Friday, May 02, 2008

New media stocks at the NSE

Until Safaricom gets listed later this year, take a glance at Access Kenya and Scangroup - two recently listed, new media companies at the NSE. They both say they are market leaders (none of their competitors are listed), both set out to increase market share organically and by acquisitions, and their shares cost about 30 shillings ($0.48) each, three times their IPO prices.

This month, Access Kenya are gearing up for their first AGM since their 2007 listing, while Scangroup will be having their second; and while Scangroup (SG) will have a vanilla AGM (no special business), Access Kenya (AK) have a lot more going on as they will seek approval from their shareholders to;

- double their authorized share capital from 250 million to 500 million shillings (500m shares) [giving them capacity to acquire companies, split shares, or raise capital in future]
- allow the board of directors to acquire companies up to 200 million shillings (~$3 million) without having to call for an expensive extraordinary general meeting of shareholders
- allocate more shares for the company’s ESOP (employee share ownership plan)

How else do the two companies stack up?

vision:
SG vision - to be the leading marketing services company in Africa by 2010
AK vision - be the premier provider of high quality internet and other technology services to corporate and high end residential customers

shareholders : SG 44,193 ; AK 29,434 shareholders

2007 performance
SG: turnover of 4.7 billion, profit of 353 million, cash generated 165 million, assets of 900 million. EPS 1.48 and a dividend of 0.90.
AK: turnover of 882 million, profit of 171m (dividend of 0.30), cash generated of 133m, assets of 748 million (had 600m in cash, much of it unutilized from the IPO). They also have separate consolidated accounts that include the financials of Openview business systems which was acquired after the IPO.

Employee Retention key for new media companies:
SG: ESOP approval of 15m of the company's 160m ordinary shares. Staff costs were 561m including 7m to directors and key managers.
AK: ESOP that had 7.25m shares of 203m ordinary shares has been exhausted and another 2.75 to be added this year. Staff costs of 131m including 53m to key managers and directors,

Other
SG: Has a lot of subsidiaries, from acquiring customers and competitors whcih is part of their strategy. 64% of their revenue was from Kenya with the rest from Uganda and Tanzania. Their CEO was on CNBC Africa TV last month saying their focus the year would be expansions to Zambia, Ghana, Mozambique, and Angola – probably by securing contracts with mobile phone companies in those countries.

AK: was charged a management fee of 52 million shillings by subsidiary companies (shades of Sameer group companies?).
Also Access Kenya’s annual report is heavy on the marketing side with a special offer for shareholders to apply for Access Home - the fastest guaranteed residential broadband(Nairobi and Mombasa) for Kshs. 6,000 + VAT per month - a 20% discount for shareholders. One time costs include 8,500 installation and equipment of 25,000 (and VAT, though I thought all computers equipment was VAT free). An added extra for shareholders is that the package which (including 1st month) costs a total of Kshs. 45,820 (~$725) can be financed with an Equity Bank 1-year loan (but monthly repayments of 4,391 work the loan out to cost about 25%) – the offer runs till end of May , and installation to be done in June & July.

3 comments:

Anthony Green said...
This comment has been removed by a blog administrator.
Josiah said...

I still find AK's costs for residential internet rather high.

But it's a stock worth having.

fimbo said...

Isnt their strategies to use stock listing to corner the market by buying off rivals or driving them out of business?

I don't get the impression that there is any afrocentric innovation in AK products (i could be wrong)

AK needed to move much more aggressively on providing local infrastructure for content - by building data warehouses, payment systems, security, user authentication, cheap domain names etc

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