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Kenya Airways...why ignore..
ProverB
#1 Posted : Tuesday, June 08, 2010 12:45:43 PM
Rank: Veteran


Joined: 3/12/2010
Posts: 1,187
Location: Eastlander

For the year ended 31st March 2010, Kenya Airways Ltd recorded Total revenue of Kshs 70,743,000,000.00, and the company’s
Operating Profit amounted to Kshs 1,839,000,000.00

Operating margin = (Operating Profit /Revenues) x 100.
= (1,839,000,000.00 / 70,743,000,000.00) x 100 = 2.6%

Out of every Kshs1.00 Kenya Airways collected as revenue in the year, it retained only Kshs 0.03, as operating profit after paying for the operational expenses incurred in getting that Kshs 1.00
It is out of that 3Cents that Kenya Airways is to pay out financial costs as well as taxes and the balance retained as profits for share holders.

Should we choose to focus only on the company’s core business operations, Kenya Airways operational performance for the just ended period is rather dismal compared to the previous periodsSad
 For 2010, Kenya Airways had an operating margin of 2.6%
 For 2009, the operating margin was 5.6%
 For 2008, the operating margin was 11.6%
 For 2007, the operating margin was 13.1%
Declining operating margins over time should be a warning sign to any investor. d'oh!

On average, out of every kshs1 in revenues that Kenya Airways collects annually, it has overtime paid more and more in operational costs. It could imply that the company is having difficulty in bringing in revenues considering that it registered slightly declined revenues compared to the previous year, or that the management is facing increasing challenges in improving the company’s Operational Efficiency.
The 54.5% decline in Operating Profits might explain why despite reporting 148% improvement in earnings, the share registered a 8% decline in trading price as soon as results were published.

A lot is learnt by observing Operating profits trend over time, but it should not be the only factor one considers when planning whether or not the Kenya Airways shares are a viable investment.smile

Ceteris paribus.Pray
..Let your light so shine before men, that they may see your good works, and glorify your Father which is in heaven...Matt5:16
- 1769 Oxford King James Bible 'Authorized Version
sheep
#2 Posted : Tuesday, June 08, 2010 1:06:23 PM
Rank: Veteran


Joined: 7/24/2008
Posts: 781
wait till @VVS sees this...utakipata! He is married to the stock!
The utimate goal of investing is to buy low sell high;if we re-write this core equation in psychology terms it becomes buy fear sell greed.
StatMeister
#3 Posted : Tuesday, June 08, 2010 1:17:21 PM
Rank: Veteran


Joined: 5/23/2010
Posts: 868
Location: La Islas Galápagos
ProverB, very interesting math - miles ahead in ahead in fundamentals
A bad day fishing is better than a good day at work
StatMeister
#4 Posted : Tuesday, June 08, 2010 1:18:16 PM
Rank: Veteran


Joined: 5/23/2010
Posts: 868
Location: La Islas Galápagos
ProverB, very interesting math - miles ahead in ahead in fundamentals
A bad day fishing is better than a good day at work
sheep
#5 Posted : Tuesday, June 08, 2010 1:36:16 PM
Rank: Veteran


Joined: 7/24/2008
Posts: 781
statMeister=ProverB...tooting his own horn!
The utimate goal of investing is to buy low sell high;if we re-write this core equation in psychology terms it becomes buy fear sell greed.
qw25041985
#6 Posted : Tuesday, June 08, 2010 1:51:38 PM
Rank: User


Joined: 5/9/2010
Posts: 1,418
Location: Nai
Thanx God not all of us are maths genius. Coz if every kenya airways shareholder knew that operatin margin is massively down like this then the share wld be tradin at ksh 1.00. I side with @proverb. And i willnt get suprised if this share breaks its downward support level of ksh 50.00. Trappin those who bought at ksh 54.00 in losses. This is the time most of u will regret the herd mentallity at wazua.
Your future depends on your dreams so go to sleep !
VituVingiSana
#7 Posted : Wednesday, June 09, 2010 5:01:11 AM
Rank: Chief


Joined: 1/3/2007
Posts: 13,071
Location: Nairobi
The poor margins at KQ are depressing... and the lower margins from year to year as well... BUT there are not apples to apples...

KQ has changed the way it accounted for hedges (according to some IAS rule)...

However you slice & dice it... KQ needs to put up some serious 1Q 2010-11 passenger numbers as well as awesome 1H 2010-11 financial figures!

When is the AGM?
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
qw25041985
#8 Posted : Wednesday, June 09, 2010 5:29:20 AM
Rank: User


Joined: 5/9/2010
Posts: 1,418
Location: Nai
I dont see why people are panicin about kQ's weak margins.If they posted weak magrins in very robust economies then there might be a reason to be concernd.But that isnot clearly the case.a couple of few years back the economy wasnt in the greatest shape so KQ shld be pardond.Atleast it didnt post record losses like BA.

Let all those who are panic sellin do just that.Six months down the line they'll be rushin back for the shares.I love gulliable inevstors.They make me rich with the slightest effort.
Your future depends on your dreams so go to sleep !
Big will
#9 Posted : Wednesday, June 09, 2010 5:54:08 AM
Rank: New-farer


Joined: 5/18/2010
Posts: 1
Well said
Govmusili
#10 Posted : Wednesday, June 09, 2010 6:13:38 AM
Rank: New-farer


Joined: 1/13/2010
Posts: 85
Location: Nairobi
@proverb interesting way to look at it. im still optimistic it can turn around thursday/friday but god help us if it drops past 50 today, itll be a freefall
Gatheuzi
#11 Posted : Wednesday, June 09, 2010 6:55:50 AM
Rank: Member


Joined: 8/16/2009
Posts: 893
The 2.2bn drop in operating profit is partly due to the implementation of the collective bargaining agreement which lead to increased staff costs by 2.1bn.

Cabin factor dropped to 67% from 71% as a result of more aircrafts being available.

As part of their fleet modernization plan, the new aircraft is suppossed to be more fuel efficient (it is worth noting that the bulk of the costs are fuel related). - too bad Boeing is taking too long to deliver.
"The end of the Republic has never looked better......" Barack Obama, 44th President of the United States
the deal
#12 Posted : Wednesday, June 09, 2010 7:35:57 AM
Rank: Elder


Joined: 9/25/2009
Posts: 4,259
Location: Windhoek/Nairobbery
VituVingiSana wrote:
The poor margins at KQ are depressing... and the lower margins from year to year as well... BUT there are not apples to apples...

KQ has changed the way it accounted for hedges (according to some IAS rule)...

However you slice & dice it... KQ needs to put up some serious 1Q 2010-11 passenger numbers as well as awesome 1H 2010-11 financial figures!

When is the AGM?

25-06-2010
Govmusili
#13 Posted : Wednesday, June 09, 2010 8:25:08 AM
Rank: New-farer


Joined: 1/13/2010
Posts: 85
Location: Nairobi
phew!!! it seems theres a god after all today it seems to be holding its ground, lets wait 4 it
cnn
#14 Posted : Wednesday, June 09, 2010 8:26:08 AM
Rank: Veteran


Joined: 6/17/2009
Posts: 1,536
@the deal ,i dont think the AGM is that soon,more like 24/09/2010
ProverB
#15 Posted : Wednesday, June 09, 2010 8:28:05 AM
Rank: Veteran


Joined: 3/12/2010
Posts: 1,187
Location: Eastlander
qw25041985 wrote:
I dont see why people are panicin about kQ's weak margins.If they posted weak magrins in very robust economies then there might be a reason to be concernd.But that isnot clearly the case.a couple of few years back the economy wasnt in the greatest shape so KQ shld be pardond.Atleast it didnt post record losses like BA.

.

Please note..i have not said do NOT buy KQ..just pointed out their core business fortunes are fading.
The core business is what defines the investment prospect.. KQ's core business has not been good over time..their making money on fuel derivatives though profitable... is not part of their core business..they may as well just quit air travel and go full on commodity trading if this fuel thingy seems so awesome!! Laughing out loudly
sliding margins imply management is out of their depth..no matter how good plans are they do not seem to have capacity to stem dropping margins!
But for share traders..bulk of decision to buy on sell is founded on investor behavior and ignorance..thus why "6 months down the line they will be rushing in"
As solid investment option.. Kq has alot to explain
..Let your light so shine before men, that they may see your good works, and glorify your Father which is in heaven...Matt5:16
- 1769 Oxford King James Bible 'Authorized Version
the deal
#16 Posted : Wednesday, June 09, 2010 9:18:38 AM
Rank: Elder


Joined: 9/25/2009
Posts: 4,259
Location: Windhoek/Nairobbery
ProverB wrote:
qw25041985 wrote:
I dont see why people are panicin about kQ's weak margins.If they posted weak magrins in very robust economies then there might be a reason to be concernd.But that isnot clearly the case.a couple of few years back the economy wasnt in the greatest shape so KQ shld be pardond.Atleast it didnt post record losses like BA.

.

Please note..i have not said do NOT buy KQ..just pointed out their core business fortunes are fading.
The core business is what defines the investment prospect.. KQ's core business has not been good over time..their making money on fuel derivatives though profitable... is not part of their core business..they may as well just quit air travel and go full on commodity trading if this fuel thingy seems so awesome!! Laughing out loudly
sliding margins imply management is out of their depth..no matter how good plans are they do not seem to have capacity to stem dropping margins!
But for share traders..bulk of decision to buy on sell is founded on investor behavior and ignorance..thus why "6 months down the line they will be rushing in"
As solid investment option.. Kq has alot to explain

its one of the reasons we sell...declining margins...if 1Q passenger nos dissapoint due to the ash...we will stare @ 20 bob..
VituVingiSana
#17 Posted : Thursday, June 10, 2010 5:33:08 AM
Rank: Chief


Joined: 1/3/2007
Posts: 13,071
Location: Nairobi
Nope to 20/-... coz at that price I will pull all stops out to buy!
KQ has 6 billion+ in cash (14/- in cash)... So the rest is worth only 6/-?
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
qw25041985
#18 Posted : Thursday, June 10, 2010 6:35:17 AM
Rank: User


Joined: 5/9/2010
Posts: 1,418
Location: Nai
Ati 20/= ? If it reachd these levels . I wld sell all my portfolio just to get into KQ. Its that serious. Lol. And guys , those who understand candlesticks in technical analysis is a reversal on KQ soon. Can i say 2day, it'll be up ?
Your future depends on your dreams so go to sleep !
VituVingiSana
#19 Posted : Thursday, June 10, 2010 7:49:13 AM
Rank: Chief


Joined: 1/3/2007
Posts: 13,071
Location: Nairobi
No more 20/-... already trading steady to up today with plenty of buyers ready at 50/-...
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Chaka
#20 Posted : Thursday, June 10, 2010 9:04:03 AM
Rank: Veteran


Joined: 2/16/2007
Posts: 1,734
@proverb
Can you start another thread and indicate NSE companies whose operating margins have been going up year on year?
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