Inside Politics

Delay in naming Auditor General to bite KP, KenGen share counters

Friday, November 1st, 2019 06:37 |
Former Auditor General Edward Ouko. Photo/FILE

 By Rawlings Otini

Kenya Power (KP) and KenGen investors’ portfolios could shrink owing to a delayed earnings call by the two counters.

The parastatals are supposed to publish results this month but the  delay in replacing former Auditor General Edward Ouko, whose term ended in August, may delay the release of the results.

Analysts say stocks often fall when market reports come late. Potential investors may also shun the two counters.

The financial statements are normally outsourced to external auditors such as Deloitte, PWC and KPG but the auditor general has to approve them before they are released to the public.

Sluggish process

“The delay may extend beyond November given the way government drags its processes. The market hates a late report,” said Lisa Kimathi, an analyst at SIB specialising in non-banking stocks.

Counters tend to rally if investors know they will be getting dividends from them.

“Investors are particularly interested in KenGen given that they had finished paying off their bond and they wanted to see whether they will announce a new bond,” said Lisa.

KP and KenGen had earlier issued statements telling investors that there would be a delay in announcement of their audited accounts for the year.

KenGen has sought the approval of the Capital Markets Authority to publish the results on or before November 30.

Genghis Capital’s energy stocks analyst Gerald Muriuki said: “At the beginning, investors will be understanding, but if the results are delayed further, I think there will be a certain level of anxiety.”

Major banks

The two are some of the biggest counters on the Nairobi Securities Exchange (NSE) apart from major banks and Safaricom.

KenGen and KP have market capitalisation of about Sh38 billion and Sh5 billion respectively according to Reuters data stream.

KenGen was yesterday trading at Sh5.7 a share having touched a 52 week high of Sh7.5 a share according to Reuters while KP traded at Sh3.1 a share having touched a one year high of Sh5.4.

Due to dwindling economic fortunes, share trading at the NSE has been depressed.

KP issued a profit warning a month ago. 

The utility firm expects a 25 percent dip in full-year earnings having announced a Sh3.6 billion pretax profit nine months ago down from Sh4.7 billion during the same period the previous year.

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