Ebenyo wrote:peep wrote:Ebenyo wrote:Realtreaty wrote:How does KK fair in Bitumen supply in construction industry? How much revenue emanates from this type of business given the govt want to buy locally as we as well know KK is majority locally owned.
Far more how is the gas industry in this company with K-gas growing too fast. What can they do to endear Kenyans buy gas from them. I remember Total went far to other company staff cooperatives to encourage them buy on Coop loan.
Again i feel KK should as well think of a Bonus this time 1/10.
No need for bonus as that will dilute the company value.
The current NAV is ksh 7.40 per share against the current price of 16.
If you create more shares further in the name of bonus,that will be lowering the value further.
A bonus can't lower the value of a stock. Its a transfer of money from retained earnings to issued stock, both owned by the same person. Like moving cash from the left pocket to the right one.
It will lower the NAV per share.From the current of 7.40 to 6.70.Against the current price of 16.80,KK will be some of the most expensive shares in NSE.
NAV is a core concept in fundamental investing BUT not the only concept nor the most important one.
1) KK has many properties/assets stated at historical cost AND read the Financial Statements to understand that point. It would be helpful to have a revaluation done and put in the Notes even if the "revaluation" isn't included in the Balance Sheet.
2) Read Warren Buffett's letters. Cash generation [& moat] are important. Can KK keep on selling fuel at a (profitable) decent margin? Can it continue to leverage its network and connections [OTS] to reduce costs? And increase volumes?
3) A bonus does not increase/decrease a firm's INTRINSIC value BUT it does affect "perception" by investors.
4) A bonus does not reduce/increase the availability of funds for expansion. What @ericsson said is that when a firm doesn't want to pay a CASH dividend, it may issue a bonus. It's a sleight of hand to keep noisy shareholders happy.
For KK:
- Solid (profitable) cash generating machine.
- Undervalued assets [needs a revaluation] as shown on the books.
- Growth [not double digits but a respectable growth] in volumes/profits.
- KK shares, IMHO, are cheap if it can make 2.50 in 2018 [FY 2017 has all sorts of one-off provisions]. That's a PER of 7
- Finally, there's been an expectation of a takeover. At a significant premium, I hope.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett