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KenolKobil HY 2016 ebitda +5.9%, net profit +29.5%
Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi
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Ebenyo wrote:Kenolkobil HY 2016 Results-My take.
Total income-37193744000
Expenses-36003807000
Balance-1189937000
Dividend payment-220764180
Retained earnings-969172820
*Shareholders got 19% of the net profit while 81% was retained.
*What is the company planning to do with the 81% retained income?
Pay down debt, expansion, rehabilitate old stations, expand into LPG & Lubes
*cost of sales-why does it consume 90% of the total income?
Different businesses have different cost of sales. Price controls control & limit the margin KK/OMCs can make above their Cost of Goods.
*What is the management doing to bring down the cost of sales?
Unless you, as a voter, convince GoK to remove price controls...
*Debt to equity ratio at 94%.
Despite selling assets in tanzania,congo and uganda,why is this ratio still high?
TZ & DRC were small markets for KK but loss-making. The proceeds were used to reduce debt. KK hasn't sold out of UG. Oil is about volumes. Small margins on huge volumes. These volumes are funded by debt. Different sectors need different levels of debt.
*Going forward,what are the growth plans?
Come to the next AGM, read the Annual Report. Organic expansion, LPG, Lube blending, etc
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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VituVingiSana wrote:Ebenyo wrote:Kenolkobil HY 2016 Results-My take.
Total income-37193744000
Expenses-36003807000
Balance-1189937000
Dividend payment-220764180
Retained earnings-969172820
*Shareholders got 19% of the net profit while 81% was retained.
*What is the company planning to do with the 81% retained income?
Finance an expanded inventory, Further investment and deeper penetration into the non-oil business
Pay down debt, expansion, rehabilitate old stations, expand into LPG & Lubes
*cost of sales-why does it consume 90% of the total income?
Different businesses have different cost of sales. Price controls control & limit the margin KK/OMCs can make above their Cost of Goods.
*What is the management doing to bring down the cost of sales?
Unless you, as a voter, convince GoK to remove price controls...
*Debt to equity ratio at 94%.
Despite selling assets in tanzania,congo and uganda,why is this ratio still high?
TZ & DRC were small markets for KK but loss-making. The proceeds were used to reduce debt. KK hasn't sold out of UG. Oil is about volumes. Small margins on huge volumes. These volumes are funded by debt. Different sectors need different levels of debt.
*Going forward,what are the growth plans?
Grow the non-oil business. Ref the MOU with INNSCOR (Chicken Inn, Pizza Inn, Creamy Inn, Bakers Inn, Galito’s, vida e caffe, The Kidz Zone). Two more locations complete this year (South B and C) and two more coming up
Come to the next AGM, read the Annual Report. Organic expansion, LPG, Lube blending, etc
KK Buru  Pesa Nane plans to be shilingi when he grows up.
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Rank: Veteran Joined: 4/4/2016 Posts: 2,016 Location: Kitale
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VituVingiSana wrote:[quote=Ebenyo]Kenolkobil HY 2016 Results-My take.
Total income-37193744000
Expenses-36003807000
Balance-1189937000
Dividend payment-220764180
Retained earnings-969172820
*Shareholders got 19% of the net profit while 81% was retained.
*What is the company planning to do with the 81% retained income?
Pay down debt, expansion, rehabilitate old stations, expand into LPG & Lubes
*cost of sales-why does it consume 90% of the total income?
Different businesses have different cost of sales. Price controls control & limit the margin KK/OMCs can make above their Cost of Goods.
*What is the management doing to bring down the cost of sales?
Unless you, as a voter, convince GoK to remove price controls...
*Debt to equity ratio at 94%.
Despite selling assets in tanzania,congo and uganda,why is this ratio still high?
TZ & DRC were small markets for KK but loss-making. The proceeds were used to reduce debt. KK hasn't sold out of UG. Oil is about volumes. Small margins on huge volumes. These volumes are funded by debt. Different sectors need different levels of debt.
*Going forward,what are the growth plans?
Come to the next AGM, read the Annual Report. Organic expansion, LPG, Lube blending, etc
Thanks for indepth answer. The total debt is ksh 4 bilion.At the repayment rate of kshs 97 milion per year,dont you think it will take too long for kk to grow its profits? Dont you see the danger of kk being bogged down with debts repayment for ages? Towards the goal of financial freedom
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Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi
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Ebenyo wrote:VituVingiSana wrote:[quote=Ebenyo]Kenolkobil HY 2016 Results-My take.
Total income-37193744000
Expenses-36003807000
Balance-1189937000
Dividend payment-220764180
Retained earnings-969172820
*Shareholders got 19% of the net profit while 81% was retained.
*What is the company planning to do with the 81% retained income?
Pay down debt, expansion, rehabilitate old stations, expand into LPG & Lubes
*cost of sales-why does it consume 90% of the total income?
Different businesses have different cost of sales. Price controls control & limit the margin KK/OMCs can make above their Cost of Goods.
*What is the management doing to bring down the cost of sales?
Unless you, as a voter, convince GoK to remove price controls...
*Debt to equity ratio at 94%.
Despite selling assets in tanzania,congo and uganda,why is this ratio still high?
TZ & DRC were small markets for KK but loss-making. The proceeds were used to reduce debt. KK hasn't sold out of UG. Oil is about volumes. Small margins on huge volumes. These volumes are funded by debt. Different sectors need different levels of debt.
*Going forward,what are the growth plans?
Come to the next AGM, read the Annual Report. Organic expansion, LPG, Lube blending, etc
Thanks for indepth answer. The total debt is ksh 4 bilion.At the repayment rate of kshs 97 milion per year,dont you think it will take too long for kk to grow its profits? Dont you see the danger of kk being bogged down with debts repayment for ages? Distinguish between Operating (Working Capital) Debt and Other (Capital, etc) Debt. Debt is not a bad thing. It's how the funds are used. KK takes on debt to bring in fuel cargoes. They then sell the fuel [to other OMCs as well as through their stations] and pay down the debt. This debt is not "core" debt. When they have a cargo, they take on a (huge) loan. When they sell it, they pay it down. What Ohana did was sell off TZ & DRC fixed assets since these were UNPRODUCTIVE and used the cash to pay down "core" debt borrowed during Segman's days to expand. Ohana has no choice but to borrow [unless KK does a huge Rights Issue] to buy OTS cargoes. Small margins, large volumes. Not speculation coz the bulk of OTS cargoes are often pre-sold. OMCs that default are blacklisted by ERC/MoE. The largest OMCs eg Total, Shell/Vivo, KK, etc are unlikely to default. Debt:Equity was very high as KK was coming from an (almost) negative position after the hedging fiasco under Segman. Since 2012, the "Equity" has been built up while debt [helped by sub-$50 oil] has come down. As KK pays down "core" debt [which also adds to Equity] the Debt:Equity ratio will improve. Questions? Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi
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@Ebenyo - I am not bothered with the current share price be it 10 or 12. The long game is either a buy-out at 15+ within 18 months OR a solid firm that will become a BAT or EABL with consistent dividends. KK hasn't given up on regional expansion but Ohana is wary about former Socialist regimes coz of the culture. He mentioned during the post-AGM discussion that they keep on looking at Mozambique BUT he doesn't want a TZ-like situation where "mali ya umma" dominates. He feels there's scope to grow in Kenya via dealers & leases NOT by purchasing real estate. Apparently, the Board shot down the 1.5bn HQ idea since it would take focus and cash away from the stations. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 4/4/2016 Posts: 2,016 Location: Kitale
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im happy with the way you are putting facts on board.You have all the details at your fingertips! this is the joy of longterm investment-you get to distinguish bones and flesh! As you can see honestly,many companies have been brought down by high debt to equity ratio.Management of debt is very poor and thats why companies like kq,mumias,ea portland and uchumi are bleeding to death.On the direct kk competitor,it took the intervention of french total outermar to bail out Total kenya which was nearly crippled with debts.The results being that total outermar took 93% ownership of total kenya. But its true Ohanna has done well to bring down the debt level. How expensive is it to buy oil? as i mentioned earlier,cost of sales is 90% of the total income and i feel thats too high.How does kk buy oil? transportation? Towards the goal of financial freedom
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Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi
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OMCs bid for OTS cargoes. The cheapest usually wins. There is a delivery window and the price for delivery is set. When the fuel is offloaded, it is allocated to different OMCs per their original orders/requirements. The OMCs then pay the importer (eg KK) and KPC allocates the Buyer (eg Shell) their portion. Before the fuel is drawn from KPC's tanks for local consumption, the OMC pays taxes to KRA. The fuel is then trucked to the station and sold. There are different "fuels" including petrol and diesel. Each is priced differently by the refinery [eg in India, Singapore, etc] or trader [Vitol, Trafigura, etc]. The OTS quantities are usually 50mn - 80mn liters [please ask others for verification coz I may be mistaken]. That's a lot of cash. Transportation: Railway, Trucks, Pipeline. Cost of Sales: It's about volumes since margins are controlled by GoK/ERC. There's a minimum cost for KK per liter coz of taxes, fuel purchase cost, transport, etc. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 4/4/2016 Posts: 2,016 Location: Kitale
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VituVingiSana wrote:OMCs bid for OTS cargoes. The cheapest usually wins. There is a delivery window and the price for delivery is set. When the fuel is offloaded, it is allocated to different OMCs per their original orders/requirements. The OMCs then pay the importer (eg KK) and KPC allocates the Buyer (eg Shell) their portion.
Before the fuel is drawn from KPC's tanks for local consumption, the OMC pays taxes to KRA. The fuel is then trucked to the station and sold.
There are different "fuels" including petrol and diesel. Each is priced differently by the refinery [eg in India, Singapore, etc] or trader [Vitol, Trafigura, etc]. The OTS quantities are usually 50mn - 80mn liters [please ask others for verification coz I may be mistaken]. That's a lot of cash.
Transportation: Railway, Trucks, Pipeline.
Cost of Sales: It's about volumes since margins are controlled by GoK/ERC. There's a minimum cost for KK per liter coz of taxes, fuel purchase cost, transport, etc. its now clear to me why the cost of sales is high according to your points: 1.Open Tender System-all the Oil marketing companies do their bids. 2.Pay tax to the gok 3.Pay for the transport It could have been cheap if everyone is left for himself.Gava just wants to monopolize and tightly control everything. They will start even controling the relationship between a husband and wife at this rate! Towards the goal of financial freedom
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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I see the path to 12.00 opening up.... The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Ebenyo wrote:
They will start even controling the relationship between a husband and wife at this rate!
This statement shows that you are still a "bachalla"  Relationships between a husband and wife are regulated first by the wife then by the government. Life is short. Live passionately.
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