I am a natural optimist,so I will normally try to look for any positives in anything and have observed the following regarding E.A.Cables results:

1. Qtrly results do not always follow a specific trend. E.g. In 2007 the first 3 qtrs were almost flat but Q4 2007 was substantially down (against previous qtrs) as was Q4 2006. This is in contrast with Q4 2005 where 43% of the whole year's profits were generated in that quarter.

2. Q1 09 PBT at 172.7 million is virtually double that of Q4 2008 at 86.5 million.

3. Sales have fallen off by 3% against Q108 and 6.4% against Q408. This worries me,but observe that it is not the first qtr where their turnover has fallen when compared to previous quarters. Note,Mgt attributed this fall partly to a reduction in LME (London Metal Exchange) prices. I presume that this means that EA Cables have had to reduce prices to end-users,which might not be such a bad thing.

4. Utility companies accross the region are continuing to ramp up investment in transmission and distribution. This is likely to continue notwithstanding the GFC.

5. If other quarters were to replicate Q1,PBT for the year would come at 3% above 2008.

Would I buy it? I think it all depends on the price and how other shares are faring. Below Kshs 18 in my view would represent good value (fwd P/E of about 9 and a Div yield of 5%). I would probably increase this price after seeing Q2 results.


Opportunity calls but few respond.

Thats a real Consoller..i see the sense in this stock in the long haul..the Yield is what will sustain this Journey and EACables is quite fine !

M'c Kende Siafu !

Stockyt,

I agree to a certain extent,but only with regard to 2008. However,even in 2008 Q3 with sales of Kshs 1.157 billion and PBT of Kshs 243m was higher than the Q1 (sales - 941m and PBT of 213.3 million). 2007 was just a little lower than the projection (extrapolation from Q1) while 2006 was higher. I trust that this does not portend a downward trend i.e from 2006 it seems to have been downwards when comparing expectations for the full year on the basis of Q1.

On a different note,EA Cables appears to be a reasonably well run company - always the first to report (and frequently),pays good dividends and has been expanding quite aggresively. The recession may have taken the wind out of their sails (No pun intended),but then which company has not been affected? All the same,I expect some DOWNWARD pressure on the share price for a while.



Opportunity calls but few respond.

Iborian,What spin are you talking about? I simply laid out the facts that are in the public domain and just highlighted certain aspects. I hold no brief for EA Cables. If Trans Century is having a problem with any of their other businesses,that is neither there nor here. Why not address the facts and/or opinion that I have enumerated in the thread rather than generalize while raising irrelevancies?

Opportunity calls but few respond.

Cables at current price an expensive share.If sales are down profit down and projects are not rosy then its its high.I must say !@ mwanahisa sound like our old Jammoh!

astrologers for better future

While the observations seem to be based on facts,it is clear that based on the history of companies that have reported declining sales and profits,EA Cables share price will have to come down. If in the next one or two quarters,the trend changes,then who knows. For now,it is better to keep away or sell this share.

wat dividends r they offering this time?

Some interesting info I picked up on the EAC website. This counter might be better than I have surmised in the past... READ ON.

East African Cables is set to further enhance its continental market reach with an ambitious expansion plan in the next three years. This will see the company establishing a solid market presence in more than 12 African countries up from its current five countries market footprint by the year 2012.


Alongside market expansion,the firm is gearing up for the commissioning of a new copper cables production line and major upgrade later in the year within its recently commissioned Kshs 1billion integrated manufacturing facility in Nairobi’s Industrial area. The commissioning of the new copper production line is expected to boost East African Cables production capacity by more than sixty percent.

Currently operating in the five East Africa countries of Kenya,Uganda,Tanzania, Rwanda,and Burundi,East African Cables has grown its export portfolio which accounted for 57% of its turnover in 2008 compared to 31% the previous year. On the downside Mr. Mwangi cited fluctuations in aluminum business to the local utility- KPLC this accounted for about 10% of the group turnover down from 28% the previous year. This on a positive note serves to eliminate concentration risk. I HAVE ALWAYS THOUGHT THAT THE COMPANY SURVIVES ON THE GOODWILL OF KPLC,BUT CLEARLY NOT!




Opportunity calls but few respond.

In Q1 2008,cables had lots of business from Tanesco which exceeded cables tz's capacity. Obviously those orders were not there in 2009. Cables has been expanding away from KPLC business to lower the concentration risk. At some point in 2004 it was nearly 50%,however that has declined to about 10% and could decline further. But remember cables enjoys synergies with other TCL group companies which many have not seen but will in the next 2-5 years provider a stimulus to the revenues and earnings. And even as KPLC styles up cables will still make money.

Cables is one of the few well run local companies in terms of management quality,board and overall strategic direction. Even debt taken was to optimize on the cost of capital. There was no cash problems just a few working capital challenges brought about by tanesco orders,as tanesco was taking slightly longer than expected to pay bt they did pay,typical of government procurement. Cables will always pay a dividend because TCL needs cash to fund its deal pipeline. Its strategy is very much influenced by TCL so even as they expand expect them to make good returns. There are very good private equity brains sitting in TCL by the way.

As for the slowdown,cables biggest market is private developers,basically copper business,obviously building and construction has slowed down but we all know the deficit of housing,commercial offices,malls,warehouses etc. and as this deficit is sorted out,cables will be sitting pretty enjoying the good times. I would definately buy cables ahead of the HFCK as an option to the housing market in Kenya. Its a good long term stock