I am actually pleasantly surprised by KenGen's results. I expected them to be worse, especially because of the interest on the IFB. I imagine that this has been capitalized.

The reason for the drop in PBT is because revenues were lower.

A statement from the company reads:

"Under the new Power Purchase Agreement regime, our revenues are based on a take or pay capacity availability. This is however adjusted in the event that we are not able to deliver a certain threshold of energy. Due to the poor inflows, the Company was unable to meet this threshold and was consequently adjusted by KPLC by a total of Kshs 1.25 billion."

As for tax charged this will never be consistent for KenGen due to capital allowances (investment deductions) which vary from year to year.

Would I buy? Only if it came to a level where I think I can speculate and exit. I will be a buyer (to keep) only when they complete their major projects and their capital structure gets sorted. There has been talk of Govt selling additional shares and the company hinted at a rights issue in the IM for the IFB.

Kengen has a huge debt burden and i remember the MD warning us that the EPS and dividends would be on their way down for the next 5 years at least...

with that info why would this stock trade at a trailing P/E of 19??? Only Mr. Market knows...

The dividends declared still stand at 0.50ksh per share which is rather fair. Price at the bourse is still stable.

16.85 is not a stable price. Hii kitu ilikuwa 18.50 last week! I bliv its a buy for mid/long term at any price below 14.

Conclusions:
This is a Cost Push Through + Margin Business. It sits at the Cusp of a serious Ramp and Scale Up. Looking ahead, I see a much more muscular Year Ahead.


My investment prowess, definitely, cannot muster such a comment, at the moment. The conclusion is from Aly-Khan Satchu.