Ndindi Nyoro: Why I Increased My Shares At Kenya Power By 3 Times

Kiharu Member of Parliament, Ndindi Nyoro, has explained why he decided to triple his shares in the government-owned Kenya Power and Lighting Company (KPLC).

A debate ensued regarding his financial investments, and the latest move sees him becoming the largest individual shareholder.

Nyoro stated on Monday, September 12 that his decision was based on a list of regulatory filings up to June 30, 2022, which he termed as public information, part of which is usually included in the financial statements.

He added that some shareholders prefer to use their actual names while investing, others use "nominee accounts" to hide identities and that he is in the earlier category since he doesn't see the need to use the latter one.

Kenya Power engineers at work on a transformer. /CAPITAL GROUP

The majority of the top shareholders, he added, have chosen "nominee accounts". Some are individuals, others are pension funds among others.

"The investment has been accumulated over time. Several years back. We started off in stockbroking from 1st year in campus (KU). Thereafter running a firm in the sector. And later a Private Equity (PE) firm. This specific counter is probably for the last 3 or 4 years.

"GoK owns approx 50.1% of Kenya Power. All directors are therefore appointed by GoK. Our small stake is passive. We make zero decisions and therefore purely a silent, retail investor," he explained

He added that he decided to buy the shares like any other investment where one makes decisions based on fundamentals and gut feeling. Nyoro revealed that the stock, a penny stock, is cheap and trades below Ksh2.

"With gross full year revenues of Approx Ksh150 billion and assets of around Ksh325 billion, probably Kenya Power is undervalued. The market values the company at around 1 per cent of its assets base. The current market capitalisation is at around Ksh3 billion.

"Using the half-year Financials of upto December 2021, where Earning Per Share (EPS) was Ksh1.96, then the PE ratio is just about 0.5 or half a year. Meaning if the company was to pay all the earnings as Dividends, it would take one 0.5 years (half a year) to recover the investment," he added.

Nyoro however clarified that investment decisions are two-sided, expounding on the reasons why the market has undervalued Kenya Power including the high debt portfolio, huge unpaid bills, especially from the government and inefficiencies stemming from being "government-run".

"Most investors, us included are holding for long term with the hope that the sleeping giant can roar with a few streamlining measures.

"The period we are in is reminiscent of 2002. The Economy was battered and the Securities Exchange was bearish. After President Kibaki took over, a lot happened that hugely increased the returns of shareholders. I know of an investor in Kenya Airways (KQ) then whose investment of Ksh500,000 turned to Ksh70 million. Some local bank shareholders from our Villages became Millionaires out of their investments in the companies especially before listing and immediately after listing," he said.

Nyoro revealed that after campus, he bought CIC shares just before listing, and made a 500% profit within one year after the company was listed.

"Our investment strategy is guided by Wareen Buffers Mantra. "Be greedy when others are fearful and fearful when others are greedy". - 

"NSE was among the worst performing markets in the world last year - we see opportunities here. From our banks and Telcos expanding regionally. All these are opportunities," he said.

Nyoro advised that any Kenyan can buy shares and one only needs to open a CDS account from a stockbroking firm. Many banks also offer those services.

Traders at the Nairobi Securities Exchange. /FILE

What Is a CDS?

CDS stands for the Central Depository System. This is a computer system that facilitates the holding of securities in electronic accounts and facilitates faster and easier processing of transactions for NSE securities (shares and bonds) 

You need two recently taken passport size photographs, an original National ID or passport, in the case of a company you need the original certificate of incorporation, and if you are an organization registered in any other way you need the certificate of registration. You need to sign the form before your CDA. 

You will obtain from your CDA a CDS account number together with a duplicate copy of the account opening form for your records. You are advised to keep your CDS account number confidential.