PRECISION AIR IPO SHARES OVER VALUED AT TZS 475/-

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

Don't Miss this Again! TBL's Public Offer Coming Soon!

Safari larger beer one of TBL's finest product!

Following East African Breweries acquisition of majority 51% stake in Serengeti Breweries Ltd(SBL) from a group of local investors now they are required by competition regulators(FCC) to offload their holding in Tanzania Breweries by way of public Offer(PO). This will result in to listing the 20% holding in TBL on the Dar es salaam Stock Market(DSE) soon. The performance of the company has been sound and gives a great prospect for the future. The market capitalization of TBL is TZS536.77 Bln and 20% translates to TZS 107.35 Bln which should be bought by investors.
Listing of additional 20% on DSE will see more activity on the TBL's counter which may result to higher prices soon after trading starts.Liquidity and Demand are good factors in determining the market price.
Currently market price per share stands at TZS 1820 and EPS 297 for 2010 therefore PE ratio of 6.13 which is a good point of holding the company for the long run.
Finally I'm advising boozers and teetotalers to hold tight their wallets for the coming investment opportunity.

Below find TBL's Ten year performance Review!

By Emmanuel Akyoo
Epak Capital Ltd

Never Miss IPO Ever Again! U JUST LOST Tsh. 25M in Profits!

Above is Tanga Cement industry which has rewarded more than 700% to her IPO investors!



Since 1998 Eleven Tanzanian companies have been listed on the Dar es salaam stock Exchange(DSE) and other five Kenyan companies cross listed on the market hence bringing the number of trading companies to Sixteen. Most of Tanzanian listed companies have performed so well in one decade and still they are showing a great prospect in the future. With companies like Tanga Cement Company(SIMBA) have give return of 580% on capital gain and more than 100% in dividend payouts grossing to 700%.This is real wealth creation! Had you invested Tsh. 1,000,000 today you would be having an asset worth TZS 6.8 Million! and more than TZS 1 million in dividends payments. Other companies which have enormously performed well include TCC,Twiga and TBL. I used to belive that these great returns are entitled to reach guys but now i realize that I could've tapped these opportunities too! Anyway i know its Just the begining and i'm happy to have discovered this priceless apparent truth!

In my simple research I've discovered that Entrance at IPO level is much safer and according to DSE Data out of eleven listed companies only two companies have done not so well since being listed(TOL and NICOL) others have rewarded returns in hundreds percent!

Would you have invested TZS 1 million in every IPO in the past Ten years you will have garnered a lot of wealth! Actually the money will have Tripled to more than TZS 35 Million being capital gain & dividends paid to investors! I'm sure it will not have costed you much collecting a million for a great investment opportunity! Where is the money you raised for your colorful wedding? birthday? or graduation party? where is the money you squandered now! You could have built a great asset base with the little money you had or just by cutting a bit of your good time budget.I don't want to advice you to forgo your great moments but an element of caution should haunt you always so as to balance your present and future.

Nairobi stock exchange has more than Fifty(50) Listed companies. If Tanzania market(DSE) will pull herself to list that number then we have just started investing and we have Known the truth at the right hour.

There are some good friends, who don't like to think outside their box. They keep on criticizing stocks holding over real estate and other ventures. Anyway, swahili people have a say that, 'ukimuamsha aliyelala utalala wewe' i dont wanna wake you up buddy, just keep on. Can you buy real estate for TZS 1 million? Can you start a hussle free business for TZS 1 million? its definitely impossible unless you have that magical formula! But you can buy a piece a well run business with Products,Systems and Teams working around the clock for you to get your value. Thats why i keep on insisting on a broader approach rather than myopic one. My idiosyncrasy sometimes get over but i hope you will bear with me.

For investment fools, IPO stands for Initial Public Offer and it means the moment which companies invite the public to subscribe for ordinary shares before listing on the stock market. IPO comes when companies require to raise new capital or when investors or the government wants to reduce/offload her/his shareholding by cashing in on IPO. Most of the IPOs in Tanzania have happened because the government wanted to cut her investment in companies. However, fewer have been for raising additional capital.

Just see below inset for further information about the performance of Listed companies on the stock Market.

Lastly, i've come to realize that there are rich and supper rich guys in Tanzania and East Africa who have just gotten there genuinely and no one should ever dare to question their Fortune. These people have gotten rich just by knowing the truth earlier than you and me.Fortunately, we have discovered the secret and soon we will share the cake. Always remember that temperate value investors will champion over a long run.

by Emmanuel Akyoo
Epak Capital Limited.

NICOL RISK BEING DE-LISTED! & FUNNY VALUATION OF NICOL

National Investment Company Limited(NICOL) risk being de-listed on the Dar bourse due to failure of filing financial statements with the regulating bodies CMSA and DSE. This has lead to a month trade suspension on the stock market(DSE) and an ultimatum to file the reports for financial year 2009 and 2010 within the same month.

BELOW IS AN EXTRACT FROM NICOL'S WEBSITE:

On the 26th of February 2011 NICOL Shareholders met and made certain important decisions regarding the future of their company. CMSA did not agree with the Shareholders’ decisions, and instead CMSA issued an order for the removal of the NICOL Board and its CEO. NICOL has therefore filed a lawsuit against CMSA and has taken the Shareholders’ claims to their rights to the High Court. A decision from the Court is expected on 10th of May 2011, and as soon as that decision has been rendered, NICOL will be communicating with its Shareholders as appropriate.

Any Shareholder unable to attend the meeting of 26th February should feel free to contact the NICOL offices for copies of all documents and presentations given at that meeting.



I've got some questions to NICOL's Management!

1.Why since inception of the company a couple of years ago they have not paid dividend?
2.Why do they get into conflict with regulatory bodies? I it the only listed company?
3.After investing a couple of billions in the defunct companies, why should they tell us that they want to sell holding in NMB to diversify? how can we belive them? they have invested severally and failed!

NICOL has failed to fulfill their promises to Tanzanian investors and now they are confused!I do remember their countrywide trips to raise capital which costed millions of shareholders money, and millions of listing expenses! Why is the board of Director not complying with regulatory bodies? There must be something fishy behind these unacceptable behavior!

FUNNY MARKET VALUATION OF NICOL!

Following the above list of shareholders, NICOL holds 6.6% of NMB Bank and current market value of the bank is Tsh415bln therefore equivalent holding of NICOL in NMB is valued at Tsh27.39bln. Amazingly, NICOL market valuation is standing at TSh 16.95bln.Had NICOL being holding only NMB it would be currently be Undervalued by the staggering Tsh 10bln.However, Nicol is holding other investments therefore the undervaluation may be even bigger! Why are the shareholders denied this value? Management of NICOL should be responsible for this gross undervaluation of the company! Would the management of NICOL be reliable one could buy NMB Shares via NICOL and hence activate the dormant NICOL's share exchange desk!

Finally, I commend and extend my sincere thanks to the regulators for standing firm to protect shareholders of NICOL! And also would like to urge CMSA and DSE not to de-list the poor managed company rather shareholders should look for non-politicians to lead and manage the company. De-listing would be a death blow to poor shareholders in upcountry who barely follow up NICOL's operations!

DAR ES SALAAM COMMUNITY BANK(DCB) ANNUAL GENERAL MEETING
DCB Annual General meeting(AGM) held on 29/May/2011. Shareholders received management reports,elected new directors and discussed several matters pertaining to the development of the bank. DCB's shares have soared recently from market price of Tsh280/share in February 2011 to Tsh460/share in the start of June 2011 an equivalent of 64% capital gain.Also, AGM meeting approved dividend payment of Tsh48 per share to shareholders.(Picture by Emmanuel Akyoo)

INFLATION AN INVISIBLE ENEMY!

It came into my attention that we should discuss a bit about an invisible element of our economy called inflation. Most of us we are currently experiencing painful bites of inflation due to the fact that our incomes are fixed(pegged to a certain rate per month) and not floating ones. One year ago one could buy 10Kg of sugar for TZS 15,000 at TZS 1500/Kg but with current prices(TZS 2000/Kg) one can only buy 7.5Kg for same TZS 15,000; inflation has taken away 2.5kgs! Same example can be discussed in terms of petroleum and diesel and you may be supprised how low your purchasing power has fallen. So this is what I want to discus with you as a potential investor. We better start bargaining from commodities point of view if we are to survive well in economies with high inflation. One year ago, would i have bargained to be paid 1000 liters of Petroleum per month my salary automatically would have moved from Tzs 1.5million to 2.2Million using current BP pump prices, I would just urge my employer to read the nearest pump price before paying me. Unfortunately, systems are set to profit from our utter ignorance,in hyper-inflated economies money does not make sense at all!

Inflation can simply be defined as the rate of increase in prices of products and services in the economy.Example of inflation is current rise in bus fares,food prices, rent, fuel prices,real estate, etc as we have seen in the example above.

INFLATION from investor's point of view is a lethal weapon! This is because a serious investor has two obligations, One to protect his capital and second to maintain fair return on his/her investment. With inflated economy one may lose value of his/her investment because to protect capital he/she should maintain return on investment which is hire than the rate of inflation. With current(April 2011) 8.5% inflation rate, already our savings at bank attracting 6% interest we are losing 2.5% to inflation, what a mess! Instead of saving money into your bank account why cant you buy some gold,silver,copper,maize,beans,Petroleum or diesel? Therefore conserving the value of your money you should be working around the clock to beat inflation. Also, to gain fair return on your investment is another obligation which may not be so easy if you slack around! What's a fair return? This depends on the investors perspective but averagely it may be gaining an edge on the average market return. In advance markets they use DOW,S&P 500 or NASDAQ indexes to measure their performance.

How do my investors hedge themselves against the wrath of inflation? As we have seen earlier that in economies with high rate of inflation money does not make sense then whatever excess cash should be directed to the factors that respond positively with inflation. Factors that moves with inflation are STOCKS,COMMODITIES and REAL ESTATE.

STOCKS: If you have some excess money/cash that can not afford buying a piece of real estate or which you will need in a couple of years ahead you can stash it in stocks especially in the companies that mostly deal with commodities like beer, cigaret, tea, etc because they can easily fight inflation by adjusting their product prices. Among the advantages of this way is that any excess amount whether a lot or little can be hedged well.

COMMODITIES: If you are a business person you may look for ways of stocking commodities that are on the inflation roller coaster! Also, for the big guys you may start hedging by buying gold,silver,copper and other exchange traded minerals. for example if tanzania
Central bank stocked Gold instead of USD dollars, Tanzania would be profiteering from the current high gold prices.

REAL ESTATE: Real estate has being performing well in hyperinflation most of the times. However, lack of city plans,ownership titles and lack of pricing model/mechanism pose a great risk to investors. One can difficultly determine the market price of a piece of real estate, this poses a risk of paying more than the market price. However for experts real estate poses a great opportunity as well.

Well, these ways are not conclusive but are among the most applied mechanisms in mitigating risks posed by inflation.

I would like to advice you to choose one of the tricks discussed above to protect your purchasing power and enriching your self. Just remember that, Cash in Hyperinflation economy is not a good commodity or a good storage of value!

Emmanuel Akyoo,
Managing Director,
Epak Capital Ltd.

MARGIN OF SAFETY

Dear colleagues,it has been a while since last time we shared some success stories of Aliko Dangote of Nigeria. Today i have an idea on margin of safety! Among famous quotes of Warren Buffet that you may have come across is " Rule No. One Do Not Lose, Rule No. Two Remember Rule No. 1". I think Warren Buffet is talking of surety of your steps. Ok, we may seem to be Idolizing him but at least he has made it and the quote makes sense!

How can we avoid losing on our investments? We can by understanding the 'margin of safety' concept! And whats this margin of safety concept? Margin of safety concept is like a white hand stick for a blind person. Before stepping forward the stick searches around and confirms to the holder the safety of the next step!

As an investor you should not wake up in the morning and say this stock will go up today or soon because I dreamed last night! You must have a solid reason or theory underpinning your decision.

Example: In roulette, a wheel with numbers 00,0 and 1 through 36 has 38 slots. The casino offers a maximum payout of 35 to 1. What if you bet sh.1000 on every number? Since only one slot can be the one into which the ball drops, you would win sh.35,000 on that slot, but lose sh 1000 on each of the other 37 slots, for the net loss of sh 2000. That sh 2000 difference(or a 5.26% spread on your total sh 38,000 bet) is the casino's "house advantage", ensuring that, on average, roulette players will always lose more than they win.Just as it is in the roulette player's interest to bet as seldom as possible, it is in the casino's interest to keep the roulette wheel spinning. Likewise the intelligent investor should seek to maximize the number of holdings that offer "a better chance for profit than for loss". For most investors, diversification is the simplest and cheapest way to widen your margin of safety!

As we may have learned from the roulette example, we don't have to expose our portfolios unnecessarily! Instead of being the the betting guy, choose being the casino owner! Ensure that your chances of winning are highest on every move you make.

Investor Versus Speculator! Investor is the casino owner and the speculator is the betting guy. Once over time the betting guy may win, the chances of winning are 2.63% if he bets on one slot out of 38 slots! I he bets on all slots he wins but he loses 5.26% of his investment, Contrary to the Casino Owner who is sure of 5.26% gain on every wheel spin!

Intrinsic value, privileged information,diversification and knowlege may widen your margin of safety! For example when CRDB bank was trading at Sh.110 per share it was undervalued by 45% at the current market price of sh200 per share.This undervaluation provided sufficient margin of safety to the value investors, besides at sh110 it was 99% of book value which meant buying actual asset of the company and getting goodwill for free! If you read my article titled "DCB a great opportunity to buy" you will understand what it means when i talk about margin of safety.
Security of Capital and fair return on investment are basically the focus of Value investors! To balance this two goals, margin of safety concept plays a central role.

Article By

Emmanuel P. Akyoo,
Managing Director,
Epak Capital Ltd,
P.O.Box 10579, DSM
Cell: 0712 459 035, 0784 146 756

Aliko Dangote on the Forbes Billionaires List

Aliko Dangote on the Forbes Billionaires List

I have been impressed and inspired by the astounding performance of an African(Nigerian) Aliko Dangote, the chairman and founder of Dangote group.His entrepreneurial skills have made him land on the 51st position on the forbe's list of richest men and women on contemporary world. Aliko Dangote is estimated to be worth Usd 13.8Bln, through his conglomerate Dangote Group! It was from humble start in trading of sugar,flour and Cement that led to this mega success.
I believe that white,black, indians and whatsoever race are equally capable of achieving world goals and cracking long time imposed stereotype on race differences.
Get inspired and make your moves forward!


Emmanuel Akyoo,
Managing Director,
Epak Capital limited
cell:0784-146-756

U JUST MISSED TZS 5 MILLION OUT OF CRDB SHARES!

Working hard perse was the way of the past whereas to-date working hard, information and shrewdness are key to our way towards successful life and financial freedom.Just between January and today for a medium investor/speculator you would have gained 45% on you investment in CRDB Shares or 11% on DCB shares.Would you have invested TZS 11 million in Dec 2010/Jan2011, today your shares would be valued at TZS 16 million. Despite the astonishing performance of the shares still foreign investors appetite has been pushing the price of the shares upward!
Below I have analyzed current prices versus year 2010 performance of major and listed banks in Dar es Salaam stock exchange. Current prices seem to value CRDB Bank 44% above its book value and NMB 41% above its book value and amazingly DCB is valued 32% below its book value.Strategically, one could balance his or her portfolio between CRDB and DCB or a mix between NMB & DCB!DCB bank is well known for its consistent dividend payout culture!
P/E for DCB is 3 years, while for CRDB is 7 years, NMB is 6 years! P/E ratio indicates shareholders believe in the bank and appetite for the bank shares.Higher P/E ratio implies long payback period and lower returns on your investment in most cases.
CRDB Staff Seem to be more productive than other banks with Average earning capacity of TZS 35Mln, followed by DCB 24Mln, NMB 21Mln and lastly NBC staff average of 2mln. However in 2010 NBC was affected by the group synchronization initiative which saw huge amounts written off the books as impairments and bad debts.
You can learn more things concerning markets and stock business through perusing this site and through direct communication with the publishers of this blog.


SUMMARY CRDB PLC, NMB, DCB , NBC
Market Cap.(In Bill.) 348.24 : 325 : 10.04 : N/A
Net Assets(Bill.) 242.28 : 230.51 : 14.87 : 153.08
Market value/Book value 144% : 141% : 68% : N/A
Market price 160 : 650 : 310 : N/A
Earnings per Share 22.86 : 107.96 : 99.21 : 2,289.00
Expected Dividend 10 : 40 : : 49.00
Earnings yield 14% : 17% : 32% : N/A
Dividend yield 6% : 6% : 16% : N/A
P/E ratio 7 : 6 : 3 : N/A
Productivity
Av. Earnings/branch(Mil.) 815 : 388 : 803 : 43
Av. Earnings/employee(Mil.) 35 : 21 : 24 : 2

Epak Capital Ltd, is looking forward to mobilize resources from potential investors who will pay a minimum fee of five percent on their investment and 20% of the profits generated! We are looking forward to offering several packages to our clients. Education on investment in stocks can be offered personally or through group arrangements! My eye these time was on bank in future we shall have a look on other caterogies available in the market!

Emmanuel Akyoo,
Managing Director,
Epak Capital Ltd.
0712-459035, 0784-146756

Dollar Cost Averaging a Nice Investment Strategy

Dear Friends and my lovely clients, its ripe time for us to learn about different investing strategies.Most of us have been focusing on quantum leap instead of incremental growth. This has failed many people in life. Many people come to realize that they would have achieved more in life if they invested at least 10%-20% of their monthly incomes in sound investment vehicles.
With help of consultants or shrewd investors someone can amass a lot of wealth through great investment strategies. I get embarrassed to see some people who had great opportunities in life fail to deliver. It will be a great sorrow to our generation if 20 Years to come we will not have crunched the numbers.One of the greatest opportunity we have if we live that longer is time.
Dollar cost averaging is a type of investment strategy whereby an investor sets aside a fixed amount of money that is channeled into investment in capital markets(stock markets)either monthly, quarterly or semi annually for a long period of time. This strategy is more convenient for persons who receives fixed incomes after every certain period of time. For example, an employee receiving a net salary of TZS 500,000/= can spare TZS 50,000/- for investment every month. If this process repeats for a period of 20 years and the portfolio returns average at 20% per year this person will have created a net worth of TZS 155,483,000.00. Making this much wealth without even cracking much of your head! currently fifty thousand can be consume by two persons in an average dinner outing! spare one great dinner every month and make TZS 155 Million in twenty years.
Advantages of DOLLAR COST AVERAGING: First,when the stock price goes down you get more number of shares and when it goes up you get less number of shares therefore your price adjusts to give an average cost over time. Secondly, Installments are reasonable and affordable. Thirdly,building a great habit of saving and investing every month. Forth, Learning about market behaviors over time therefore building a great investment knowledge.
I would advise investment dummies and risk averse interested investors to adopt this strategy. As time goes on i will unveil to you different investment strategies that will fast track our journey to financial freedom.
Imagine when time come and you have no financial constrain whatsoever!
Lets keep on investing daily and always! Investing is a process which starts when you have nothing to the time when you are endowed with abundance.


Thank you for reading this Article! I would love to receive your feedback via message or comment.

Emmanuel Akyoo,
Managing Director,
Epak Capital Ltd, Box 110222 DSM.
+255712459035 or +255784146756