Financial Performance review
Sasini Limited , East Africa’s largest listed tea and coffee producer, reported a 16% rise in revenues to KES 2.99 Billion from KES 2.66 Billion.
Profits after tax fell by 60% from KES 980.9 to KES 391.2 Million. Most of the drop was due to a fall in revaluation gains related to biological assets. The operating profits advanced by 9.91% to KES 387.5 Million from KES 352.5 Million reported in 2010.
Investment analysis/Recommedation
The company’s share price closed (on February 13, 2012) at KES 11.10; 26% below its 52 week high.
The share is inexpensive, trading at a PE of 6.47. The price to book value is only 0.37. Even after excluding the accumulated gains on revaluation of biological assets (un- distributable reserves) the price to book value is still a cheap 1.54.
The dividends paid in the year KES 1 (50 cents interim and 50 cents final) translate to a yield of 9.01%.
Recommendation:
The share is a long term buy. The recent steep fall in price following the shares going ex-dividend presents an opportunity to take a position cheaply. Demand for tea, coffee and for agricultural commodities in general is expected to rise with the expected growth in income and population in the region and in Sasini’s export markets.
There are major risks such as exchange rate fluctuations and change in climatic conditions. A steep rise in the shilling or a major drought will deal a significant blow to Sasini’s performance.
Link: Sasini Financial Data
Sasini Limited , East Africa’s largest listed tea and coffee producer, reported a 16% rise in revenues to KES 2.99 Billion from KES 2.66 Billion.
Profits after tax fell by 60% from KES 980.9 to KES 391.2 Million. Most of the drop was due to a fall in revaluation gains related to biological assets. The operating profits advanced by 9.91% to KES 387.5 Million from KES 352.5 Million reported in 2010.
Operating environment and outlook
Sasini’s performance was helped by a favorable exchange rate (the Kenya Shilling weakened and stayed weak throughout the year). Drought conditions caused a drop in production of both coffee and tea in the first three months of 2011.The weather conditions from the last quarter of 2011 and early 2012 have been favourable. The volume of tea sold at the Mombasa auction in January 2012 was 28 Million Kilos compared to 18 Million Kilos in January 2011. The exchange rate is expected to remain above KES 80 to the dollar for the rest of 2012 which will be good for Sasini. 2012 prospects for the company look good.
Investment analysis/Recommedation
The company’s share price closed (on February 13, 2012) at KES 11.10; 26% below its 52 week high.
The share is inexpensive, trading at a PE of 6.47. The price to book value is only 0.37. Even after excluding the accumulated gains on revaluation of biological assets (un- distributable reserves) the price to book value is still a cheap 1.54.
The dividends paid in the year KES 1 (50 cents interim and 50 cents final) translate to a yield of 9.01%.
Recommendation:
The share is a long term buy. The recent steep fall in price following the shares going ex-dividend presents an opportunity to take a position cheaply. Demand for tea, coffee and for agricultural commodities in general is expected to rise with the expected growth in income and population in the region and in Sasini’s export markets.
There are major risks such as exchange rate fluctuations and change in climatic conditions. A steep rise in the shilling or a major drought will deal a significant blow to Sasini’s performance.
Link: Sasini Financial Data
