KQ shares drop to rights issue price ahead of annual results
Posted Tuesday, June 12 2012 at 18:39
Kenya Airways shares have dropped to the rights issue price signalling investor anxiety ahead of the airline’s annual results expected to be announced on Thursday.
The counter moved 155,000 shares on Tuesday at an average price of Sh14, touching a high Sh14.20 and a low of Sh13.95.
This is the first time that the national carrier’s stock has traded at the rights issue price since Friday’s announcement of a 30 per cent under-subscription of its Sh20.6 billion cash call.
Kenya Airways (KQ) has issued a profit warning for the financial year ended March, indicating that the airline’s earnings will be at least 25 per cent lower than the last year’s.
“Investors are not too keen about it (the KQ share) due to the profit warning. Furthermore, the rights issue was successful only due to commitment of the Government and KLM,” said a research analyst at Genghis Capital.
KQ’s was trading at Sh14.25 when results of the rights issue were announced on June 8. Analysts said the start of trading of the extra rights shares on June 21 will also trigger further price movement on the counter.
KQ board chairman Evanson Mwaniki said in the profit warning that the eurozone crisis, escalating fuel prices, political unrest in Egypt and Nigeria resulted in reduced revenues in the second half of 2011.
The firm announced a net profit of Sh3.53 billion for the year ended March 31, 2011 and in the same year KQ paid out at Sh1.50 dividend of per share.
The profit warning is despite the carrier announcing higher passenger numbers for the third quarter up to December, a 15.4 per cent increase to 956,742 passengers.
Analysts, however, said the big institutional holding of KQ shares post the rights issue would help to check against wide price fluctuations.
“There has been a re-calibration of shareholding mainly in favour of informed investors,” said a research analyst who did not want to be named as he was involved in the rights issue.
The just concluded rights issue has seen the government, Dutch Airline KLM and the International Finance Corporation own 29.8 per cent of KQ, 26.73 per cent and 7.4 per cent respectively.
The rights issue has increased the authorised share capital to 1.5 billion from 462 million. Shareholders who did not take up their rights are set for a 70 per cent dilution in their dividend earnings and voting power.