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Kenya airways Right Issue
Rank: Elder Joined: 7/11/2010 Posts: 5,040
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Today up 4 percent. From yesterdays close. Don't expect the major shareholders to watch it go to 14.00 lol. The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Elder Joined: 9/23/2010 Posts: 2,220 Location: Sundowner,Amboseli
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Aguytrying wrote:Today up 4 percent. From yesterdays close. Don't expect the major shareholders to watch it go to 14.00 lol. This one belongs to sub 10. Hope we don't get here before the new shares start trading! For the speculators, please keep off! And this you can take to the bank! @SufficientlyP
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Rank: Elder Joined: 11/7/2007 Posts: 2,182
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6 bob all over again LOVE WHAT YOU DO, DO WHAT YOU LOVE.
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Rank: Member Joined: 3/20/2009 Posts: 348
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Sufficiently Philanga....thropic wrote:Aguytrying wrote:Today up 4 percent. From yesterdays close. Don't expect the major shareholders to watch it go to 14.00 lol. This one belongs to sub 10. Hope we don't get here before the new shares start trading! For the speculators, please keep off! And this you can take to the bank! Let the people who want to be heroes keep buying KQ.i have been saying this since the share was 30+ when they announced plans to do a rights issue.This is a massive dilution.Going back to under 10 and it will be hard to move this shares up.Airlines just like utilities(kengen,kplc,part of transcentury) require alot of capital to run.
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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itz wrote:Sufficiently Philanga....thropic wrote:Aguytrying wrote:Today up 4 percent. From yesterdays close. Don't expect the major shareholders to watch it go to 14.00 lol. This one belongs to sub 10. Hope we don't get here before the new shares start trading! For the speculators, please keep off! And this you can take to the bank! Let the people who want to be heroes keep buying KQ.i have been saying this since the share was 30+ when they announced plans to do a rights issue.This is a massive dilution.Going back to under 10 and it will be hard to move this shares up.Airlines just like utilities(kengen,kplc,part of transcentury) require alot of capital to run. Speculators are in for a rough ride, esp those that will buy rights hoping to make some profit. At a PE of 6 post rights(which is even higher than some very well performing firms are trading at) KQ will have a share price of EPS*PE 1.25*6= 7.50/= The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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mwekez@ji wrote:If local shareholding in KQ reduces to less than 51%, KQ would loose the national flag carrier status. I don't think so. National flag carrier is just a marketing thing and any operator who acquires KQ would be wise to leave it that way. And that's why EABL are so happy telling us proudly Kenyan while we all know it's proudly Diageo.
BBI will solve it :)
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Rank: Member Joined: 10/14/2011 Posts: 661
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2012 wrote:mwekez@ji wrote:If local shareholding in KQ reduces to less than 51%, KQ would loose the national flag carrier status. I don't think so. National flag carrier is just a marketing thing and any operator who acquires KQ would be wise to leave it that way. And that's why EABL are so happy telling us proudly Kenyan while we all know it's proudly Diageo. "flag carrier" -definition (Wikipedia’s.) “The term is also used loosely to refer to any dominant or major airline sized carrier in a country, or in reference to a mainline carrier with a history of a state sponsored legacy of airline service, even long after their privatization.” http://en.wikipedia.org/wiki/Flag_carrier
So, it still will retain -the national flag carrier status.
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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Aguytrying wrote:
At a PE of 6 post rights(which is even higher than some very well performing firms are trading at) KQ will have a share price of EPS*PE 1.25*6= 7.50/=
Post rights, the share should trade at a PE of >12 to reflect the expected future incomes. Remember the capital will be deployed in coming days and did not contribute to the 2011 earnings. Ope the IM will give a picture of how much they expect the earnings to grow as the ambitious expansion plan starts rolling. We can then calculate the forward PE
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Rank: Elder Joined: 5/27/2008 Posts: 3,760
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@mwekez@ji, an airline need not have a 51% local shareholding to be designated a national carrier. The Government can simply declare an airline a national airline regardless of local shareholding. Problems occur when an airline with say 48% local holding (say KQ) is designated national when Air Kenya (say owned 100% by bikini) is not accorded that status.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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mwekez@ji wrote:Post rights, the share should trade at a PE of >12 to reflect the expected future incomes. @mwekez@ji did you know the 20 billion KQ rights issue will not contribute to earnings in anyway.. It is merely a DOWN PAYMENT/DEPOSIT for the planes it wants to buy.. They need almost 300billion to get the planes they want.. What are the future expected earnings from companies like kenol, kengen, KCB and the rest?? These companies will do better than KQ will ever do in terms of growth and yet they all trade at a P/E of 5-6.. Going by this basis it literally means KQ may even have a P/E of 4 after the rights... Mark 12:29
Deuteronomy 4:16
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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guru267 wrote:mwekez@ji wrote:Post rights, the share should trade at a PE of >12 to reflect the expected future incomes. @mwekez@ji did you know the 20 billion KQ rights issue will not contribute to earnings in anyway.. It is merely a DOWN PAYMENT/DEPOSIT for the planes it wants to buy.. They need almost 300billion to get the planes they want.. What are the future expected earnings from companies like kenol, kengen, KCB and the rest?? These companies will do better than KQ will ever do in terms of growth and yet they all trade at a P/E of 5-6.. Going by this basis it literally means KQ may even have a P/E of 4 after the rights... @guru, did you know that making down payment is a step in acquiring the planes required in achieving the ambitious expansion plan. Raising debt is the next step in case you dint know! If this expansion plan will result to outstanding returns, nothing will stop the share from trading at the PE of >12 in the initial years. Certainly, as the returns set in, the PE will go down to probably the level you are talking about and investors will have made enough money to laugh all the way to the bank.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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mwekez@ji wrote:
@guru, did you know that making down payment is a step in acquiring the planes required in achieving the ambitious expansion plan. Raising debt is the next step in case you dint know!
From the post above it seems that you are implying that KQ can handle the 200billion of new debt.. I wonder where they'll find the 20billion interest payments every year & that is not even inclusive of the principal amount... I also would like you to observe the oil prices in the next few years.. You can ask @hisah about that.. Do you really believe there will be enough revenue to cover just these two obligations?? Mark 12:29
Deuteronomy 4:16
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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guru267 wrote:mwekez@ji wrote:
@guru, did you know that making down payment is a step in acquiring the planes required in achieving the ambitious expansion plan. Raising debt is the next step in case you dint know!
From the post above it seems that you are implying that KQ can handle the 200billion of new debt.. I wonder where they'll find the 20billion interest payments every year & that is not even inclusive of the principal amount... I also would like you to observe the oil prices in the next few years.. You can ask @hisah about that.. Do you really believe there will be enough revenue to cover just these two obligations?? Why not! This discussion was covered here earlier The planes should be able to service the debt. They may however explore getting a moratorium period on the repayments to give time for the planes to start generating income
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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VituVingiSana wrote:sparkly wrote:StatMeister wrote:VituVingiSana wrote:StatMeister wrote:
Over next 5 years, they borrow 180b. At 10% interest, sounds like interest payments work out at 18b. I dont see how doubling operations will generate additional operating profits of even 10b. KQ keeps making more money from derivatives than from operations.
1) The rates are much lower than 10% of USD loans. Probably closer to 5% coz borrowed from US EXIM Bank. 2) The 180bn is not borrowed in one go but gradually as planes are delivered. Therefore the additional payments are made after more planes are in service. This is an even bigger problem since KQ has to either hedge the USD or take impairments even now and then. Then, KQ annuals will shift focus from operations to performance of fuel and forex hedges ... Aren't the majority of KQ's collections in USD? Their tickets are also in USD equivalent. Even local flights are priced in USD - converted to KES for payments - there is little currency risk. Most of KQ's interest costs, lease costs, fuel costs, etc are in USD
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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mwekez@ji wrote:The planes should be able to service the debt. The directors must be factoring in stable oil prices and stable ticket prices.. What happens when competition brings ticket prices down and global demand drives oil prices up?? What about austerity in Europe?? Mark 12:29
Deuteronomy 4:16
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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guru267 wrote:
The directors must be factoring in stable oil prices and stable ticket prices..
I highly doubt Anyway, the IM is coming next week
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Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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This may either be one big success story or an outright disaster...with all the uncertainities looming around its hard knowing what the end result will be...hope it turns out well though...  possunt quia posse videntur
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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The plane touches a low of 14 today b4 the sack rights!!this should be the 8th wonder of the world. "Don't let the fear of losing be greater than the excitement of winning."
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