mwanahisa wrote:Wiztec wrote:@mwanahisa, Ahsante sana kwa ujumbe hiyo. i suppose they are still waiting for some authorization i guess from IRA, i can still spend money as i Waite for new info...
@Wiztec, You are welcome. BTW, you should not take this as a buy recommendation. In my view the fundamentals do not actually warrant paying a premium over other the pricing for other banks/insurance companies. I have not done precise calculations on its valuation but its EPS at the H1 point was only Kshs 2.48 with a forward PE of about 17 while growth (even for the bank only) was lagging its peers i.e. DTK, NIC, I&M and even CBA.
You can however make money speculating on the counter. The fact that they have a big pocket shareholder in the name of Standard Bank Group keeps it from going too low from its "normal" average. Also, the shareholding is fairly concentrated. So I buy it on a day like today (80 looks reasonable and I have seen a sale at 78). I can then wait for an opportune day to sell @88-90.
The CFC Insuarance holdings will be listed at an introductory price of Ksh 6.157 which is P/E of about 8 (based on half yr 2010 results). This looks abit ambitious since this division is the 'black sheep' of the CFC Stanbic Holdings (especially for last year where this division made a 700M loss).
The mother company seems to value its insuarance arm at Ksh 3.2B (projected market capitalisation after listing 515,270,364 shares at Ksh 6.157) despite an asset base of 23B.
The listing prospectus will shade more light on this insuarance wing of CFC but i would value its shares at not more than the P/E of Kenya Re (P/E of about 5).(This is a new entity coming from a loss making year which could be representing the toxic assets of CFC Stanbic.When the other banks are merging their operations to reduce overheads eg KCB with S&L,CFC is demerging to 'unlock value').
At a P/E of 5, this translates to a price of about Ksh 3.5-4.00.
With all 515M shares being given as a special dividend to CFC Stanbic Holdings shareholders at a ratio of 1:1, I anticipate a significant dumping of the shares that will push the insuarance shares towards the Ksh 4.50 to 5.50 range.
CFC Insuarance will make for an interesting speculative share due to its penny nature (and i suspect high liquidity) especially before the market can truely value it.
Happy hunting.
x handle: @stocksmaster79