Tuesday, June 20, 2006

Why NSE investors love Mumias Shares and will continue to

One of the welcome new in Mr. Kimunya's budget speach was the statement that the goverment will be offloading more Mumias shares to the market. Since he came to office, the minister has demonstrated an unsual determination to follow up his actions. remeber the banks rates issue. Because of this, his intentions for Mumias are likely to be carried through. Besides, he needs to raise Kshs. 18bn from the sale of public companies at the nse. This money has alreandy been budgeted for hence the necessity to raise it.

Why is this good news investors?
Already Mumias is a popular stock having returned to profitability in 2003 and showing strong growth since then. Investors were alerady expecting good returns and growth in capital due to among others:
Expansion of electricity generation to be sold to the national grid to 30mwt from 3gmgt. This should see revenues increase consideralby besides cushioning the earnings from risks associated with sugar price fluctuations.
Bonus Shares
Investors have indeed stuck with the company throgh the bad days that saw poor earnings in the late nineties and early twenties when the company posted losses. Its expected that the company may soon give a bonus issue to reward these investors. Since 2003, the company has accumulated reserves enough to underwrite such a bonus.
Exit of government
Should the goverment further dilute its stake as expected or exit altogether, thenthe investors will have even more confidence on the manageemnt of the sugar giant. This will see institutions coming to buy bulk stakes to fill in the vacuum left by goverment. this can only be good for investors as the share price is expected to appreciate.

14 Comments:

Anonymous Anonymous said...

In your opinion will the govt unload it's shares from Mumias this year or next year hence use it as a campaign tool since the elaections are next year

4:02 PM  
Anonymous KenyaUnlimited said...

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Thanks

9:14 PM  
Blogger Nairobi Paul said...

I know little about NSE. I must say good luck to you in your adventures in that arena.

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5:59 AM  
Blogger gathinga said...

anon: i think the govt will offload mumias next year. there is a lot of preparation and behind the scenes manouvres that go with such ana activity and theres no time for this here... till nest year

12:23 PM  
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5:12 AM  
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Hi,

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This bull run will continue for few more days. Overall market is in bearish mood as in medium term its just a small rally due to short covering
and result season.


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5:13 AM  
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