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KPC IPO - Bearish Noise
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mufasa
#1 Posted : Monday, January 26, 2026 9:53:17 AM
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Joined: 4/15/2008
Posts: 232
Current date check: Jan 26, 2026 – IPO still wide open (closes Feb 19), so plenty of time.

I'm going contrarian here. Yeah, most analysts and pundits are bearish on this KPC IPO.
High valuation chatter (on twitter there's talk of 22x P/E looks stretched, low dividend yield compared to peers like KenGen at around 9%, transparency/legal concerns floating around, and fears of post-listing drop once reality hits).
My Play - long-term upside in Kenya's energy/transport backbone. Pipelines aren't sexy, but they're monopoly-ish and steady
Plus, KPC's dividend policy commits to paying out 50% of net earnings as dividends, which does make it attractive-ish.
Bullish on Kes 12.0 by 31st Dec. (Based on the fact that NSE will be on a bullish trend this year)

Jumping out at 7.00 if it starts goin Bearish, then i jump back in. (I missed safaricom at 2bob)



Do it today! Tomorrow is promise to no-one.
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MaichBlack
#2 Posted : Monday, January 26, 2026 10:31:25 AM
Rank: Elder


Joined: 7/22/2009
Posts: 7,744
That P/E is a huge no for me! There are many other stocks in the NSE with way better valuation with a number trading below book value!!!

This one I sit out and watch!

I will be buying another bank starting this week. I am too over invested in banks but it still makes sense investing in them.
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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jawgey
#3 Posted : Monday, January 26, 2026 10:34:39 AM
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Joined: 1/13/2014
Posts: 398
Location: Denmark
mufasa wrote:
Current date check: Jan 26, 2026 – IPO still wide open (closes Feb 19), so plenty of time.

I'm going contrarian here. Yeah, most analysts and pundits are bearish on this KPC IPO.
High valuation chatter (on twitter there's talk of 22x P/E looks stretched, low dividend yield compared to peers like KenGen at around 9%, transparency/legal concerns floating around, and fears of post-listing drop once reality hits).
My Play - long-term upside in Kenya's energy/transport backbone. Pipelines aren't sexy, but they're monopoly-ish and steady
Plus, KPC's dividend policy commits to paying out 50% of net earnings as dividends, which does make it attractive-ish.
Bullish on Kes 12.0 by 31st Dec. (Based on the fact that NSE will be on a bullish trend this year)

Jumping out at 7.00 if it starts goin Bearish, then i jump back in. (I missed safaricom at 2bob)





"Based on the fact that NSE will be on a bullish trend this year"..... that's a very risky assumption.
Seeing is believing
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MaichBlack
#4 Posted : Monday, January 26, 2026 10:34:52 AM
Rank: Elder


Joined: 7/22/2009
Posts: 7,744
The price of KPC might go up but the value will remain low.

OMCs will have to buy, NSSF might be forced to buy etc. Given that these are not traders/short term investors, available volumes might be low thereby supporting the price.

But I still would rather buy value!!!
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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mufasa
#5 Posted : Monday, January 26, 2026 1:04:06 PM
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Joined: 4/15/2008
Posts: 232
MaichBlack wrote:
The price of KPC might go up but the value will remain low.

OMC will have to buy, NSSF might be forced to buy etc. Given that these are not traders/short term investors, available volumes might be low thereby supporting the price.

But I still would rather buy value!!!


Spot on. institutions could soak up big chunks as long-term holders. No real short-term traders dumping, which might keep the floor higher than pure fundamentals suggest, at least initially. The 50% net earnings dividend policy - tick, monopoly -tick

At 22x trailing P/E it's premium, sure, but if FY2026 EPS hits KSh 0.44–0.50 with modest growth, and they deliver on dividends (DPS KSh 0.22+), the yield could appeal
Do it today! Tomorrow is promise to no-one.
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mufasa
#6 Posted : Wednesday, January 28, 2026 11:29:23 AM
Rank: Member


Joined: 4/15/2008
Posts: 232
From the wall of #TheKenyanWallstreet

Dr. Kenne Belgrade of Faida Investment Bank, the Lead Transaction Advisor, speaks on the KPC IPO Valuation.

• Three methods used: income, assets, peer comparison.
• Independent asset valuer priced KPC assets at ~KSh 124Bn.
• EV to EBITDA chosen to reflect operating cash flow.
• Peer set drawn from India and developed markets.
• Peer median EV to EBITDA ~9.56x.
• IPO priced at ~8.1x EV to EBITDA to support wide Kenyan ownership.

Dr. Kenne Belgrade on post-listing price dynamics.

- Sees upside adjustment after listing, not downside correction.
- Pushes back on narratives of a sharp post-IPO price fall.
- Points to unmet institutional demand at the offer stage.
- Expects secondary-market buying from investors excluded in the primary.
- Long-term capital positioned to absorb any retail exits.

Kenya Pipeline growth, margins, and comparables.

◉ Kenya Pipeline CAGR about 8.4%, versus KenGen and KPLC near 2%.
◉ Growth viewed as more critical than headline margins.
◉ Dividend yield alone seen as an incomplete return measure.
◉ Safaricom identified as the closest local comparable by scale and economics.
◉ Safaricom five-year CAGR around 8.8% versus Kenya Pipeline at 8.4%.
◉ EBITDA margins similar, Safaricom near 50%, Kenya Pipeline near 49%.
◉ Dividend yields comparable, Kenya Pipeline about 3.9%, Safaricom about 4.1%.
◉ Valuation gap highlighted, Kenya Pipeline around 1.7x book versus Safaricom near 5x.

*Why Kenya Pipeline does not belong in the same valuation bucket as KenGen, KPLC, or TotalEnergies.*

➠ TotalEnergies Kenya not comparable, market cap about KSh 6Bn versus KPC cash of KSh 16.2Bn.
➠ KPC operates a midstream monopoly, Total is a downstream oil marketer among 140+ competitors.
➠ KPLC trades near 0.22x book, implying asset pricing unsuitable for a strategic national asset like KPC.
➠ Low PE at KPLC and KenGen reflects weak growth and structural constraints, not undervaluation.
➠ PE ratios must adjust for both margins and growth, not viewed in isolation.
➠ KPC projected FY revenue about KSh 41Bn and net profit about KSh 9.6Bn.
➠ Implied net margin around 24–25%, materially above most listed utilities.
➠ Strong margins and faster growth fundamentally separate KPC from KenGen and KPLC.
Do it today! Tomorrow is promise to no-one.
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MaichBlack
#7 Posted : Wednesday, January 28, 2026 6:33:51 PM
Rank: Elder


Joined: 7/22/2009
Posts: 7,744
mufasa wrote:
From the wall of #TheKenyanWallstreet

Dr. Kenne Belgrade of Faida Investment Bank, the Lead Transaction Advisor, speaks on the KPC IPO Valuation.

• Three methods used: income, assets, peer comparison.
• Independent asset valuer priced KPC assets at ~KSh 124Bn.
• EV to EBITDA chosen to reflect operating cash flow.
• Peer set drawn from India and developed markets.
• Peer median EV to EBITDA ~9.56x.
• IPO priced at ~8.1x EV to EBITDA to support wide Kenyan ownership.

Dr. Kenne Belgrade on post-listing price dynamics.

- Sees upside adjustment after listing, not downside correction.
- Pushes back on narratives of a sharp post-IPO price fall.
- Points to unmet institutional demand at the offer stage.
- Expects secondary-market buying from investors excluded in the primary.
- Long-term capital positioned to absorb any retail exits.

Kenya Pipeline growth, margins, and comparables.

◉ Kenya Pipeline CAGR about 8.4%, versus KenGen and KPLC near 2%.
◉ Growth viewed as more critical than headline margins.
◉ Dividend yield alone seen as an incomplete return measure.
◉ Safaricom identified as the closest local comparable by scale and economics.
◉ Safaricom five-year CAGR around 8.8% versus Kenya Pipeline at 8.4%.
◉ EBITDA margins similar, Safaricom near 50%, Kenya Pipeline near 49%.
◉ Dividend yields comparable, Kenya Pipeline about 3.9%, Safaricom about 4.1%.
◉ Valuation gap highlighted, Kenya Pipeline around 1.7x book versus Safaricom near 5x.

*Why Kenya Pipeline does not belong in the same valuation bucket as KenGen, KPLC, or TotalEnergies.*

➠ TotalEnergies Kenya not comparable, market cap about KSh 6Bn versus KPC cash of KSh 16.2Bn.
➠ KPC operates a midstream monopoly, Total is a downstream oil marketer among 140+ competitors.
➠ KPLC trades near 0.22x book, implying asset pricing unsuitable for a strategic national asset like KPC.
➠ Low PE at KPLC and KenGen reflects weak growth and structural constraints, not undervaluation.
➠ PE ratios must adjust for both margins and growth, not viewed in isolation.
➠ KPC projected FY revenue about KSh 41Bn and net profit about KSh 9.6Bn.
➠ Implied net margin around 24–25%, materially above most listed utilities.
➠ Strong margins and faster growth fundamentally separate KPC from KenGen and KPLC.

What else do you expect the lead transactional advisor to say?

Hii maneno yake ni ile tuliambiwa in professional/technical terms inaitwa hot air!!!

Talking exactly how one would expect a primary beneficiary of the 3 Billion transaction fees to!! What else would he say??
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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