KQ market valuation jumps after rights shares listing

Kenya Airways rose to the 14th most valuable company at the stock market with the listing of its 1.03 billion additional rights shares Thursday.

The new shares pushed the value of the national carrier to Sh19.75 billion from Sh6.2 billion on Wednesday, when only 461.6 million shares were outstanding.

The Kenya Airways (KQ) shares yesterday continued to trade below the rights issue price.

The counter closed at an average price of Sh13.20, with the number of shares traded jumping to 3.9 million making it the most active counter of the day compared to Wednesday’s close of Sh13.30, when only 50,700 shares were traded.

Eric Musau, a research analyst at Standard Investment Bank, which was the lead sponsoring broker for what went down as East Africa’s largest rights issue so far said that even though the share price has been trading below the rights offer price, he did not expect significant downward pressure going forward.

“Today probably was it… I think this was the pressure we were waiting for because of the profits that they released and the additional new shares so I do not see any more significant price pressure,” said Mr Musau.

He said KQ’s free float at the Nairobi Securities Exchange had actually dropped from 51 per cent prior to the rights issue to 33.9 per cent even though the absolute number of shares had increased, since most of the stock was now in the hands of institutional investors.

The airline was seeking to raise Sh20.67 billion through the sale of 1.47 billion shares but managed to get Sh14.48 billion by selling 1.03 billion shares.

“We met our target in a truly challenging environment,” said Evanson Mwaniki, chairman of Kenya Airways adding that the government and KLM increased their shareholding while the International Finance Corporation came in as a new institutional shareholder with a 9.56 per cent stake.

The total volume of shares traded at the Nairobi bourse rose to 21.71 million from 15.699 million on Wednesday while the value of all listed shares rose to Sh1.049 trillion.

The NSE 20 Share Index - which tracks price movement of shares at the exchange - dropped by 12.31 points to close at 3,682.24 points.
KQ announced a profit warning at the beginning of this year blaming it on the political unrest in Egypt, high fuel costs and the euro zone debt crisis.

Its net profit of Sh1.7 billion for the year ended March 31 this year was a 46.7 per cent drop as compared to Sh3.5 billion it posted in a similar period last year.