Rank: Elder Joined: 6/23/2009 Posts: 14,163 Location: nairobi
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MaichBlack wrote:obiero wrote:MaichBlack wrote:VituVingiSana wrote:MaichBlack wrote:stocksmaster wrote:stocksmaster wrote:littledove wrote:https://ntvkenya.co.ke/news/treasury-to-raise-sh100-billion-from-selling-kenya-pipeline/?utm_source=twitter&utm_medium=NTV+SocialsThe National Treasury expects to raise approximately Sh100 billion from the privatisation of the Kenya Pipeline Company (KPC) shares through an initial public offering at the Nairobi Securities Exchange. The Treasury says the proceeds from the KPC sale will be used to fund priority public services and infrastructure. A Sessional Paper on the Privatisation of Kenya Pipeline Company through an Initial Public Offering (IPO), tabled in the National Assembly, shows that the proceeds of the sale will enable the government to raise funds budgeted for in 2025/26, to implement economic and social objectives. ........................ โThe company is wholly owned by the government of Kenya, with 99.9 percent shareholding held by the National Treasury and about 0.1 percent by the Ministry of Energy and Petroleum.โ The KPC maintains an extensive pipeline network spanning 1,342 kilometres, and in the financial year 2023/24, reported Sh35.4 billion in revenue and a Profit After Tax of Sh6.9 billion, contributing dividends to the National Treasury. The maths is not adding up. Let's do some quick calculations: What we know is that the GoK will list 65% of KPC shares. The net profit for 2024 for KPC was Ksh 6.9bn. If we apportion 65% of this net profit to the public shares to be sold, that adds up to about 4.5bn. If the target is truly to raise 100bn from the 65% stake, that means the IPO share price will be at a P/E of over 22! (Price of 100bn/Attributable net profit of 4.5bn). KenGen for comparison is trading at a trailing P/E of below 7 making the potential KPC IPO offer share price three times more expensive. If the KPC offer is to be sold at same market metrics as Kengen (Price per earnings of about 7), then the realistic cash to be generated for a 65% sale of KPC based on an annual net profit of about Ksh 7Bn would be 1/3rd of that 100bn....about Ksh 30-33bn. Happy Hunting With KPC IPO details now out, it seems my calculations were spot on. The IPO is being offered at a P/E of almost 22 {Ksh 9÷0.4122} so as to generate Ksh 100bn. Thats a crazy valuation when compared to Kengen (P/E of 6) and KPLC (P/E of 1) being the other GoK energy stocks they will share an NSE category. I wonder whether the transaction advisors are oblivious of the market? Wanjiku will buy based on hype but am curious about institutional and high net worth investors. An interesting IPO but will seat out of this one as I wait it post market at my target price of Ksh 2.50. Happy Hunting Thanks @Stockmaster for you analysis. Interesting times we are living in. I am also wondering if there is more than meets the eye here! My trust for this government is at an all time low. As you clearly point out, the transaction advisors cannot be that clueless!!! Is someone trying to grab KPC by for example doing everything to ensure there is a massive under subscription and then the government being later "forced" to do a private placement! After all, the public was given a chance to buy the shares and "they refused" to buy them and the government still needs/wants to raise the cash!!! Or is someone just trying to shaft Kenyans!!?? But it will not be easy to shaft institutional investors and gullible retail investors cannot take up 100B worth of shares! (informed ones will sit it out) KenGen had a "private placement" of sorts to PIC (SA). And if the public does not buy at 9/- then let someone else buy at 9/-. If anything, the "Buyer of Last Resort" [your someone trying to grab KPC] makes no sense since they could apply for the shares during the IPO as well. I am thinking of a situation where the private placement is done later to a "strategic investor" at a huge discount and all sorts of excuses given including the lower uptake during the IPO. the uptake is not low Leta verified data. Preferably a link, not grapevine, exchange bar bla bla, "speaking in code" etc., @xtina avoid rumour mongers. deal with people who have facts on the ground
KQ ABP 4.26
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