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7 Pages«<567
Is it the right time to buy CENTUM?
Ericsson
#121 Posted : Saturday, November 28, 2020 12:18:34 AM
Rank: Elder


Joined: 12/4/2009
Posts: 9,274
Location: NAIROBI
Centum is trying to be clever in the way it’s managing its risks especially on real estate.

They had the real estate subsidiary take on a bond that works almost similar to securitized mortgages.

The bond they are issuing is a zero coupon bond that is backed by deposits from people who will buy the real estate units in projects they intend to invest in.
Zero coupon means they wont pay anything until bond maturity. At maturity the bondholders will be paid out of the deposits collected from the housing unit sales. In the event that there are insufficient funds to cover bond payments, investors will have to take up housing units.

This means that investors will carry the risk that the projects won’t be completed in time and the risk that the real estate market might perform poorly and Centum might be unable to meet housing units sales targets. So Centum only biggest risk there is reputation risk.

They are also saying they want to keep the holding company balance sheet ‘debt free’ by having subsidiaries take on debt against their own assets. Without guarantees from parent it means that subsidiaries can be closed down without necessarily hurting the parent company,assuming the group does not depend too much on the subsidiary (ies) closed down and that the parent does not try to shift capital around through inter-company debt/dividends.
At group level, debt taken by subsidiaries is still debt carried by the company
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
VituVingiSana
#122 Posted : Monday, November 30, 2020 7:10:06 AM
Rank: Chief


Joined: 1/3/2007
Posts: 17,375
Location: Nairobi
watesh wrote:
Ericsson wrote:
watesh wrote:
Angelica _ann wrote:
Ericsson wrote:
The biggest loss in the history of the company


Why the big loss, contributed by?


Last year there was a gain in disposal (Almasi)of about Ksh12bn recognized in the consolidated income statement and the sales by Almasi of ksh4 bn were still being consolidated into the statement. These were not present in the current financial year. There has also been an uptick of losses in some associates and joint ventures (Two Rivers, Sabis, Nas Servair),some of them were not in operation after covid measures kicked in. The rest of the items are largely similar apart from the decrease in interest cost.

Personally, I never look at the consolidated income statement since these are many companies in different industries and shareholding being consolidated together. I look at the company statement to see what comes back as dividend, interest income and gains in disposal of assets. This is what will determine whether I get a dividend or not.



To reverse that loss into a profit and pay dividend is a tall order.

The next asset to be disposed I see is Sidian bank


From what I understood (I may be wrong), there is a lot of liquidity coming in from the real estate business but it isn't flowing through the company's income statement. So when Centum Re pays the parent company Centum the money comes in as debt repayment of the shareholder loans rather than dividends (They didn't input a lot of share capital to the subsidiary but lent money). It is visible in the company's cash flow statement. The CEO indicated this is enough to sustain the dividend.

Sidian for now is still lagging behind as compared to its peer of similar size which is Credit Bank. It may not fetch a good market price.

Yes! We will be fine. Kelele ya chura tu. Laughing out loudly Laughing out loudly Laughing out loudly
I expect Centum to pay KES 1.20 for FY 2020-2021. Let the machura take note. smile
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
watesh
#123 Posted : Monday, November 30, 2020 11:33:37 AM
Rank: Member


Joined: 8/10/2014
Posts: 856
Location: Kenya
VituVingiSana wrote:
watesh wrote:
Ericsson wrote:
watesh wrote:
Angelica _ann wrote:
Ericsson wrote:
The biggest loss in the history of the company


Why the big loss, contributed by?


Last year there was a gain in disposal (Almasi)of about Ksh12bn recognized in the consolidated income statement and the sales by Almasi of ksh4 bn were still being consolidated into the statement. These were not present in the current financial year. There has also been an uptick of losses in some associates and joint ventures (Two Rivers, Sabis, Nas Servair),some of them were not in operation after covid measures kicked in. The rest of the items are largely similar apart from the decrease in interest cost.

Personally, I never look at the consolidated income statement since these are many companies in different industries and shareholding being consolidated together. I look at the company statement to see what comes back as dividend, interest income and gains in disposal of assets. This is what will determine whether I get a dividend or not.



To reverse that loss into a profit and pay dividend is a tall order.

The next asset to be disposed I see is Sidian bank


From what I understood (I may be wrong), there is a lot of liquidity coming in from the real estate business but it isn't flowing through the company's income statement. So when Centum Re pays the parent company Centum the money comes in as debt repayment of the shareholder loans rather than dividends (They didn't input a lot of share capital to the subsidiary but lent money). It is visible in the company's cash flow statement. The CEO indicated this is enough to sustain the dividend.

Sidian for now is still lagging behind as compared to its peer of similar size which is Credit Bank. It may not fetch a good market price.

Yes! We will be fine. Kelele ya chura tu. Laughing out loudly Laughing out loudly Laughing out loudly
I expect Centum to pay KES 1.20 for FY 2020-2021. Let the machura take note. smile


CEO said dividend is guaranteed since they have the cash despite being paid less dividend from their private equity portfolio. On the bright side, Isuzu has resumed paying dividends and they are finalizing a number of land sales. They only need Ksh800 million in cash to pay a dividend and as at half year they have 1.7 billion. Since the banks are not paying any dividend next year, I will gladly take a 7% yield from Centum.
Centum has a market Cap 11bn, yet it has 7 bn in pure cash and cash equivalents so the rest of the business less debt is valued at 4bn. It is still a buy for me below 20 despite the heavy exposure in real estate. Real estate will recover at some point in future.
littledove
#124 Posted : Wednesday, December 16, 2020 2:04:44 PM
Rank: Member


Joined: 7/1/2014
Posts: 807
Location: sky
who is the registrar of centum, somebody assist
There are only two emotions in the stock market, fear and hope. The problem is, you hope when you should fear and fear when you should hope
Sufficiently Philanga....thropic
#125 Posted : Wednesday, December 16, 2020 5:24:07 PM
Rank: Elder


Joined: 9/23/2010
Posts: 2,124
Location: Sundowner,Amboseli
littledove wrote:
who is the registrar of centum, somebody assist


Try Custody on the contacts below
6th Floor Bruce House
Standard Street
P.O. Box 8484-00100
Nairobi 2230518
2230488
0726971599
0737095124
Markets
littledove
#126 Posted : Thursday, December 17, 2020 2:49:10 PM
Rank: Member


Joined: 7/1/2014
Posts: 807
Location: sky
Sufficiently Philanga....thropic wrote:
littledove wrote:
who is the registrar of centum, somebody assist


Try Custody on the contacts below
6th Floor Bruce House
Standard Street
P.O. Box 8484-00100
Nairobi 2230518
2230488
0726971599
0737095124


thanks
There are only two emotions in the stock market, fear and hope. The problem is, you hope when you should fear and fear when you should hope
Ericsson
#127 Posted : Wednesday, December 23, 2020 5:53:34 PM
Rank: Elder


Joined: 12/4/2009
Posts: 9,274
Location: NAIROBI
heri wrote:


Share price has overtaken Nation media on it's way down.
There has been heavy trading on the counter for the past one week with daily trades of over a million shares
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
cyruskulei
#128 Posted : Thursday, December 24, 2020 10:45:53 AM
Rank: Member


Joined: 3/9/2010
Posts: 279
Location: kenya
Ericsson wrote:
heri wrote:


Share price has overtaken Nation media on it's way down.
There has been heavy trading on the counter for the past one week with daily trades of over a million shares



I hear there are some shareholders disposing close to 50m. Now you know
Work hard at your job and you can make a living. Work hard on yourself and you can make a fortune.

Ericsson
#129 Posted : Thursday, December 24, 2020 11:04:16 AM
Rank: Elder


Joined: 12/4/2009
Posts: 9,274
Location: NAIROBI
cyruskulei wrote:
Ericsson wrote:
heri wrote:


Share price has overtaken Nation media on it's way down.
There has been heavy trading on the counter for the past one week with daily trades of over a million shares



I hear there are some shareholders disposing close to 50m. Now you know

Like vvs
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
xtina
#130 Posted : Thursday, December 24, 2020 12:01:27 PM
Rank: Member


Joined: 6/26/2008
Posts: 340
Ericsson wrote:
cyruskulei wrote:
Ericsson wrote:
heri wrote:


Share price has overtaken Nation media on it's way down.
There has been heavy trading on the counter for the past one week with daily trades of over a million shares



I hear there are some shareholders disposing close to 50m. Now you know

Like vvs


Hehehe it's more like VVS is waiting for them to dispose....
VituVingiSana
#131 Posted : Thursday, December 24, 2020 1:17:14 PM
Rank: Chief


Joined: 1/3/2007
Posts: 17,375
Location: Nairobi
xtina wrote:
Ericsson wrote:
cyruskulei wrote:
Ericsson wrote:
heri wrote:


Share price has overtaken Nation media on it's way down.
There has been heavy trading on the counter for the past one week with daily trades of over a million shares



I hear there are some shareholders disposing close to 50m. Now you know

Like vvs


Hehehe it's more like VVS is waiting for them to dispose....

Nation or Centum?
I would buy the 50mn Centum if I had 800mn sitting around! Laughing out loudly Laughing out loudly Laughing out loudly
Centum is not for the short-termists. This requires shutting out the noise. Project 2024!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
McGill
#132 Posted : Thursday, December 24, 2020 2:14:24 PM
Rank: New-farer


Joined: 8/1/2019
Posts: 39
Seems like the time for the million+ in daily traded shares is over because today the market has traded 22k shares.
VituVingiSana
#133 Posted : Friday, December 25, 2020 12:10:26 AM
Rank: Chief


Joined: 1/3/2007
Posts: 17,375
Location: Nairobi
Copied and Pasted: Warren Buffett is not just a contrarian investor. He may be what you might call a “business-oriented value investor.” This means he does not purchase any and all stocks just because they are on sale.

As a business-value investor, it is imperative to know when it is time to leave and to be prepared for that perfect opportunity, to be greedy when others are fearful, yet to be greedy for investment with long-term durable economics and rational, honest management.

>>> My notes/analysis.

Centum is "disliked" by some for various reasons.
- Sale of Coca-Cola (NBL, Almasi) but "As a business-value investor, it is imperative to know when it is time to leave and to be prepared for that perfect opportunity"

- Real Estate but this isn't new real estate bought at high prices. Two Rivers, Vipingo, etc were bought at low prices compared to today's (distressed) values. I don't have exact numbers but I think Centum paid (back then) 10mn/acre for Two Rivers and less then 200k/acre for Vipingo. Of course, money had to expended to improve the "raw" land.

I am focused on disposals. They handed over Awali Phase 1. Phase 1 of 1255 Palm is supposed to be handed over in Jan/Feb 2021. So these "profits" will reflect in 2H 2020-2021 results.

Demand for 1255 seems good and they are starting Phase 2. I read that some of the UG properties will be handed over in this FY.

3bn raised to help continue development of raw land and complete ongoing projects instead of slowing down or ceasing construction which creates problems with perception or those who have contracts.

- Amu. The dynamics/market changed. One cannot win them all. Not even Warren Buffett. GoK wanted 5,000MW and now doesn't. 2bn provisioned and its no longer a drag. Banks provision bad loans. Insurance firms provision bad debtors or assets they get after an insurance settlement.

- Cash. CIL (HoldCo) is net cash but has some guarantees for subsidiaries. It can easily pay a dividend (1.20/year = 800mn). Also the interest savings from paying off the loan and bond will be substantial.

- PE Firms. These had a tough year with COVID from Sidian (bad debts), Longhorn (huge drop in sales when schools closed), ACE/Sabis (shutdown), etc. Schools will re-open in Jan and textbooks will be required. GoK may require all kids have their own books and this might be good for Longhorn.
Isuzu should see an uptick once the economy opens up and supply chains are restored. Weaker competitors will have problems.

Longhorn was forced to accelerate the development of online/mobile resources which will benefit them in the future. Dividends to the HoldCo could start in 2021 but more likely in 2022.

If you are in Centum, keep your eye on the prize.
Add more. That's what I am trying to do.
It needs 2-4 years (2024) to get past the elections. Of course, Chupilee could make everything go to hell!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
watesh
#134 Posted : Friday, December 25, 2020 8:10:14 PM
Rank: Member


Joined: 8/10/2014
Posts: 856
Location: Kenya
VituVingiSana wrote:
Copied and Pasted: Warren Buffett is not just a contrarian investor. He may be what you might call a “business-oriented value investor.” This means he does not purchase any and all stocks just because they are on sale.

As a business-value investor, it is imperative to know when it is time to leave and to be prepared for that perfect opportunity, to be greedy when others are fearful, yet to be greedy for investment with long-term durable economics and rational, honest management.

>>> My notes/analysis.

Centum is "disliked" by some for various reasons.
- Sale of Coca-Cola (NBL, Almasi) but "As a business-value investor, it is imperative to know when it is time to leave and to be prepared for that perfect opportunity"

- Real Estate but this isn't new real estate bought at high prices. Two Rivers, Vipingo, etc were bought at low prices compared to today's (distressed) values. I don't have exact numbers but I think Centum paid (back then) 10mn/acre for Two Rivers and less then 200k/acre for Vipingo. Of course, money had to expended to improve the "raw" land.

I am focused on disposals. They handed over Awali Phase 1. Phase 1 of 1255 Palm is supposed to be handed over in Jan/Feb 2021. So these "profits" will reflect in 2H 2020-2021 results.

Demand for 1255 seems good and they are starting Phase 2. I read that some of the UG properties will be handed over in this FY.

3bn raised to help continue development of raw land and complete ongoing projects instead of slowing down or ceasing construction which creates problems with perception or those who have contracts.

- Amu. The dynamics/market changed. One cannot win them all. Not even Warren Buffett. GoK wanted 5,000MW and now doesn't. 2bn provisioned and its no longer a drag. Banks provision bad loans. Insurance firms provision bad debtors or assets they get after an insurance settlement.

- Cash. CIL (HoldCo) is net cash but has some guarantees for subsidiaries. It can easily pay a dividend (1.20/year = 800mn). Also the interest savings from paying off the loan and bond will be substantial.

- PE Firms. These had a tough year with COVID from Sidian (bad debts), Longhorn (huge drop in sales when schools closed), ACE/Sabis (shutdown), etc. Schools will re-open in Jan and textbooks will be required. GoK may require all kids have their own books and this might be good for Longhorn.
Isuzu should see an uptick once the economy opens up and supply chains are restored. Weaker competitors will have problems.

Longhorn was forced to accelerate the development of online/mobile resources which will benefit them in the future. Dividends to the HoldCo could start in 2021 but more likely in 2022.

If you are in Centum, keep your eye on the prize.
Add more. That's what I am trying to do.
It needs 2-4 years (2024) to get past the elections. Of course, Chupilee could make everything go to hell!


Well said sir! They bought 10546 acres at Ksh2 billion and selling each acre for 1.85m-15m. Minimum 5x on that land only (ksh18bn). Market Cap for Centum 10.3 billion....serious mismatch! Patience will one day pay, I hope Laughing out loudly Laughing out loudly
Ericsson
#135 Posted : Friday, December 25, 2020 10:12:43 PM
Rank: Elder


Joined: 12/4/2009
Posts: 9,274
Location: NAIROBI
watesh wrote:
VituVingiSana wrote:
Copied and Pasted: Warren Buffett is not just a contrarian investor. He may be what you might call a “business-oriented value investor.” This means he does not purchase any and all stocks just because they are on sale.

As a business-value investor, it is imperative to know when it is time to leave and to be prepared for that perfect opportunity, to be greedy when others are fearful, yet to be greedy for investment with long-term durable economics and rational, honest management.

>>> My notes/analysis.

Centum is "disliked" by some for various reasons.
- Sale of Coca-Cola (NBL, Almasi) but "As a business-value investor, it is imperative to know when it is time to leave and to be prepared for that perfect opportunity"

- Real Estate but this isn't new real estate bought at high prices. Two Rivers, Vipingo, etc were bought at low prices compared to today's (distressed) values. I don't have exact numbers but I think Centum paid (back then) 10mn/acre for Two Rivers and less then 200k/acre for Vipingo. Of course, money had to expended to improve the "raw" land.

I am focused on disposals. They handed over Awali Phase 1. Phase 1 of 1255 Palm is supposed to be handed over in Jan/Feb 2021. So these "profits" will reflect in 2H 2020-2021 results.

Demand for 1255 seems good and they are starting Phase 2. I read that some of the UG properties will be handed over in this FY.

3bn raised to help continue development of raw land and complete ongoing projects instead of slowing down or ceasing construction which creates problems with perception or those who have contracts.

- Amu. The dynamics/market changed. One cannot win them all. Not even Warren Buffett. GoK wanted 5,000MW and now doesn't. 2bn provisioned and its no longer a drag. Banks provision bad loans. Insurance firms provision bad debtors or assets they get after an insurance settlement.

- Cash. CIL (HoldCo) is net cash but has some guarantees for subsidiaries. It can easily pay a dividend (1.20/year = 800mn). Also the interest savings from paying off the loan and bond will be substantial.

- PE Firms. These had a tough year with COVID from Sidian (bad debts), Longhorn (huge drop in sales when schools closed), ACE/Sabis (shutdown), etc. Schools will re-open in Jan and textbooks will be required. GoK may require all kids have their own books and this might be good for Longhorn.
Isuzu should see an uptick once the economy opens up and supply chains are restored. Weaker competitors will have problems.

Longhorn was forced to accelerate the development of online/mobile resources which will benefit them in the future. Dividends to the HoldCo could start in 2021 but more likely in 2022.

If you are in Centum, keep your eye on the prize.
Add more. That's what I am trying to do.
It needs 2-4 years (2024) to get past the elections. Of course, Chupilee could make everything go to hell!


Well said sir! They bought 10546 acres at Ksh2 billion and selling each acre for 1.85m-15m. Minimum 5x on that land only (ksh18bn). Market Cap for Centum 10.3 billion....serious mismatch! Patience will one day pay, I hope Laughing out loudly Laughing out loudly



Even Home Afrika started similarly,I hope they don't fall into the same trap
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
xtina
#136 Posted : Monday, December 28, 2020 11:08:03 AM
Rank: Member


Joined: 6/26/2008
Posts: 340
VituVingiSana wrote:
xtina wrote:
Ericsson wrote:
cyruskulei wrote:
Ericsson wrote:
heri wrote:


Share price has overtaken Nation media on it's way down.
There has been heavy trading on the counter for the past one week with daily trades of over a million shares



I hear there are some shareholders disposing close to 50m. Now you know

Like vvs


Hehehe it's more like VVS is waiting for them to dispose....

Nation or Centum?
I would buy the 50mn Centum if I had 800mn sitting around! Laughing out loudly Laughing out loudly Laughing out loudly
Centum is not for the short-termists. This requires shutting out the noise. Project 2024!


I meant Centum your sweetheart
VituVingiSana
#137 Posted : Monday, December 28, 2020 7:20:00 PM
Rank: Chief


Joined: 1/3/2007
Posts: 17,375
Location: Nairobi
xtina wrote:
VituVingiSana wrote:
xtina wrote:
Ericsson wrote:
cyruskulei wrote:
Ericsson wrote:
heri wrote:


Share price has overtaken Nation media on it's way down.
There has been heavy trading on the counter for the past one week with daily trades of over a million shares



I hear there are some shareholders disposing close to 50m. Now you know

Like vvs


Hehehe it's more like VVS is waiting for them to dispose....

Nation or Centum?
I would buy the 50mn Centum if I had 800mn sitting around! Laughing out loudly Laughing out loudly Laughing out loudly
Centum is not for the short-termists. This requires shutting out the noise. Project 2024!


I meant Centum your sweetheart
Looking for 800mn in spare change! Laughing out loudly
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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