Kenya Electricity Generating Company Ltd (NSE:KEGN)’s 2H2015 profit soars 15%

Kenya Electricity Generating Company Ltd (NSE:KEGN) has reported that its profit for the back half of calendar year 2015 rose 15% to Ksh5.7 billion. Investors reacted positively to the news sending shares of the electricity producer up Ksh0.05 on Nairobi Securities Exchange (NSE) to close at Ksh6.95 today. KEGN seems to have defied multiple odds to post the profit gain given that the period was characterized by sharp increases in operating and financing costs.

Kenya Electricity Generating Company Ltd (NSE:KEGN)’s Ksh5.7 billion profit for 2H2015 came on the back of revenue of Ksh14.8 billion, up 27% from a similar period a year earlier. 

Setbacks in the reported period

KEGN’s 2H2015 would have been much better than the reported figures if the company didn’t face a spike in expenses related to operations and financing. Company officials announced that financing costs in 2H2015 rose 22% to Ksh1.62 billion while operating costs spike nearly 25% to Ksh8.7 billion.

Kenya Electricity Generating Company Ltd (NSE:KEGN) exited 2H2015 with total assets worth Ksh355 billion, up from Ksh342.5 billion in the same period in the prior year. The assets are offset by liabilities of Ksh21.3 billion. There was a Ksh6.2 billion dividend payable allocation captured in the liability amount for the period.

Investments

Recent years have seen KEGN boost investments to increase capacity. The management is looking to raise additional funds later this year through a rights issue. The rights issue is planned for 2H2016 and is expected to generate Ksh28 billion. 

Market share

Kenya Electricity Generating Company Ltd (NSE:KEGN) generates 80% of Kenya’s electricity and its market share is expected to expand as it continues to invest in production capacity. Analysts project that KEGN’s shares, which presently trade in the vicinity of Ksh6.90, have the potential to hit Ksh13.32 apiece over the next few years, suggesting nearly double growth.

Company ownership

The government of Kenya owns 70% of equity stake in Kenya Electricity Generating Company Ltd (NSE:KEGN). Through the rights issue, KEGN is hoping to net Ksh20 billion from the government and Ksh8 from the holder of 30% of the company.