TrransCentury Gachao Kiuna. TransCentury is betting on rail transport and the rising connection of East Africans to electricity grids to support future growth as it moved into profitability in the first-half of 2011. File
Investment firm TransCentury is betting on rail transport and the rising connection of East Africans to electricity grids to support future growth as it moved into profitability in the first-half of 2011.
The firm, which listed at the Nairobi Stock Exchange on July 14, said its net profit stood at Sh53.8 million compared to a loss of Sh167 million in the same period last year. Its sales grew by 40.6 per cent and revenue to Sh4.5 billion helped by sales in the power sector that supported its firms such as East African Cables (EAC) and transformer plant Tanelec.
Now, the firm is counting on increased connection to the national power grid and increased rail use with the upgrade of Rift Valley Railways (RVR), where it has a 34 per cent stake. “The company expects to ramp up production (of power products) further in the second-half of 2011,” said the firm in a statement. “With loan agreements now signed with lenders, RVR is expected to…ramp up its capacity and grow profitability.”
The investment firm has a 63 per cent stake in East Africa Cables — which means that it books the dividend and sales of the cable firm to its profit and loss statement.
The cable firm announced a profit of Sh172.3 million in the six months to June compared to a loss of Sh56.9 million in the same period last year— helped by improved performance of its Tanzanian unit that was in losses last year.
Its sales grew to Sh2.3 billion in this year’s first-half compared to Sh1.8 billion in the same period a year ago — which means that the cable firm accounted for 51 per cent of TransCentury revenue. It also signals that either some of its subsidiaries including Avery, Tanelec and Chai Bora or one them posted huge losses that ate into the earnings of EAC.
“The earnings cycle of TransCentury is hugely influenced by the performance of EAC, and expectations that the firm will post better results this year means well for TC (the investment firm),” says Eric Musau, an analysts at Standard Investment Bank. It earned Sh42 million from EAC as interim dividend in the period.
The firm said its loan agreements with various lenders including IFC, African Development Bank and Equity Bank for RVR amounting to $164 million (Sh14.7 billion) would help lift its performance further.
The results did not excite investors at the NSE as its share price remained unchanged at Sh38 having shed 33 per cent after hitting Sh57 in mid-July. Its IPO price was Sh50.
“TransCentury opened at a premium since most analysts had priced it at between Sh45 and Sh50 and what we are witnessing is price discovery,” Robert Munuku, an analyst at Drummond Investment Bank, told the Business Daily.
