Kiharu Member of Parliament, Ndindi Nyoro has explained how and why tripled his shares to 27m from 9m, at the Kenya Power and Lighting Company (KPLC).
Taking to his Facebook page, the legislator noted his decision was based on fundamentals of investments as well as financial instincts.
He stated that the entity’s stock is cheap and is currently trading at below Ksh2. The legislator also pointed out that the power utility’s valuation shows a paltry one percent of its assets base- which underrates its true potential.
Nyoro noted that the valuation of Kenya Power is based on several factors including the high debt Portfolio, huge unpaid bills, especially from GoK and inefficiencies stemming from being “government-run”.
“With gross full-year revenues of approximately Ksh150 billion, assets of around Ksh325 billion, probably Kenya Power is undervalued. The market values the company at around 1 percent of its assets base. The current market capitalisation being at around Ksh3 billion.”
The lawmaker underscored the value and potential that Kenya Power could reach with an effective administration in power.
“Using the half-year Financials of up to Dec 2021, where Earning Per Share (EPS) was Ksh 1.96, then the Price Earnings (PE) ratio is just about 0.5 or half a year. This means if the company was to pay all the earnings as Dividends, it would take one 0.5 years to recover the investment.”
Nyoro affirmed that some shareholders opted to use their actual names while the majority used nominee accounts to mask their identities. He explained that the investment was not a one-off purchase but was bought over time.
“The investment has been accumulated over time. Several years back. We started off in stockbroking in our first year in campus (KU). Thereafter running a firm in the sector. And later a Private Equity (PE) firm. ”
He affirmed that the government still maintains the largest stake in the power utility firm.
” The government owns approximately 50.1 percent of Kenya Power. All directors are therefore appointed by the State. Our small stake is passive. We make zero decisions and therefore purely a silent, retail investor.”
He added that his investment strategy is guided by a similar situation in 2002 when the economy was crawling but suddenly soared after the Mwai Kibaki administration took over.
“I know of an investor in a local airliner then whose investment of Ksh500k turned to Ksh70 Million. Some bank shareholders from our villages became Millionaires out of their investments in the companies especially before listing and immediately after listing.”
“Our investment strategy is guided by Warren Buffers Mantra. “Be greedy when others are fearful and fearful when others are greedy.”
He added that Kenyans can also join in the venture and purchase shares by opening a Central Depository System (CDS) account.
“Any Kenyan can buy shares. You just need to open a CDS account from a stockbroking firm. Many banks also offer those services.”
