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Kengen success
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obiero
#541 Posted : Sunday, July 03, 2016 7:37:41 AM
Rank: Elder

Joined: 6/23/2009
Posts: 14,211
Location: nairobi
Aguytrying wrote:
sparkly wrote:
Ebenyo wrote:
Aguytrying wrote:
Ericsson wrote:
@Obiero
Go and read the information memorandum. The purpose was to re balance the debt:equity ratio so for the case of gqva part of the debt was retired by converting to equity for the rights issue. So if for example kengen owed gava sh.30bn post rights issue its now 10bn.
That gives kengen room to pay lower finance costs and get loans from JICA for new power plants to be built


I used to like kengen once upon a time. Then came the massive expansion plans using debt. mind boggling debt figures. that was the end for me. even this rights issue is to reduce debt so they can borrow more. i have an issue with too much (gross) debt. debt to equity ratio be damned


I was attracted to kengen by a high dividend yield.I entered at kshs 6.80 which at the current dps of kshs 0.60 represents a dividend yield of 11%.


That is if DPS is maintained at 0.6 after the dilution. highly unlikely.


After dilution the yield at 6.55 should be about 3-4%. I hope u know That @Ebenyo.

Just divide the dividend by 4. To estimate the new dividend. Assuming pay out ratio remains the same

I have gone and read the IM

KQ ABP 4.26
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VituVingiSana
#542 Posted : Sunday, July 03, 2016 8:05:06 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,346
Location: Nairobi
Aguytrying wrote:
sparkly wrote:
Ebenyo wrote:
Aguytrying wrote:
Ericsson wrote:
@Obiero
Go and read the information memorandum. The purpose was to re balance the debt:equity ratio so for the case of gqva part of the debt was retired by converting to equity for the rights issue. So if for example kengen owed gava sh.30bn post rights issue its now 10bn.
That gives kengen room to pay lower finance costs and get loans from JICA for new power plants to be built


I used to like kengen once upon a time. Then came the massive expansion plans using debt. mind boggling debt figures. that was the end for me. even this rights issue is to reduce debt so they can borrow more. i have an issue with too much (gross) debt. debt to equity ratio be damned


I was attracted to kengen by a high dividend yield.I entered at kshs 6.80 which at the current dps of kshs 0.60 represents a dividend yield of 11%.


That is if DPS is maintained at 0.6 after the dilution. highly unlikely.


After dilution the yield at 6.55 should be about 3-4%. I hope u know That @Ebenyo.

Just divide the dividend by 4. To estimate the new dividend. Assuming pay out ratio remains the same
Kusoma ni kazi ngumu for Gen Y. Or is it Gen Z/
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Aguytrying
#543 Posted : Sunday, July 03, 2016 1:40:34 PM
Rank: Elder

Joined: 7/11/2010
Posts: 5,040
VituVingiSana wrote:
Aguytrying wrote:
sparkly wrote:
Ebenyo wrote:
Aguytrying wrote:
Ericsson wrote:
@Obiero
Go and read the information memorandum. The purpose was to re balance the debt:equity ratio so for the case of gqva part of the debt was retired by converting to equity for the rights issue. So if for example kengen owed gava sh.30bn post rights issue its now 10bn.
That gives kengen room to pay lower finance costs and get loans from JICA for new power plants to be built


I used to like kengen once upon a time. Then came the massive expansion plans using debt. mind boggling debt figures. that was the end for me. even this rights issue is to reduce debt so they can borrow more. i have an issue with too much (gross) debt. debt to equity ratio be damned


I was attracted to kengen by a high dividend yield.I entered at kshs 6.80 which at the current dps of kshs 0.60 represents a dividend yield of 11%.


That is if DPS is maintained at 0.6 after the dilution. highly unlikely.


After dilution the yield at 6.55 should be about 3-4%. I hope u know That @Ebenyo.

Just divide the dividend by 4. To estimate the new dividend. Assuming pay out ratio remains the same
Kusoma ni kazi ngumu for Gen Y. Or is it Gen Z/


Ina unekana ni ngumu sana. Lack of knowledge will kill my people. It's in the Bible
The investor's chief problem - and even his worst enemy - is likely to be himself
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guru267
#544 Posted : Monday, July 04, 2016 2:37:07 AM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
Debt is a beautiful thing when return on assets exceeds the interest paid on debt...

Debt is also cheaper than equity in the long run as equity cannot be redeemed...

With Kengen's asset base we should be seeing at least KES 20Bn PAT.. So waiting for that potential to be unlocked should be rewarding.
Mark 12:29
Deuteronomy 4:16
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  | | Edit by user: Monday, July 04, 2016 2:38 AM | Reason: Not specified
Ebenyo
#545 Posted : Monday, July 04, 2016 8:50:55 AM
Rank: Veteran

Joined: 4/4/2016
Posts: 2,016
Location: Kitale
Aguytrying wrote:
VituVingiSana wrote:
Aguytrying wrote:
sparkly wrote:
Ebenyo wrote:
Aguytrying wrote:
Ericsson wrote:
@Obiero
Go and read the information memorandum. The purpose was to re balance the debt:equity ratio so for the case of gqva part of the debt was retired by converting to equity for the rights issue. So if for example kengen owed gava sh.30bn post rights issue its now 10bn.
That gives kengen room to pay lower finance costs and get loans from JICA for new power plants to be built


I used to like kengen once upon a time. Then came the massive expansion plans using debt. mind boggling debt figures. that was the end for me. even this rights issue is to reduce debt so they can borrow more. i have an issue with too much (gross) debt. debt to equity ratio be damned


I was attracted to kengen by a high dividend yield.I entered at kshs 6.80 which at the current dps of kshs 0.60 represents a dividend yield of 11%.


That is if DPS is maintained at 0.6 after the dilution. highly unlikely.


After dilution the yield at 6.55 should be about 3-4%. I hope u know That @Ebenyo.

Just divide the dividend by 4. To estimate the new dividend. Assuming pay out ratio remains the same
Kusoma ni kazi ngumu for Gen Y. Or is it Gen Z/


Ina unekana ni ngumu sana. Lack of knowledge will kill my people. It's in the Bible


Not really that way.Im a long term investor.So i make decisions based on a company good fundamentals.During kengen IPO in 2006 the price was kshs 11.90.So somebody who boarded at that price and me who has entered at 6.80,clearly i have got it cheap.Kengen business of producing and selling electricity is also reliable in producing returns in the long run which will beat recent dillution.Im clearly not happy with huge debt to equity ratio which ofcourse makes the share price and profits volatile.As long as i will maintain my margin of safety by adding more at rock bottom prices,i will be fine.I will consider exit should there be problems in their ability to make profits and pay dividends.But over the last ten years they have been making profits and paying dividends.I trust that they will make more profits to compensate the recent dillution.Meanwhile i will take advantage of the dillution to get more shares at cheap price when they start flooding the market.So im comfortable for now.
Towards the goal of financial freedom
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  | | Edit by user: Monday, July 04, 2016 8:58 AM | Reason: Not specified
VituVingiSana
#546 Posted : Monday, July 04, 2016 11:26:07 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,346
Location: Nairobi
guru267 wrote:
Debt is a beautiful thing when return on assets exceeds the interest paid on debt...

Debt is also cheaper than equity in the long run as equity cannot be redeemed...

With Kengen's asset base we should be seeing at least KES 20Bn PAT.. So waiting for that potential to be unlocked should be rewarding.

I think the new Company's Act does [or will] allow for share buybacks. So yes, equity can be redeemed. Some firms issue/d Preference Equity/Shares. These too can be redeemed.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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obiero
#547 Posted : Monday, July 04, 2016 11:31:19 AM
Rank: Elder

Joined: 6/23/2009
Posts: 14,211
Location: nairobi
guru267 wrote:
Debt is a beautiful thing when return on assets exceeds the interest paid on debt...

Debt is also cheaper than equity in the long run as equity cannot be redeemed...

With Kengen's asset base we should be seeing at least KES 20Bn PAT.. So waiting for that potential to be unlocked should be rewarding.

I love reading your comments. One of the most astute investors on wazua

KQ ABP 4.26
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hisah
#548 Posted : Monday, July 04, 2016 11:50:18 AM
Rank: Chief

Joined: 8/4/2010
Posts: 8,977
obiero wrote:
guru267 wrote:
Debt is a beautiful thing when return on assets exceeds the interest paid on debt...

Debt is also cheaper than equity in the long run as equity cannot be redeemed...

With Kengen's asset base we should be seeing at least KES 20Bn PAT.. So waiting for that potential to be unlocked should be rewarding.

I love reading your comments. One of the most astute investors on wazua

Make love not war smile
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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murchr
#549 Posted : Monday, July 04, 2016 3:57:39 PM
Rank: Elder

Joined: 2/26/2012
Posts: 15,980
hisah wrote:
obiero wrote:
guru267 wrote:
Debt is a beautiful thing when return on assets exceeds the interest paid on debt...

Debt is also cheaper than equity in the long run as equity cannot be redeemed...

With Kengen's asset base we should be seeing at least KES 20Bn PAT.. So waiting for that potential to be unlocked should be rewarding.

I love reading your comments. One of the most astute investors on wazua

Make love not war smile


Laughing out loudly
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
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Aguytrying
#550 Posted : Monday, July 04, 2016 11:22:08 PM
Rank: Elder

Joined: 7/11/2010
Posts: 5,040
guru267 wrote:
Debt is a beautiful thing when return on assets exceeds the interest paid on debt...

Debt is also cheaper than equity in the long run as equity cannot be redeemed...

With Kengen's asset base we should be seeing at least KES 20Bn PAT.. So waiting for that potential to be unlocked should be rewarding.


Massive debt with the promise of higher revenues and in turn profits. Thats always the plan, it's a risk, one thing goes wrong and the interest payments eat you alive. Debt is good, but too much will kill you, ask KQ
The investor's chief problem - and even his worst enemy - is likely to be himself
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