Wazua
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CARBACID-Any hope?
Rank: New-farer Joined: 10/19/2015 Posts: 21 Location: Everywhere
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VituVingiSana wrote:grahamsdisciple wrote:VituVingiSana wrote:grahamsdisciple wrote:As a shareholder, my biggest issue with the stock is that its over-capitalised. They need some debt to balance out the capital structure. An action management could take is to raise 1.5 billion through a corporate bond and buy half of its shareholding back. This will double EPS and ROE significantly. As a Ben Graham disciple, you should be ashamed of thinking this! There's nothing like 'over-capitalized' considering the current cost of borrowing. Why borrow at 25% when they can invest excess cash at 23%? If they have excess cash, they can distribute it as a dividend but asking Carbacid to borrow at 25% (or higher) is crazy. BTW, stock buybacks are not allowed in Kenya. Even if there was a stock buyback, it should only be done when the price is lower than the intrinsic value. First of all stock buy backs are about to be re-introduced Wake me up when the long-time-in-limbo Companies Bill becomes the Law. Until it is law it will not matter.(http://www.theeastafrican.co.ke/business/Will-share-buybacks-save-Kenyan-companies--stock-/-/2560/2691460/-/13b7n2l/-/index.html). Secondly, no body said anything about borrowing now, but with the amount of free cash flow Carbacid has, they can borrow at 12% in bad times and maybe lower in good times. The new 'normal' is higher. Banks have been issuing bonds at 12+% when things looked good post-Eurobond. GoK issued tax-free IFBs at 11.75%. If Carbacid was to borrow at 12% then the earnings yield should exceed 12% on a consistent basis. What the current earnings yield of Carbacid?
Third, you are the kind of people who read the summary of a book instead of reading the whole book. Ad hominem attack, eh? I'd invite you to read Security Analysis particularly part III when he focuses on equity analysis. There are plenty of times when he says that sometimes debt is good if its properly managed Yes, sometimes, if managed properly and yes, he even alludes to a company being over-capitalised. I maintain that the company is over-capitalised. They have ROE of around 22% and net margins of 50% if you take last 5-year average so how is borrowing at 14-15% not prudent??? Sigh. I have read Security Analysis. The ROE is irrelevant unless the price = ROE. What the Earnings Yield? Is it 22%? A firm's ROE is irrelevant when the PRICE is much higher than the NAV/share. The NAV = Equity = Shareholders' Funds. The net margin of 50% is bolstered by income from deposits/bonds/bills. Nevertheless, I want to hear you out on how you came to a NET MARGIN (also define what the NM is) of 50%. Furthermore, please use actual numbers so we compare apples to apples. History is history. Until we go back to long-term rates of 12-15% [you said 12% then you said 14-15%] we should look at 25% to be prudent. What Graham called the Margin of Error. What I said [& I am happy to refer to Security Analysis] is what Warren Buffett calls 'excess cash' which is yielding less by remaining with the firm than it would for the shareholders. If shareholders can get 22% (less 3.3% w/holding tax) from CBK then it makes little sense for Carbacid to buy 22% bonds, pay 6.6% tax on the interest then shareholders pay 5% on the dividend. Buying back shares using debt is Financial Engineering. It may may sense in a STABLE market but not when things are volatile. Carbacid shares trade at a substantial premium to NAV. I agree with a number of your points, if we were major shareholders we'd be slugging it out at the AGM. For now, wazua will do. Sometimes a company can be over-capitalised and part of that is as you've said holding excess cash predominantly through their surplus reserve. You can leverage on your capital in good times when rates are low by borrowing at below market rates on a corporate bond and return cash to your shareholders either through a special dividend or buy-back that increases their total return on investment. This is all I'm suggesting. By NM I meant PAT/Gross. Nonetheless, on an operating basis they make roughly 47% margin. By way of back of hand calculations, they can increase EPS by 1.93 to 3.00 by doing this. Moreover, their EPS would be more sensitive to changes in gross sales than it is at the moment. ARM sells at a higher multiple than Bamburi because they have a more aggressive capital structure. (Not that I'm advocating for so much debt). Shareholders would benefit. As for new normal, there's nothing like that. People always say the world has changed but as they say, the more things change the more they stay the same. Rates will come down soon, I don't see us going into election period with such elevated rates albeit the macro imbalances are getting worse.
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Rank: Elder Joined: 8/16/2011 Posts: 2,297
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Results 2015 preserved on Dry Ice!!!!!!! The Secrets are locked in the strong coldroom!!!!
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Rank: Veteran Joined: 10/11/2009 Posts: 1,223
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The end year results have been released. Some key highlights: -Turnover at 809mn which is more or less the same as 826mn reported last year. -PBT at 580mn vs 597mn last year but a higher taxation charge of 186mn vs 106mn which has drasticaly reduced the PAT to 393mn compared to 439mn last year which translates to an EPS of 1.55 vs 1.93. -Dividend remains the same at 70cents per share. History will not remember you for your IQ. It will remember you for what you did. “Genius is 1 percent inspiration, 99 percent perspiration.” Thomas Edison
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Rank: Elder Joined: 8/16/2011 Posts: 2,297
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BGL wrote:The end year results have been released.
Some key highlights:
-Turnover at 809mn which is more or less the same as 826mn reported last year.
-PBT at 580mn vs 597mn last year but a higher taxation charge of 186mn vs 106mn which has drasticaly reduced the PAT to 393mn compared to 439mn last year which translates to an EPS of 1.55 vs 1.93.
-Dividend remains the same at 70cents per share.
@BGL please Link us to the "Rink" tht will be my bullets to those who threw stones to me!!!!!  
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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BGL wrote:The end year results have been released.
Some key highlights:
-Turnover at 809mn which is more or less the same as 826mn reported last year.
-PBT at 580mn vs 597mn last year but a higher taxation charge of 186mn vs 106mn which has drasticaly reduced the PAT to 393mn compared to 439mn last year which translates to an EPS of 1.55 vs 1.93.
-Dividend remains the same at 70cents per share.
What is ailing this company? "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: Elder Joined: 8/16/2011 Posts: 2,297
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Now, Now Now @Wondergirl, WILL YOU MARRY ME? I predicted RIGHT and You got what I said after Mashujaa day, Get your 70cts Hao majamaa wachana nao, they gave you too much analysis that bore nothing at the end...@pesaNane,@instinct etc We say, why go to the flowing rivers to fetch water? If rivers are flowing, the water table is high (Shallow) and you can easily sink a shallow borehole and enjoy clean water!!! Too much analysis is for the Auditors and consultants
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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Realtreaty wrote: Now, Now Now @Wondergirl, WILL YOU MARRY ME? I predicted RIGHT and You got what I said after Mashujaa day, Get your 70cts Hao majamaa wachana nao, they gave you too much analysis that bore nothing at the end...@pesaNane,@instinct etc We say, why go to the flowing rivers to fetch water? If rivers are flowing, the water table is high (Shallow) and you can easily sink a shallow borehole and enjoy clean water!!! Too much analysis is for the Auditors and consultants Okay! Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Aren't you already married to Miss Candy BRitam? Life is short. Live passionately.
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Rank: Member Joined: 9/12/2009 Posts: 312
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Realtreaty wrote: Now, Now Now @Wondergirl, WILL YOU MARRY ME? I predicted RIGHT and You got what I said after Mashujaa day, Get your 70cts Hao majamaa wachana nao, they gave you too much analysis that bore nothing at the end...@pesaNane,@instinct etc We say, why go to the flowing rivers to fetch water? If rivers are flowing, the water table is high (Shallow) and you can easily sink a shallow borehole and enjoy clean water!!! Too much analysis is for the Auditors and consultants thanks bro,you were right.
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Rank: Member Joined: 1/13/2014 Posts: 386 Location: Denmark
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Wondergirl wrote:Realtreaty wrote: Now, Now Now @Wondergirl, WILL YOU MARRY ME? I predicted RIGHT and You got what I said after Mashujaa day, Get your 70cts Hao majamaa wachana nao, they gave you too much analysis that bore nothing at the end...@pesaNane,@instinct etc We say, why go to the flowing rivers to fetch water? If rivers are flowing, the water table is high (Shallow) and you can easily sink a shallow borehole and enjoy clean water!!! Too much analysis is for the Auditors and consultants thanks bro,you were right. Bro..?? . Worse than friendzone Seeing is believing
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Rank: New-farer Joined: 7/1/2015 Posts: 67
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BGL wrote:The end year results have been released.
Some key highlights:
-Turnover at 809mn which is more or less the same as 826mn reported last year.
-PBT at 580mn vs 597mn last year but a higher taxation charge of 186mn vs 106mn which has drasticaly reduced the PAT to 393mn compared to 439mn last year which translates to an EPS of 1.55 vs 1.93.
-Dividend remains the same at 70cents per share.
kindly, do you have the link to the ful year results, would like to carefully look at the results. I missed the Saturday D. nation “It’s no good, it’s no good!” says the buyer—
then goes off and boasts about the purchase-Proverbs 20:14
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Sam_Kibs wrote:BGL wrote:The end year results have been released.
Some key highlights:
-Turnover at 809mn which is more or less the same as 826mn reported last year.
-PBT at 580mn vs 597mn last year but a higher taxation charge of 186mn vs 106mn which has drasticaly reduced the PAT to 393mn compared to 439mn last year which translates to an EPS of 1.55 vs 1.93.
-Dividend remains the same at 70cents per share.
kindly, do you have the link to the ful year results, would like to carefully look at the results. I missed the Saturday D. nation Bonyeza HAPAPesa Nane plans to be shilingi when he grows up.
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Rank: New-farer Joined: 7/1/2015 Posts: 67
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Pesa Nane wrote:Sam_Kibs wrote:BGL wrote:The end year results have been released.
Some key highlights:
-Turnover at 809mn which is more or less the same as 826mn reported last year.
-PBT at 580mn vs 597mn last year but a higher taxation charge of 186mn vs 106mn which has drasticaly reduced the PAT to 393mn compared to 439mn last year which translates to an EPS of 1.55 vs 1.93.
-Dividend remains the same at 70cents per share.
kindly, do you have the link to the ful year results, would like to carefully look at the results. I missed the Saturday D. nation Bonyeza HAPA thanks “It’s no good, it’s no good!” says the buyer—
then goes off and boasts about the purchase-Proverbs 20:14
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Rank: Chief Joined: 1/3/2007 Posts: 18,098 Location: Nairobi
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grahamsdisciple wrote:VituVingiSana wrote:grahamsdisciple wrote:VituVingiSana wrote:grahamsdisciple wrote:As a shareholder, my biggest issue with the stock is that its over-capitalised. They need some debt to balance out the capital structure. An action management could take is to raise 1.5 billion through a corporate bond and buy half of its shareholding back. This will double EPS and ROE significantly. As a Ben Graham disciple, you should be ashamed of thinking this! There's nothing like 'over-capitalized' considering the current cost of borrowing. Why borrow at 25% when they can invest excess cash at 23%? If they have excess cash, they can distribute it as a dividend but asking Carbacid to borrow at 25% (or higher) is crazy. BTW, stock buybacks are not allowed in Kenya. Even if there was a stock buyback, it should only be done when the price is lower than the intrinsic value. First of all stock buy backs are about to be re-introduced Wake me up when the long-time-in-limbo Companies Bill becomes the Law. Until it is law it will not matter.(http://www.theeastafrican.co.ke/business/Will-share-buybacks-save-Kenyan-companies--stock-/-/2560/2691460/-/13b7n2l/-/index.html). Secondly, no body said anything about borrowing now, but with the amount of free cash flow Carbacid has, they can borrow at 12% in bad times and maybe lower in good times. The new 'normal' is higher. Banks have been issuing bonds at 12+% when things looked good post-Eurobond. GoK issued tax-free IFBs at 11.75%. If Carbacid was to borrow at 12% then the earnings yield should exceed 12% on a consistent basis. What the current earnings yield of Carbacid?
Third, you are the kind of people who read the summary of a book instead of reading the whole book. Ad hominem attack, eh? I'd invite you to read Security Analysis particularly part III when he focuses on equity analysis. There are plenty of times when he says that sometimes debt is good if its properly managed Yes, sometimes, if managed properly and yes, he even alludes to a company being over-capitalised. I maintain that the company is over-capitalised. They have ROE of around 22% and net margins of 50% if you take last 5-year average so how is borrowing at 14-15% not prudent??? Sigh. I have read Security Analysis. The ROE is irrelevant unless the price = ROE. What the Earnings Yield? Is it 22%? A firm's ROE is irrelevant when the PRICE is much higher than the NAV/share. The NAV = Equity = Shareholders' Funds. The net margin of 50% is bolstered by income from deposits/bonds/bills. Nevertheless, I want to hear you out on how you came to a NET MARGIN (also define what the NM is) of 50%. Furthermore, please use actual numbers so we compare apples to apples. History is history. Until we go back to long-term rates of 12-15% [you said 12% then you said 14-15%] we should look at 25% to be prudent. What Graham called the Margin of Error. What I said [& I am happy to refer to Security Analysis] is what Warren Buffett calls 'excess cash' which is yielding less by remaining with the firm than it would for the shareholders. If shareholders can get 22% (less 3.3% w/holding tax) from CBK then it makes little sense for Carbacid to buy 22% bonds, pay 6.6% tax on the interest then shareholders pay 5% on the dividend. Buying back shares using debt is Financial Engineering. It may may sense in a STABLE market but not when things are volatile. Carbacid shares trade at a substantial premium to NAV. I agree with a number of your points, if we were major shareholders we'd be slugging it out at the AGM. No, we would not because we would both prefer a payout of cash if price > intrinsic value or a buyback [if allowed] if the price < intrinsic value. Unless there are plans for expansion or acquisition, there's no need for excess cash just being invested in T-Bills. . For now, wazua will do. Sometimes a company can be over-capitalised and part of that is as you've said holding excess cash predominantly through their surplus reserve. You can leverage on your capital in good times when rates are low by borrowing at below market rates on a corporate bond and return cash to your shareholders either through a special dividend or buy-back that increases their total return on investment. This is all I'm suggesting. In Kenya, it's not very common for interest rates to be lower than ROI. What I have noticed is that many firms borrow for Working Capital. Those that borrow heavily for capital projects often see sub-par results. I agree with you vis-a-vis the USA [where Graham invested] where rates are very, very low.By NM I meant PAT/Gross. Nonetheless, on an operating basis they make roughly 47% margin. By way of back of hand calculations, they can increase EPS by 1.93 to 3.00 by doing this. Moreover, their EPS would be more sensitive to changes in gross sales than it is at the moment. ARM sells at a higher multiple than Bamburi because they have a more aggressive capital structure. (Not that I'm advocating for so much debt). Shareholders would benefit. ARM posted a loss primarily due to higher debt financing costs despite their growing Top Line and Operating Margins. That said, there are limited options for ARM for financing but for financing.As for new normal, there's nothing like that. People always say the world has changed but as they say, the more things change the more they stay the same. Rates will come down soon, I don't see us going into election period with such elevated rates albeit the macro imbalances are getting worse. I believe the collapse of Imperial Bank has led to CBK loosening Monetary Policy. That said, banks will not run out to lend coz they are strained as well. Bottomline: We need Fiscal Discipline. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 8/16/2011 Posts: 2,297
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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Wondergirl wrote:Realtreaty wrote: Now, Now Now @Wondergirl, WILL YOU MARRY ME? I predicted RIGHT and You got what I said after Mashujaa day, Get your 70cts Hao majamaa wachana nao, they gave you too much analysis that bore nothing at the end...@pesaNane,@instinct etc We say, why go to the flowing rivers to fetch water? If rivers are flowing, the water table is high (Shallow) and you can easily sink a shallow borehole and enjoy clean water!!! Too much analysis is for the Auditors and consultants thanks bro,you were right. Bookmarked until 18 Nov 2015 at Ex-div Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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Pesa Nane wrote:Wondergirl wrote:Realtreaty wrote: Now, Now Now @Wondergirl, WILL YOU MARRY ME? I predicted RIGHT and You got what I said after Mashujaa day, Get your 70cts Hao majamaa wachana nao, they gave you too much analysis that bore nothing at the end...@pesaNane,@instinct etc We say, why go to the flowing rivers to fetch water? If rivers are flowing, the water table is high (Shallow) and you can easily sink a shallow borehole and enjoy clean water!!! Too much analysis is for the Auditors and consultants thanks bro,you were right. Bookmarked until 18 Nov 2015 at Ex-div iam seeing some wanjiku speculative behaviour here "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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Pesa Nane wrote:Wondergirl wrote:Realtreaty wrote: Now, Now Now @Wondergirl, WILL YOU MARRY ME? I predicted RIGHT and You got what I said after Mashujaa day, Get your 70cts Hao majamaa wachana nao, they gave you too much analysis that bore nothing at the end...@pesaNane,@instinct etc We say, why go to the flowing rivers to fetch water? If rivers are flowing, the water table is high (Shallow) and you can easily sink a shallow borehole and enjoy clean water!!! Too much analysis is for the Auditors and consultants thanks bro,you were right. Bookmarked until 18 Nov 2015 at Ex-div how is your bookmark fairing? nothing to show it went ex -div  "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Elder Joined: 5/25/2012 Posts: 4,105 Location: 08c
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mlennyma wrote:Pesa Nane wrote:Wondergirl wrote:Realtreaty wrote: Now, Now Now @Wondergirl, WILL YOU MARRY ME? I predicted RIGHT and You got what I said after Mashujaa day, Get your 70cts Hao majamaa wachana nao, they gave you too much analysis that bore nothing at the end...@pesaNane,@instinct etc We say, why go to the flowing rivers to fetch water? If rivers are flowing, the water table is high (Shallow) and you can easily sink a shallow borehole and enjoy clean water!!! Too much analysis is for the Auditors and consultants thanks bro,you were right. Bookmarked until 18 Nov 2015 at Ex-div how is your bookmark fairing? nothing to show it went ex -div Below is the original query, has anything changed to warrant a celebration? And still the div. is not yet paid! Wondergirl wrote:Fellow Wazuans, My portfolio is really in the red- thanks to my investments in carbacid. Is there hope in it ever going up- Carbacid that is? Right now I have lost massively, i feel tempted to sell it and start afresh- your thoughts please.  Pesa Nane plans to be shilingi when he grows up.
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Rank: Elder Joined: 8/16/2011 Posts: 2,297
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Sometimes old trends are just mirages. If I was told to sketch a graph of how Carbacid will move in the year 2016 I would try to show my teacher that it has a chance, big chance to move from 15 currently to 44 kshs by October 2016 nesting for sometime between 27 and 35Ksh. But would we always depend on history to say that Raila will still lose next elections?
The Market especially in Africa will improve as more Europeans come in assuming that Terrorism is global and could as well hit them like happened in Paris. I will invest where I can pay less for labour cost with open market policy and investor friendly tax refunds. Europe will come back as we see Barclays is trying to make Africans happy through their "Go to" friendly policies where repsect and low interest on loan matters.We can see its also moving up and by Feb 2016 it may be at 21 ksh
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