elder

Joined: 6/2/2008
Posts: 1,438
Impunity wrote:
VituVingiSana wrote:
9 months to go & KK hasn't announced results... So @stocksmaster is sitting pretty...


Kesho saa nne asubuhi.


@Impunity, It's now past 11.00 a.m. Is it too early to start declaring your sources regarding KK to be "bure kabisa"?
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Impunity
#193 Posted : Thursday, March 24, 2011 11:29:47 AM
Rank: Elder

Joined: 3/2/2009
Posts: 26,331
Location: Masada
mwanahisa wrote:
Impunity wrote:
VituVingiSana wrote:
9 months to go & KK hasn't announced results... So @stocksmaster is sitting pretty...


Kesho saa nne asubuhi.


@Impunity, It's now past 11.00 a.m. Is it too early to start declaring your sources regarding KK to be "bure kabisa"?


That guy on PM live on NTV is NKTEST!Brick wall
Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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  | | Edit by user: Thursday, March 24, 2011 11:37 AM | Reason: Not specified
mwanahisa
#194 Posted : Thursday, March 24, 2011 12:39:31 PM
Rank: Elder

Joined: 6/2/2008
Posts: 1,438
erifloss wrote:
I tend to agree with evolve reason being if you have ever been through an accounts consolidation process:


@erifloss and Evolve, I am not a practising Accountant, but I am reasonably conversant in interpreting Consolidated Accounts.

I still stand by my words regarding CFC Stanbic Ban's EPS in the books of CFC Stanbic Holdings.

Let me break it down for you:

The earnings from CFC Stanbic Bank are all attributable to shareholders of the parent since CFC Stanbic Bank is wholly owned by CFC Stanbic Holdings Ltd.

Total earnings from the bank (which include those from CFC Financial Services and the proportion the bank owns in SIMS ) were Kshs 1,477,182,000. When this amount is "transferred" to the holdings company, you then have to "share" them out amongst all the shares in the holding company (NOT those for the bank), in this case 273,684,211 shares, amounting to an EPS of Kshs 5.40.

Assuming that the holding co. had no other subsidiary and had ZERO expenses, it means the EPS for CFC Stanbic Holdings Co. would be 5.40.

Are you with me so far?
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  | | Edit by user: Thursday, March 24, 2011 12:42 PM | Reason: Clarification
mwanahisa
#195 Posted : Thursday, March 24, 2011 12:58:46 PM
Rank: Elder

Joined: 6/2/2008
Posts: 1,438
From my post 194 above, having established that the attributable EPS for CFC Stanbic Bank in the books of CFC Stanbic Holdings Ltd is 5.40, the question will be, what is a fair price for a share of the bank (held via your shares in CFC Stanbic Holdings)?

FOR THE MOMENT, IGNORE THE INSURANCE COMPANY.

CFC Stanbic Bank grew its after tax earnings in 2010 by 88% against those for NIC & DTB which grew by 71.68% and 82.75% respectively. Given that CFC Stanbic has tended to lag the others in the past couple of years, we can take these two to be its peers, notwithstanding that its PAT grew just a little faster in 2010.

NIC is trading at a PE of 9.10 while DTB is at a PE of 9.78. Holding other factors constant, it then stands to reason that the demerged CFC Stanbic Bank should trade at a PE of 10 (more or less). This brings me to a price of 54.

Of course one could argue that CFC Stanbic Bank might manage to grow faster after its disassociation with the insurance holdings, although I have my doubts.
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mwanahisa
#196 Posted : Thursday, March 24, 2011 1:29:49 PM
Rank: Elder

Joined: 6/2/2008
Posts: 1,438
Let me now turn to the Insurance Holding Company:

In 2010, CFCIH made an after tax profit of Kshs 260,014,000, of which only 225,741,000 was attribtable to the owners of the parent. Note this is not a loss as someone has alleged although in 2009, it did indeed make a loss.

To be fair, we shall note that the above profits only includes 8 months of the results of the Heritage group but 12 months of CFC Life Insurance, CFC Investments Ltd and of course for the Insurance Holding Co. itself.

The total number of shares in CFCIH in issue are 515,270,364. The weighted EPS for CFCIH has been reported as Kshs 0.54.

Using 2009 reported earnings, PEs for listed insurance companies current range from a low of 4.38 for Kenya Re to 9.93 for Jubilee. The PE for PanAfric Ins. using PAI 2010 earnings stands at 7.49. So we would expect PE for CFCIH would be no more than 10 hence a price of 5.40.

However, I will be generous and assume that it can trade at an incredibly high PE of 20 based on expected rapid future growth and hence a price of 10.80.
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Aguytrying
#197 Posted : Thursday, March 24, 2011 2:30:05 PM
Rank: Elder

Joined: 7/11/2010
Posts: 5,040
Reminds me of a jay-z song called the watcher. 'you guys are now just learning the stuff that we taught' being him, he didn't say guys and he didn't say stuff.
The investor's chief problem - and even his worst enemy - is likely to be himself
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Aguytrying
#198 Posted : Thursday, March 24, 2011 2:34:27 PM
Rank: Elder

Joined: 7/11/2010
Posts: 5,040
Today i put my money where my mouth is. Picked up some arm at 155. T minus 4. Speculating is enthralling. Will i be burnt or come out unscathed. Time will tell
The investor's chief problem - and even his worst enemy - is likely to be himself
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Impunity
#199 Posted : Thursday, March 24, 2011 2:53:44 PM
Rank: Elder

Joined: 3/2/2009
Posts: 26,331
Location: Masada
A guy trying...keep on trying.
Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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mwanahisa
#200 Posted : Thursday, March 24, 2011 2:54:21 PM
Rank: Elder

Joined: 6/2/2008
Posts: 1,438
Aguytrying wrote:
Today i put my money where my mouth is. Picked up some arm at 155. T minus 4. Speculating is enthralling. Will i be burnt or come out unscathed. Time will tell


Hey, I got myself some too. I intend to get a lot more if it stays at this price or if it declines. I am not speculating here. I am looking to keep it at least until their new capacity comes through next year.
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