There is expectation that the KPC will be settled out of court by July. They are already in discussion. Though this is with lots of hope. The money from TZ already came but it was only 1.68B.

People are taking advantage of KK mantra to spread skewed rumours and mere gossip .

KK is fairly priced at 12-14.
The fuel market has been favorable to the company. Lower cost per litre increased the margin per litre sold, reduced the cash outlay needed to buy stocks. When international prices start rising this advantage will vaporize.

KK still operates in a regulated market. Apart from protecting margins (discussed above) saving SGA and Finance costs is the only viable means of improving profitability. KK started by retrenching employees. Sold assets to reduce debts. Scope for operating cost reduction is almost done.

From 2016/7 onwards, operating profit growth can only come from increasing volumes while holding Capex steady, by growing a franchise model of stations and convenience stores.

Political risk still high for KK. Mainly held by Kanu men who have not found favour with subsequent regimes. In fact I am surprised that KK has survived this long with loss of favoured position, liberization and controls in the sector, Devani Triton antics.
That KPC (GOK) will pay the disputed amounts to KK with a clean heart is a tad too optimistic. If it happens, you can expect 70% of the cash to end up in Hyenas pockets. Not sure if our Messiah Ohana is open to such deals.

In conclusion all powers in the Cosmos are against a KK outperformance post 2016. This is a share to sell when the bulls return and put the money elsewhere, even T Bills will yield more.

There are very pedestrian views up there. Source of info very reliable. Won't tell you it's DO if that is what you wanted. KK raked are running at double GP margins of last year meaning by end of this month they will be at 100% of 1H15. So if similar or nearer to margins are attained for the 2ND quarter of 2016 we should end up 50%+ earnings growth. Good people how else do you think the debt is being settled that fast?

You need to be an analyst, in your own way otherwise you are coming here to tell us bees and birds stories Back to business KK has been flattish for the last 20 years except during the mad bull run of 2003-2006 when it hit the equivalent of 40/- post split. As a a commodity and energy stock it was good for dividend income which changed with introduction if price controls in the sector

@Sparks we agree though I am of the opinion you are seriously discounting certain earnings drivers. The GP margin they have is from inventory management. Trading at the right time and holding logical quantities. KK also starts the year minus 460m loss from tz and Lubumbashi. Forex valuations are at a net profit. KK is repaying debt aggressively from TX sales but from higher cash flows due to higher profit margins.

There are alot of businesses KK can diversify on to slightly delink from its core oil businesses. They must think now that they want to plant their own offices. I wish they could reward those who suggested the best options to them.

KenolKobil diversifies business operations to survive low prices

Please share the math because we are heading there.

What I really like now is the beginning of renovation of stations to attract rents of restaurants, which in turn will also increase retail fuel sales. That will increase turnover and profits.
People who think that the profits are just from cost cutting and paying down debt will be surprised.

This share in two years time will be trading at between 15/= and 20/=. You can't gurantee anything in the stock market but this will be as close to a gurantee as you can get. Provided the good running of the company prevails. People should be accumulating.

Data gleaned from Kestrel and SIB reports after the investor briefing. Ceteris Paribus.

2016 forecasted EPS 1.65
Debt at zero by 30 June 2016 [unless there's an acquisition]
Forex Losses will be minimal with UGX & KES stabilized.
KPRL tanks to be renovated for use as storage so supply will be better.
Real estate enhancement [rental income]
New stations in Kenya - Breakeven in 3-6 months
200,000 LPG tanks on the way.
K-Card is better and faster.

Let's take the 1.65 EPS so at 10/- that's 6x PER. The assets are carried at cost in their books and they have realized that some 'CBD' stations are worth a lot more as rental properties. Will they sell these? I do not know.

Is KK a takeover target? Yes [I say] but Ohana said they do not run KK to sell [that's for the shareholders] but as a PROFITABLE GOING CONCERN for the future.

My take:

2016 1.65
2017 2.00

2018 CETERIS PARIBUS I think KK will be acquired. Hence I am very comfortable adding KK at 10/- for 18/- in 2018 assuming a normalized 10 PER.