After a long time now since the last IPO of CRDB bank the Precision Air has broken the silence. There has been several cross listing at DSE for the kenyan public companies like the recent one of Nation Media Group. But for the Tanzanian companies, Precision Air IPO is the silence breaker deal after a long IPO Scant period. Literally, PW shares will be nice to hold because whenever u see it in the blue sky you will be reminded of your investment. However, this cannot be investors interest!
Following the announced IPO Price of TZS 475/- per share I am very convinced that PW shares have been highly overvalued. Currently PW has a fleet of 11 planes, while KQ has a fleet of 33 planes, Kenya airways has more than 55 international and local destinations whereas PW has much less footprints.Also airline industry is characterized with lower dividends payout,higher PE and very vulnerable to fuel prices and Foreign exchange risks.
Simply I would not value PW shares higher than KQ shares. Currently KQ shares are prices at KSh.25/- an equivalent of Tsh.425/- at Nairobi Stock Exchange which I consider a better market than DSE which has less activity on KQ counter at TZS 1020/- and Market Capitalization of TZS470.85 bln. Honestly, PW shares should have been valued at TZS 250/- per share.
Finally, I would advice my customers to take a very precautionary approach towards the coming Precision Air IPO. If you really want to buy them for passion don't test the depth of a dam with two of your feet. Use part of your financial asset and spare the rest for TBL, ABG and many more to come.
Regards,
Emmanuel Akyoo
