I read a statement recently, “Best investing articles are the ones that have nothing to do with investment”. I see this all the time, with investing newsletters venturing into philosophy.
The problem I find with this statement is that the person in context has defined himself / herself narrowly as an investor. I have not. As a man shall not live by bread alone but by every word of ….., no investor shall live with stocks or financial analysis alone. It is too drab to focus on single domain without variety.
So, I do not like philosophizing on equities but come to the point. The point being making money with multi-fold growing ideas. Hence the title of this post.
While I may be wrong in duration it may take for NSE Kenya to be 50 times, perhaps it could be a mere 20 bagger over next 12 years. Every serious long term investor should go through annual reports of NSE Kenya and find out if he/she holds the company that is better than this? I unequivocally found the answer to be No, in every situation, not excluding BRK. That also depends if you consider 18-20% to be sufficient year in and year out.
Someone needing USD there is some semblance of currency depreciation to keep them away from Kenya or Nigeria, but for INR earners, that does not seem to be the case.
In the previous three years, the company grew top line by 25-35%. 2015 was a hard year for Kenya with tourist cancellations, scaremongering by CNN on security, horticultural crop failure, so, in the six months ended 30th of June 2015, the company grew topline by just 15% and bottomline by 40% (that is a bad year). A great company constantly throws up two choices “Very good and excellent, and a bad company constantly offers you other two choices gruesome and horrible”, speaketh Buffett. This result sets the company at valuation of ~10.5 times earnings (as opposed to 12 that I said in previous post today http://multibaggersindia.blogspot.com/2015/08/why-india-is-still-expensive-sensex.html). Again, for my the benefit of my institutional brethren, its TTM not FY18 earnings.
Link to half yearly results: 30-June-2015
NSE Kenya is a lot similar to CRISIL, but only better in every respect, in terms of cash flows and market share. Dividend payout needs improvement. A lot of investors from India are familiar with CRISIL one of the biggest credit rating agencies of India, and if you see its 10 year chart, it has gone up 200 times. Crisil is growing at humble 15% but PE ratio is 65.
CRISIL price went up 200 times for those who dared to invest with fog on the windscreen. Very High quality companies will not be available at 10 times earnings, nay even 30 times earnings. That has been the case in my experience with India, Pakistan and Bangladesh; I would wager that will be case with Kenya and Nigeria as well.
I will be least surprised if the dividend per share after 10-15 years on NSE Kenya is far bigger than 2015 current market price of the script. If you find one such company, and you do not pounce on it, you are making a big mistake.
Lastly, NSE Kenya has no reason to be listed, merely a Capital Market Authority mandate to share wealth. That is exactly what you need to be looking, companies that are listed due to a freak accident and are not in need of capital.
Its time for you to get rich, think 10 years forward!
SOURCE: Long Term Equities – Read entire story here.