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CLASS 101: Deciphering Financial Statements.
Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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Pesa Nane wrote:the deal wrote:
Part 1
I would buy into a company if its:-
1. Trading on a single digit trailing/forward Price to Earnings (PE) Ratio.
Trailing PE is calculated as Current Market Price/current Earnings Per Share (EPS) where as Forward PE is calculated as Current market price/estimated EPS
2. Trading Below or slightly above its book value.
Book Value calculated as Total Assets-Total Liabilities. After calculating Book Value compare it to a companies market capitalization actually just divide market cap/book value...if the figure is below 1 then the company is trading below its book value an indicator that the stock could be undervalued...its wise to compare the figure you get to a firms peers.
Homework.
1. Calculate Kenya Re's current trailing PE (5.2978) and forward PE if we assume that Kenya Re's FY 2012 EPS will rise by 15% (4.6068)
2. Calculate Kenya Re's Book Value? ( 12,926,788,000.00) Whats is its. market cap/book value ratio? (1.48)
3. What are your conclusions?
a. Trading slightly above book value
b. If PE are to be maintained, we are looking at a TP of 19.40
After this we then move to part 2.
@Deal you've killed me, Homework!? Thats original, but people gotta learn. Thumbs up. Part 1 was more of quantitative analysis...and I must say Kenya Re has passed with flying colours...but why is the market discounting Kenya RE like that? so we have to investigate further... Part 2 is more of qualitative analysis. Qualitative analysis will give us more insights into the company. Homework I want you to investigate Kenya RE's 1. Ownership structure, management and the managements track record...expertise...the board experience and qualifications etc 2. What is Kenya RE's a competitive advantage over its rivals (Moat)? Can it survive under an onslaught like the one Airtel did to Safcom? Do the above homework before we move to part 3...
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Rank: Member Joined: 1/28/2013 Posts: 182
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the deal wrote:Pesa Nane wrote:the deal wrote:
Part 1
I would buy into a company if its:-
1. Trading on a single digit trailing/forward Price to Earnings (PE) Ratio.
Trailing PE is calculated as Current Market Price/current Earnings Per Share (EPS) where as Forward PE is calculated as Current market price/estimated EPS
2. Trading Below or slightly above its book value.
Book Value calculated as Total Assets-Total Liabilities. After calculating Book Value compare it to a companies market capitalization actually just divide market cap/book value...if the figure is below 1 then the company is trading below its book value an indicator that the stock could be undervalued...its wise to compare the figure you get to a firms peers.
Homework.
1. Calculate Kenya Re's current trailing PE (5.2978) and forward PE if we assume that Kenya Re's FY 2012 EPS will rise by 15% (4.6068)
2. Calculate Kenya Re's Book Value? ( 12,926,788,000.00) Whats is its. market cap/book value ratio? (1.48)
3. What are your conclusions?
a. Trading slightly above book value
b. If PE are to be maintained, we are looking at a TP of 19.40
After this we then move to part 2.
@Deal you've killed me, Homework!? Thats original, but people gotta learn. Thumbs up. Part 1 was more of quantitative analysis...and I must say Kenya Re has passed with flying colours...but why is the market discounting Kenya RE like that? so we have to investigate further... Part 2 is more of qualitative analysis. Qualitative analysis will give us more insights into the company. Homework I want you to investigate Kenya RE's 1. Ownership structure, management and the managements track record...expertise...the board experience and qualifications etc 2. What is Kenya RE's a competitive advantage over its rivals (Moat)? Can it survive under an onslaught like the one Airtel did to Safcom? Do the above homework before we move to part 3... Just what I needed for myself. I've come for a sit in class! Man must live!
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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the deal wrote:
Homework
I want you to investigate Kenya RE's
1. Ownership structure, management and the managements track record...expertise...the board experience and qualifications etc
2. What is Kenya RE's a competitive advantage over its rivals (Moat)? Can it survive under an onslaught like the one Airtel did to Safcom?
And don't forget! 3. What is Kenya re doing to ensure it strengthens any weaknesses found in the first two questions?? eg board & management changes, privatisation trends, re branding, investment diversification etc etc! Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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guru267 wrote:the deal wrote:
Homework
I want you to investigate Kenya RE's
1. Ownership structure, management and the managements track record...expertise...the board experience and qualifications etc
2. What is Kenya RE's a competitive advantage over its rivals (Moat)? Can it survive under an onslaught like the one Airtel did to Safcom?
And don't forget! 3. What is Kenya re doing to ensure it strengthens any weaknesses found in the first two questions?? eg board & management changes, privatisation trends, re branding, investment diversification etc etc! Kenya Re at a glance. All errors, misrepresentation regretted. 1. Ownership structure, management and the managements track record...expertise...the board experience and qualifications etc Kenya Re was established in 1970, becoming the oldest Re-insurer in Eastern and Central Africa. GoK. owns approx. 60% and public 40%. DIRECTORS:Nelius Kariuki (Chair / non-exec director): BA (econ), MA (Econ). Member, Institute of Directors and a former Principal Economist (GOK). Joined Kenya Re 2003. Chair since 2007. Also director of Zep Re, Nelleon. Jadaih Mwarania (Managing Director). BCom, MBA. Member FCII, FIIK, CI (London) and Associate member KIM. Appointed 2011. 20 years in Kenya Re. Also director in Zep Re and hon. Secretary AKR. Joseph Kinyua (Treasury / non-exec. director). BA (Econ), MA (Econ). PS, Min of Finance (Treasury). Formerly with IMF and also alternate governor, World Bank Board of Governors. Dr. Irukia Kailemia (Non exec director). Also director, Madawa Pharmaceuticals. Jacon Haji Ali (Non exec director). Appointed since 2003.Former legal Assistant, ICDC Gladys Mumbua Mboya (Non exec director). Joined 2007. LLB, MBA, ACIrb. Advocate of the High court, experienced in Commercial and Corporate practice Everest Matolo Lenjo (Non exec director). BA (International Trade and Marketing), MBA (Corporate Finance). Priscilla Kirigua (Non exec director). BSc, MBA (Ops and Strategic Management) Dr. Lumbi wa M’Nabea (Non exec director). BSc., MSc. 2nd Vice Chair of APDK. Felix Owaga Okach (Non exec director). BCom, PGD (Econ), MBA. Joined board in 2010. Maina Mukoma (Non exec director). BCom, ACII (London), ACIrb, AMKIM. Also managing director Cannon Assurance. Habil Waswani (Corporation Secretary, Pricipal Legal Officer). BB.L, Law Diploma (KSL), GEMBA. Member ICPSK, LSK and Advocate of the high court. 2. What is Kenya RE's a competitive advantage over its rivals (Moat)? Can it survive under an onslaught like the one Airtel did to Safcom?Investment diversification: (Re-Insurance) Aviation, Marine, Engineering, Fire, Motor, Ratakaful and Life. Property (Kenya Re Tower, Anniversary Towers, Reinsurance Plaza NBI and KSM etc) Financial strength – Financial Strength Rating of B+ (Good) from AM Best 2011, Issuer Credit Rating (ICR) of BBB- Best practice and Quality Management Systems – Kenya Re is ISO 9001:2008 Certified Positive Future outlook: “Kenya Re has maintained an international solvency ratio well above 200% over the review period, with forecasts predicting solvency to remain robust over the medium term” GCR Market Risk Spread: Kenya Re is present in Kenya, Africa, Middle East and Asia. Successful Re-Branding, Aggressive marketing, new products (Sharia compliant), 3. What is Kenya re doing to ensure it strengthens any weaknesses found in the first two questions?? eg board & management changes, privatisation trends, re branding, investment diversification etc etc!Attract, develop and maintain a pool of qualified and experienced staff.Weak Enterprise Risk Management: Measure have been introduced to reflect some improvement in monitoring the Company’s Risk metrics. It formed a risk division and recruited a risk compliance officer Mr Hilary Maina Wachinga. However, as at end of 2012, ERM is still deemed as weak. Non-existence succession plan: Kenya re- has set up succession plans for senior management. This was evidenced on departure of Eunice Mbogo and transition to Jadiah Mwarania (MD) Re-Branding and innovation: Introduced Political Risk Cover after the 2007/08 PEV, Ratakaful, Own the house of your dream etc Engage modern Technology to increase efficiencies. ICT elevated as a complete division headed by George Njuguna Visibility – Niko Fiti Campaign Commitment to continuous quality improvement and focus on customer satisfaction. Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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maka wrote:maka wrote:Nabwire wrote:Just take a basics class in Financial Accounting, some things are really hard to teach, moreso online. not really the problem is you have to take all the other units...what we can do is start with the basics of accounting put them in this one thread then even in future a newbie can just read through get from baby steps to a full grown adult who can decipher the various ratios,make industry comparison,know how to relate the economy's performance and the stock market etc...It can be done... Later today we will start our class...we can do this. @Maka, Its happening penny penny :d/ :d/  Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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Pesa Nane wrote:guru267 wrote:the deal wrote:
Homework
I want you to investigate Kenya RE's
1. Ownership structure, management and the managements track record...expertise...the board experience and qualifications etc
2. What is Kenya RE's a competitive advantage over its rivals (Moat)? Can it survive under an onslaught like the one Airtel did to Safcom?
And don't forget! 3. What is Kenya re doing to ensure it strengthens any weaknesses found in the first two questions?? eg board & management changes, privatisation trends, re branding, investment diversification etc etc! Kenya Re at a glance. All errors, misrepresentation regretted. 1. Ownership structure, management and the managements track record...expertise...the board experience and qualifications etc Kenya Re was established in 1970, becoming the oldest Re-insurer in Eastern and Central Africa. GoK. owns approx. 60% and public 40%. DIRECTORS:Nelius Kariuki (Chair / non-exec director): BA (econ), MA (Econ). Member, Institute of Directors and a former Principal Economist (GOK). Joined Kenya Re 2003. Chair since 2007. Also director of Zep Re, Nelleon. Jadaih Mwarania (Managing Director). BCom, MBA. Member FCII, FIIK, CI (London) and Associate member KIM. Appointed 2011. 20 years in Kenya Re. Also director in Zep Re and hon. Secretary AKR. Joseph Kinyua (Treasury / non-exec. director). BA (Econ), MA (Econ). PS, Min of Finance (Treasury). Formerly with IMF and also alternate governor, World Bank Board of Governors. Dr. Irukia Kailemia (Non exec director). Also director, Madawa Pharmaceuticals. Jacon Haji Ali (Non exec director). Appointed since 2003.Former legal Assistant, ICDC Gladys Mumbua Mboya (Non exec director). Joined 2007. LLB, MBA, ACIrb. Advocate of the High court, experienced in Commercial and Corporate practice Everest Matolo Lenjo (Non exec director). BA (International Trade and Marketing), MBA (Corporate Finance). Priscilla Kirigua (Non exec director). BSc, MBA (Ops and Strategic Management) Dr. Lumbi wa M’Nabea (Non exec director). BSc., MSc. 2nd Vice Chair of APDK. Felix Owaga Okach (Non exec director). BCom, PGD (Econ), MBA. Joined board in 2010. Maina Mukoma (Non exec director). BCom, ACII (London), ACIrb, AMKIM. Also managing director Cannon Assurance. Habil Waswani (Corporation Secretary, Pricipal Legal Officer). BB.L, Law Diploma (KSL), GEMBA. Member ICPSK, LSK and Advocate of the high court. 2. What is Kenya RE's a competitive advantage over its rivals (Moat)? Can it survive under an onslaught like the one Airtel did to Safcom?Investment diversification: (Re-Insurance) Aviation, Marine, Engineering, Fire, Motor, Ratakaful and Life. Property (Kenya Re Tower, Anniversary Towers, Reinsurance Plaza NBI and KSM etc) Financial strength – Financial Strength Rating of B+ (Good) from AM Best 2011, Issuer Credit Rating (ICR) of BBB- Best practice and Quality Management Systems – Kenya Re is ISO 9001:2008 Certified Positive Future outlook: “Kenya Re has maintained an international solvency ratio well above 200% over the review period, with forecasts predicting solvency to remain robust over the medium term” GCR Market Risk Spread: Kenya Re is present in Kenya, Africa, Middle East and Asia. Successful Re-Branding, Aggressive marketing, new products (Sharia compliant), 3. What is Kenya re doing to ensure it strengthens any weaknesses found in the first two questions?? eg board & management changes, privatisation trends, re branding, investment diversification etc etc!Attract, develop and maintain a pool of qualified and experienced staff.Weak Enterprise Risk Management: Measure have been introduced to reflect some improvement in monitoring the Company’s Risk metrics. It formed a risk division and recruited a risk compliance officer Mr Hilary Maina Wachinga. However, as at end of 2012, ERM is still deemed as weak. Non-existence succession plan: Kenya re- has set up succession plans for senior management. This was evidenced on departure of Eunice Mbogo and transition to Jadiah Mwarania (MD) Re-Branding and innovation: Introduced Political Risk Cover after the 2007/08 PEV, Ratakaful, Own the house of your dream etc Engage modern Technology to increase efficiencies. ICT elevated as a complete division headed by George Njuguna Visibility – Niko Fiti Campaign Commitment to continuous quality improvement and focus on customer satisfaction. comprehensive! Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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the deal wrote:2. Calculate Kenya Re's Book Value? ( 12,926,788,000.00) Whats is its. market cap/book value ratio? (1.48)
3. What are your conclusions?
a. Trading slightly above book value @the deal you went off slightly on the market cap!! 2. Kenya re is currently trading at 16.90 and the number of shares = 700million! Therefore market cap is 16.90*700,000,000 which = 11,830,000,000 So with book value at 12,926,788,000 market cap/book value = 0.9153. Conclusion Kenya re is trading slightly below book value! makes it even cheaper than you thought!  Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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guru267 wrote:the deal wrote:2. Calculate Kenya Re's Book Value? ( 12,926,788,000.00) Whats is its. market cap/book value ratio? (1.48)
3. What are your conclusions?
a. Trading slightly above book value @the deal you went off slightly on the market cap!! 2. Kenya re is currently trading at 16.90 and the number of shares = 700million! Therefore market cap is 16.90*700,000,000 which = 11,830,000,000 So with book value at 12,926,788,000 market cap/book value = 0.9153. Conclusion Kenya re is trading slightly below book value! makes it even cheaper than you thought! Hehehe, Mea Culpa, thats my ommission. Noted thanx. Pesa Nane plans to be shilingi when he grows up.
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Rank: Member Joined: 8/4/2012 Posts: 155 Location: Kenya
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Alternatively you can use sites such as reuters, bloomberg or rich.co.ke to give all these ratios and statistics. You just have to know what to do with them, however insider information will help you more than any of these statistics, so make friends working with the companies you are interested in. If you don't want to go to plan B have a good plan A.
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Rank: Elder Joined: 6/23/2009 Posts: 13,501 Location: nairobi
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Pesa Nane wrote:guru267 wrote:the deal wrote:2. Calculate Kenya Re's Book Value? ( 12,926,788,000.00) Whats is its. market cap/book value ratio? (1.48)
3. What are your conclusions?
a. Trading slightly above book value @the deal you went off slightly on the market cap!! 2. Kenya re is currently trading at 16.90 and the number of shares = 700million! Therefore market cap is 16.90*700,000,000 which = 11,830,000,000 So with book value at 12,926,788,000 market cap/book value = 0.9153. Conclusion Kenya re is trading slightly below book value! makes it even cheaper than you thought! Hehehe, Mea Culpa, thats my ommission. Noted thanx. Hizi hesabu zote ni sawa. But what novices seekin technical analysis skills should know, is that information is what makes or breaks a stock price. that is why scom once traded below KES 3 and is now above KES 6. Happy huntin
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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Fundamental analysis is the only thing that can save investors from the constant noise that comes from information and random investor behavior! "Without fundamental analysis at their fingertips investors are like feathers that bow down to the every whim of the wind that is information" - guru267 Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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guru267 wrote:Pesa Nane wrote:guru267 wrote:the deal wrote:
Homework
I want you to investigate Kenya RE's
1. Ownership structure, management and the managements track record...expertise...the board experience and qualifications etc
2. What is Kenya RE's a competitive advantage over its rivals (Moat)? Can it survive under an onslaught like the one Airtel did to Safcom?
And don't forget! 3. What is Kenya re doing to ensure it strengthens any weaknesses found in the first two questions?? eg board & management changes, privatisation trends, re branding, investment diversification etc etc! Kenya Re at a glance. All errors, misrepresentation regretted. 1. Ownership structure, management and the managements track record...expertise...the board experience and qualifications etc Kenya Re was established in 1970, becoming the oldest Re-insurer in Eastern and Central Africa. GoK. owns approx. 60% and public 40%. DIRECTORS:Nelius Kariuki (Chair / non-exec director): BA (econ), MA (Econ). Member, Institute of Directors and a former Principal Economist (GOK). Joined Kenya Re 2003. Chair since 2007. Also director of Zep Re, Nelleon. Jadaih Mwarania (Managing Director). BCom, MBA. Member FCII, FIIK, CI (London) and Associate member KIM. Appointed 2011. 20 years in Kenya Re. Also director in Zep Re and hon. Secretary AKR. Joseph Kinyua (Treasury / non-exec. director). BA (Econ), MA (Econ). PS, Min of Finance (Treasury). Formerly with IMF and also alternate governor, World Bank Board of Governors. Dr. Irukia Kailemia (Non exec director). Also director, Madawa Pharmaceuticals. Jacon Haji Ali (Non exec director). Appointed since 2003.Former legal Assistant, ICDC Gladys Mumbua Mboya (Non exec director). Joined 2007. LLB, MBA, ACIrb. Advocate of the High court, experienced in Commercial and Corporate practice Everest Matolo Lenjo (Non exec director). BA (International Trade and Marketing), MBA (Corporate Finance). Priscilla Kirigua (Non exec director). BSc, MBA (Ops and Strategic Management) Dr. Lumbi wa M’Nabea (Non exec director). BSc., MSc. 2nd Vice Chair of APDK. Felix Owaga Okach (Non exec director). BCom, PGD (Econ), MBA. Joined board in 2010. Maina Mukoma (Non exec director). BCom, ACII (London), ACIrb, AMKIM. Also managing director Cannon Assurance. Habil Waswani (Corporation Secretary, Pricipal Legal Officer). BB.L, Law Diploma (KSL), GEMBA. Member ICPSK, LSK and Advocate of the high court. 2. What is Kenya RE's a competitive advantage over its rivals (Moat)? Can it survive under an onslaught like the one Airtel did to Safcom?Investment diversification: (Re-Insurance) Aviation, Marine, Engineering, Fire, Motor, Ratakaful and Life. Property (Kenya Re Tower, Anniversary Towers, Reinsurance Plaza NBI and KSM etc) Financial strength – Financial Strength Rating of B+ (Good) from AM Best 2011, Issuer Credit Rating (ICR) of BBB- Best practice and Quality Management Systems – Kenya Re is ISO 9001:2008 Certified Positive Future outlook: “Kenya Re has maintained an international solvency ratio well above 200% over the review period, with forecasts predicting solvency to remain robust over the medium term” GCR Market Risk Spread: Kenya Re is present in Kenya, Africa, Middle East and Asia. Successful Re-Branding, Aggressive marketing, new products (Sharia compliant), 3. What is Kenya re doing to ensure it strengthens any weaknesses found in the first two questions?? eg board & management changes, privatisation trends, re branding, investment diversification etc etc!Attract, develop and maintain a pool of qualified and experienced staff.Weak Enterprise Risk Management: Measure have been introduced to reflect some improvement in monitoring the Company’s Risk metrics. It formed a risk division and recruited a risk compliance officer Mr Hilary Maina Wachinga. However, as at end of 2012, ERM is still deemed as weak. Non-existence succession plan: Kenya re- has set up succession plans for senior management. This was evidenced on departure of Eunice Mbogo and transition to Jadiah Mwarania (MD) Re-Branding and innovation: Introduced Political Risk Cover after the 2007/08 PEV, Ratakaful, Own the house of your dream etc Engage modern Technology to increase efficiencies. ICT elevated as a complete division headed by George Njuguna Visibility – Niko Fiti Campaign Commitment to continuous quality improvement and focus on customer satisfaction. comprehensive! @guru267, Kenya-Re is one of your 2013 pet stocks, please add to the info. and fill the gaps. Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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guru267 wrote:Fundamental analysis is the only thing that can save investors from the constant noise that comes from information and random investor behavior!
"Without fundamental analysis at their fingertips investors are like feathers that bow down to the every whim of the wind that is information" - guru267 Nice! Life is short. Live passionately.
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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the deal wrote:
Do the above homework before we move to part 3...
@deal how about part 3 when you are ready Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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Pesa Nane wrote:the deal wrote:
Do the above homework before we move to part 3...
@deal how about part 3 when you are ready Hi, we will move to part 3 ....when I get time...for now I'm busy
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Rank: Member Joined: 4/14/2011 Posts: 639
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question to mwalimu@deal;
Why did you choose kenya re for for example?
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Rank: New-farer Joined: 4/19/2011 Posts: 49 Location: Nairobi
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the deal wrote:Pesa Nane wrote:the deal wrote:
Do the above homework before we move to part 3...
@deal how about part 3 when you are ready Hi, we will move to part 3 ....when I get time...for now I'm busy Maybe, mwalimu @the deal should consider delegating teaching duties while he is away. This coursework is long and might overwhelm mwalimu in the process. I tend to believe there are other teachers in wazua who are more than willing to assist. What say you?
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Rank: New-farer Joined: 10/10/2010 Posts: 51 Location: Nairobi
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Where is Mwekezaji in this discussion?
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Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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This is commendable 58 posts as Dean of Students am very proud...you,ve done well... A study by Barclays Capital shows that £100 invested in cash deposits since 1899 with income reinvested would have grown to just £286 by the end of 2006,after adjusting for inflation.The same amount invested in gilts would have grown to £323.£100 invested in shares with dividends reinvested would have grown to £25,022 possunt quia posse videntur
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Rank: Elder Joined: 6/23/2009 Posts: 13,501 Location: nairobi
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maka wrote:This is commendable 58 posts as Dean of Students am very proud...you,ve done well...
A study by Barclays Capital shows that £100 invested in cash deposits since 1899 with income reinvested would have grown to just £286 by the end of 2006,after adjusting for inflation.The same amount invested in gilts would have grown to £323.£100 invested in shares with dividends reinvested would have grown to £25,022
Good man. Next week we meet at the shores
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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