ANOTHER DISAPPOINTING ALLOCATION

Another dismal allocation for Eveready applicants as investors are forced to settle for less than 20% of share application following the offer oversubscription. It is now becoming a disappointment to eager subscribers who have to brace the never-ending queues to put in their applications, only to have a larger part of their forwarded funds returned. The allocation gets smaller and smaller with each IPO and investors will soon get wary of channeling their funds this way.

It would be so much better if brokers (or is it the registrars or receiving bank or other transaction advisors, or all) would have a way of telling when the subscription hits 100% mark then close the doors on any more applications. That way, there’d be no chance of oversubscription and all subscribers would get the exact amount applied for. That’s just my suggestion. Others are welcome but the bottom line is, we need some intervention.

Its no wonder Mumias has not received as much a following as the other offers. But then there is just no telling with Kenyans. 2 days to go and everyone comes rushing in doing the last minute stunt.

On the secondary market front, prices have settled back to the yoyo dance, down a few shillings then back again. I sincerely expected a significant correction in the month of December (which would then give me a chance to take position on a number of counters at lower prices) but it just aint happening. Just as a price starts a gradual decline, demand sets in and pushes the price back up.

Kenya Power and Nation media, both having information on possible splits tied to them, were yesterday’s highest climber, up Kshs. 9.00 and 8.00 to close at Kshs. 293 and 218 respectively. Jubilee insurance whose share float is so low and a split would go a long way in increasing liquidity on this counter, was also up Kshs. 8.00 to close at Kshs 309. KCB and Car & General both edged Kshs. 5.00 higher to close at Kshs. 55 and 218 in that order while ICDC, currently trading cum split and dividend closed Kshs 3.00 higher at Kshs. 51.

Standard Chartered captured the largest dip, down Kshs. 8.00 to close at Kshs. 202 while BAT shed Kshs. 5.00 to close at Kshs. 189.

INITIAL AND SECONDARY OFFERS

Every company listed on the Stock Exchange had to go through an initial public offer which essentially is the offering of company shares to the public. At the point of incorporation of any company, the owners have to assign a nominal value to their company which states the number of shares and the value of the shares. These are the shares that are then offered to the public at IPO point.

Companies opt for public offers for various reasons including;

* Need for expansion capital
* Divestiture – as in the case of parastatals
* Exit mechanism for shareholders
* Boosting of company profile

SECONDARY OFFER

Companies that have already floated their shares on the Stock Exchange can still release an additional number of shares through a public floatation thus a secondary offer. Mumias sugar secondary offer is one such example where the government is releasing about 92mn of the total shares still held by the government to the public.

In this case, you don’t have to be holding shares in that company in order to qualify as is the case in a rights issue. You just need to make an application as would be done in the case of an Initial Public Offer.

The secondary offer for Mumias starts today, 4th December 2006 and runs for 2 weeks to 18th December 2006. The shares are being offered at Kshs. 49.50 and the minimum number of shares that an individual can purchase is 200, translating to Kshs. 9,900. Corporates have been allocated a higher minimum of 10,000 shares, translating to Kshs. 495,000.

Also currently under offer are Stanbic Bank Uganda shares on the Uganda securities Exchange. The bank, a subsidiary of Stanbic Africa Holdings Ltd, which in turn is owned by Standard Bank Group Ltd opened its doors to an initial public offer on 24th November 2006. The company is offering a total of 1,023,773,394 shares, 20% of its issued shares, to the public at a price of Kshs. 2.80 (Ushs 70) per share and a minimum of 1,000 shares translating to Kshs. 2,800. The offer period will be closing on 22nd December 2006.

Market Review

The market recorded a rather dismal day yesterday as the index shed 62.68 points to settle at 5490.20 while turnover declined to Kshs. 262 mn. Down from the previous day’s Kshs. 314 mn. A larger number of declines than advances were captured, the highest being Jubilee incurance which shed Kshs 20 to close at Kshs. 302. ICDC was down Kshs. 13 to close at Kshs. 352 while Bamburi dropped Kshs. 7.00 to close at shs. 193. On the gaining side, Kenya Power and Standard Chartered both closed Kshs. 3.00 higher at Kshs. 250 and 202 respectively while Equity, Kenya Commercial and Williamson Tea aced up Kshs. 2.00 to close at Kshs 135, 210 and 117 in that order.

EVEREADY DOWN, MUMIAS NEXT

As the dust settles on the Eveready IPO, anticipation for the forthcoming Mumias Sugar shares public offer has gripped the market. The government is releasing a further 18% to the public, translating to 91.8 mn. Shares. With the opening of the offer only a week away, and the price set at slightly below Kshs. S0 Investors are now going back to the drawing board to establish strategies to finance the acquisition of the shares, and preparing themselves to brace the long queues.

The market is on equally high gear as prices continue to soar evidenced by a larger number of and stronger gains as compared to the losing side. Jubilee holdings realized the highest gain, up Kshs. 32 to close at Kshs. 360. Nation Media broke the Kshs. 400 barrier to hit a high of Kshs 430, buoyed by a possible split romour while ICDC Investments Chalked up Kshs 10 to close at Kshs. 392. CMC, Standard Chartered and Kenya Oil all closed Kshs. 4 higher at Kshs 164, 214v and 110 respectively.

Barclays Bank, currently trading cum split and bonus, traded at between Kshs 630 and 580 and averaged Kshs. 591, 8 shillings below Friday’s closing price. Books on both the bonus and split close on Wednesday, 27th November 2006. Sasini Tea shed Kshs 4.00 to close at Kshs. 125 while Kakuzi edged down Kshs. 2.00 to close at Kshs. 40.

POWER CRAZE

The market closed 71.25 points higher riding on strong price leaps on a number of blue chip counters. Kenya Power stole the show as a surge in demand pushed the price to a Kshs. 262. Nation Media aced up Kshs. 16 to close Kshs. 3.00 shy of its Kshs. 258 12 month high. CMC Holdings hit a new 12 month high of Kshs 236, 12 shillings above Friday’s Kshs. 124 close. Sasini Tea, which has captured significant price appreciations with every trading day also hit a new 12 month high of Kshs. 87 while Bamburi edged Kshs 10 higher to hit the Kshs. 200 mark.

Losers were much fewer and lower, the highest being on Barclays Bank counter which shed Kshs 18 to close at Kshs 466 after hitting a new 12 month high of Kshs. 515. TPS shed 7 shillings to close at Kshs. 85 while Cables eased down a further Kshs. 5.50 to close at Kshs. 52.

SPLITS AND GAINS

The last two weeks have been relatively hectic as the bourse received news, releases and information left right and centre despite having hosted two holidays. ICDC unveiled plans for a 10 to 1 shares split barely 2 months after the dust on E.A. cables split settled. The company had just released their year end results reflecting an 86% appreciation in pre tax profits to Kshs. 696mn up from the previous years Kshs. 373 m. Performance was largely buoyed by the bull run on the bourse. The company's share price has since shot to a high of Kshs. 560.

E.A. Cables also released their results for the 9 months ended 30th September 2006 which reflected a 96% appreciation in profits to kshs. 344 mn. up from Kshs. 175 mn. realized over a similar period over the previous year. Directors attributed this growth to a boom in the construction industry and the company’s expansion to regional markets.

Carbacid Investments realized a Kshs. 126mn profit, 11.5% above the previous year’s Khs. 113 mn. This however could not be captured on the company’s share price as the company is still suspended on the bourse following the unresolved BOC accusation negotiations.

Mumias Sugar which currently has a concentration in the western Kenya sugar belt is set on further expansion through the establishment of a factory in Tana River district bound to increase the total sugar output by 210,000 tonnes.

Family Finance Building Society uncovered its plan to sell its shares to the public through a private placement. The directors plan to convert the building society to a fully fledged commercial bank by the end of the year, and have further plans of having the company publicly listed on therr bourse.

MARKET REVIEW

ICDC Investments, currently trading cs/cd, continued its downward spiral, down Kshs. 46 to close at Kshs. 453 while Barclays Bank shot up Kshs 38 to close at Kshs. 427. TPS EA was up Kshs. 5.00 to close at Kshs. 89.50 while Sasini Tea has maintained a gradual appreciation to hit a new 12 month high of Kshs. 67.50, Kshs. 4.00 above Monday’s Kshs. 64.50 close. Nation Media and Equity Bank were also both up Kshs. 4.00 to close at Kshs. 234 and 130 respectively.

Other counters on the loosing side included Kenya Power which shed Kshs. 9.00 to close at Kshs 241, Pan Africa Insurance which was down Kshs. 5 to close at Kshs. 81 and E.A. Cables which slid down Kshs. 3.50 to close at Kshs. 62.

MARKET WRAP – 13/10/06

A generally losing week on the bourse evidenced by the large number of declines. 47% of the active counters adjusted back while 29% appreciated. Kenya Oil captured the largest slide, down Kshs. 13 to close the week at Kshs. 107. Kenya Power shed Kshs. 12 to close at Kshs 259 while ICDC and NMG both closed the week Kshs. 9.00 below the previous week’s close at Kshs. 335 and 230 respectively.

Appreciating counters all yoyoed between price ranges already captured with no new high being hit over the week. Bamburi Cement was up Kshs. 13 to clos eat Kshs. 190 after having shed to a low of Kshs. 177 in the previous week. TPS bounced back to Kshs. 94over the week while a usually quiet Olympia holdings was up Kshs. 7.75 to close the week at Kshs 23.75. EABL also edged higher to close the week at Kshs. 159.

On the news front, Kenya Re continued gearing itself for the much awaited IPO. Financial bids for the Lead Broker to be commissioned with the task of selling shares on behalf of the company are to be opened on Monday. A consortium led by Dyer and Blair Investment Bank had earlier clinched the transaction advisor deal. The bourse is bound to experience further price dips on the run-up to and during the offer period as investors prepare to take positions.

With the year 2008 expiry of the Comesa importation lifeline drawing closer, the government has set aside over Kshs. 1.1 bn. To restructure the sugar industry. The lifeline has shielded the local industry from competition by limiting sugar imports to 200,000 tonnes, and its expiry will expose the local industry to fatal competition considering the high production costs on local producers relative to other competing countries. With the governments Vision 2030: Transforming National Development strategy targeted at an annual growth rate of 10% for the next 25 years, the government can not afford to expose any of the sectors and need to put in every possible effort to ensure sustainable growth and strength in unavoidable competiton.