Thursday, September 30, 2010

British American Tobacco Uganda (BATU) Share Price Doubles

BATU's share price moved 112 percentage points from 330/= to 700/= today 30th September 2010 on the Uganda Stock Market after more than a year below 350/=.
Though with a paltry 500 shares exchanging ownership worth 350,000/=, this is very significant considering a pending half year dividend of 70/= per share and accumulation of suffocated value through disposal and productivity Leaf production improvements coupled with the exchange movements.

In the last two years BATU Ltd has been edging more towards the agriculture side of their business and at the helm of this is Mr Fronseca the Brazilian Managing Director, who has gone ahead to dispose off all reminders of the Manufacturing days (BATU closed its manufacturing business Unit due to the an unfavorable manufacturing environment characterized by power shortage and smuggling) and concentrated on the Leaf Business Productivity, with the weakening of the dollar in the over the last two years from 1$=1,800Ugx to 1$=2250Ugx BATU as an export company has reaped also notably proceeds from disposal of manufacturing property.
The Share price was held between the ‘I do not want to Sell now at this price’ and the ‘I want to buy now at this price’.

Near Future
At 700/= and with an upcoming 10% half year price dividend of 70/= this could provide incentive to realize gain on shares bought at 300/= a couple of years from the NSSF. (NSSF sold off her BATU holdings at 300/= under very suspicious circumstances; no prizes for guessing who the Buyer was as well who the MD at the time was! Read NSSF Bond/TBs Dealings)

Brief historic facts:
BATU’s IPO price was 1000/= in the year 2000 it hit a high of 1,700/= around 2008 and a low of 290/= in 2009

Friday, September 3, 2010


If NIC pays out 5/= per share as per her declarations, Investors stand to lose 4.5% (total figure:94,230,000/=) of their dividend earning for the financial year end 2009, which would otherwise cover half of the required dividend withholding tax.

As the NIC Vs Makerere dons scandal rages on, on issues pertaining valuations of the DAP fund, here is a related 'valuation' issue
from a shareholder's standpoint.
I hope the Capital Markets Authority, will come in to Value incase!

What is the Dividend 'Valuation' Genesis?
NIC in her end of year 2009 published financial statement (New Vision, June 25th 2010, page 20) declare a Dividend Per Share of 5.23/=. It is prudent to note that this publication is a requirement by the Insurance Industry Regulator; therefore unsophisticated Shareholders' were not able to fully comprehend them.

Later on, in August, the NIC released Investor financial statements, a requirement of the Stock Exchange, in the print media declaring 5/= Dividend Per Share as well as announcing the AGM Date of 10th September 2010.

Is the NIC being logically Honest?

Dividends per share are the earning entitlement paid on each share as a portion of company profits, therefore:

Dividend Per share (DPS) = Total Dividend payable DIVIDED by the number or Shares,

NIC DPS = 2,113,630,000/403,880,000
Therefore, NIC DPS = 5.23/=

Important Notes:

- Witholding tax on Dividend is; 10% for Individual Nationals and Residents and 15% for Companies and Non-Residents.

- NIC has a Share Capital of 2,019,400,000/= which is 403,880,000 shares of 5/= each. There were no extra share issues and this is business exclusive to the AGM.

- Explanations of rounding off could arise (from 5.23 to 5...), however the precedent at the Stock Market is to declare also those points as evidenced from the other listed company dividend declarations.

INVESTOR BE AWARE. Learn from the lessons of Makerere.