RESEARCH ALERT-KenolKobil rated "buy" by Kestrel
* Posted 86 percent jump in H1 pretax profit
* Weak shilling expected to affect short-term performance
NAIROBI, Sept 21 (Reuters) - Kestrel Capital has maintained a 'buy' rating for Kenyan fuel marketer KenolKobil on the back of its strong performance and growth expected from its acquisition strategy across Africa.
The oil company posted an 86 percent jump in first-half pretax profit to 3.22 billion shillings ($33.5 million) helped by regional growth, despite fuel price regulations in east Africa's biggest economy.
Kestrel upgraded its fair value estimate to 17.50 shillings,
in a research note issued on Wednesday.
It said KenolKobil's focus on niche operations including exports, liquefied petroleum gas, fuel oil as well as non-fuel business would pay off, mainly due to the relatively low operating risk associated with the niche business.
A weakening local currency, which has lost 20 percent this year, was expected to dampen short-term performance.
"While the company is 50 percent hedged on its dollar liabilities, we hold the view that there is high likelihood of significant forex losses in 2011 as a result of the depreciation of the shilling," said Kestrel. ($1 = 96.250 Kenyan shillings) (Reporting by Beatrice Gachenge; Editing by James Macharia and Dan Lalor)
- Tweet this
- Share this
- Digg this