Rarely are you expected to defend Safcom on SK,but this will be a historic lesson worth taking a position on in stock valuation,as result's are now expected tommorow. Depending on what you use i.e:-
1. If you use P/E,EPS,Par Value/nominal value to guide you or
2. Company Vision,Management,Previous earnings,Economic outlook and product mix etc,or
3. Rumors,heresay etc
If 1,ignore me,if 2 do this Kienyeji Prediction. Without the benefit of research info and balance sheets:-
1. Look at your phonebook and see the changes thus far,ask the kiosk near you about what scratch cards sell's well,is he selling many or has income reduced(guide you on efect on lower call rate's) and if there are significant change's in calling patterns(mine,more safcom call's,though vuka/orange did get breif growth then tanked with jibambie,i carry telkom,and use all three).
2. Knowing that there are over 4million registered Mpesa user's some paying 1bob to view their balance per day,and other (million's) paying at least 25/= up to 450/= for a transfer of cash per day,count the new Mpesa shops and see
3. Do you trust the management? is thier expected venture into fixed lines and fibreoptics a probable income boost,and can they continue to grow
4. How much will capital expenditure hit them,has their capital expenditure been reducing?
5. Does Kenya's economic outlook support growth. IMF,World bank are now distinguishing developed and emerging markets when it comes to impact of global crises
6. Estimate growth on Market valuation(current stock price(Kes4.05) * 40billion stocks=KES162bill)divide by expected after tax profit (20bill/162bill *100=12.35%)and compare with other stocks (10% profit growth against market capitalisation is huge,expect more)
Conclusion
I think 6.50 is an understatement if you average out at more(given most locals purchased fleeing foreignor's stock),if you average out at 5bob or less it's OK,remember of the 10billion share sold at IPO less than 2bill have been traded (mostly local's buying out foreigner's),and alot are holding. That's my own take,please give your's without being 'incedeniary'. Factor the fact that i hold thousand's of stock in safcom and temper you judgement accordingly,but you won't make cash on stock's without research,you will continue to buy at 300 and sell at 100.
Learn something new everyday
Learn Something New Every Day!