Live;Ndindi Nyoro Address at the 4th Investor Education Conference at Movenpick Hotel, Nairobi

Hinzugefügt: 2026-05-31

[00:00:01]And I just want to highlight because listening here and I'm very glad that I got some presentation going on is that you have had time for many people to talk about many things.

[00:00:16]So I not come here to talk about investing in terms of globally. globally meaning as an investment company I try to individualize investments because there are more qualified people to talk about their opportunities.

[00:00:35]So in my brief speech, if I say anything against your company, I don't mean it's bad or what you do. It means that you came to share diverse ideas that you share your ide because we are looking for different audiences and different house as the as.

[00:01:00]So what do we do when we are investing? What do we look for?

[00:01:08]obvious from the village as Kama put it your father does not believe you made it before you have blood and before you have a file of titles.

[00:01:21]So when you go home over Christmas with a file of titles then your father knows he has a son.

[00:01:28]If you go with things called shares and crypto uh he has there is room for improvement.

[00:01:40]So there is and everything associated with that and what I'll give you is my so it may be different from many others.

[00:01:49]The second thing we look at is fixed anything fixed income and I like to represent all the others. fixing money in the bank like the one we visited here or the obvious TP and government instruments because of fixed somebody dealing with risks maybe we wrote an argument what we wrote about the third thing is my pet investing in companies I like it all the others cuz all the others is an accumulation of those. If you put up a that purchases equities so I don't want to go to that I want to highlight the specifics. So the the four that one is the equities equities shares and buy companies and as you know I'm a proponent of that more than the other two more than the other two because investment is about timing. Where am I investing in myself? I may not be a proponent of blood, but I've made money in the past.

[00:03:01]I have made multiples in 2 years by just buying a piece of land. So I could be the last person to talk anything about real estate. But then it is a ticket ago just when I left KU for my undergrad.

[00:03:22]around that time land was hot and it was actually hot. We made money.

[00:03:30]Is that the case now?

[00:03:33]You tell me because you have try to sell it and let me compare notes and don't tell me about the value of tell me about the offers credit cuz there's a whole difference between what you think your life is worth and what you can actually receive from a person who can actually buy it not the one who thinks they can buy it.

[00:03:57]The second thing both fixing money is is is both sides of the same coin coin.

[00:04:07]Both are lendings.

[00:04:10]Both are are lending you I mean fixing money in the bank. You you areing money to that bank.

[00:04:21]They actually compare it. They actually you deposit it. They take it as a liability not as you have.

[00:04:32]The other one and you have given your money to government for a predetermined rate. So you let money government. So both are the same.

[00:04:44]It is lending and you only lend money when the other person has the rate.

[00:04:52]It means when you areing money to the bank through fixing it and you areing money to the to the bank through banks and both you have admitted that those two institutions have more better use of your money than myself.

[00:05:09]So that is the case.

[00:05:13]The third one is buy companies.

[00:05:17]But before I go there because I'll be preparing money to these two institutions fixing and also buys and there is one fallacy that I want to distract us from fallacy of government We already pay we always pay my money because this government >> yes because possibly in your investment time it has never happened but remember all the things that take too long to happen where they happen they actually happen so >> so I'm here with a country where we 13 trillion in in debt, national debt because those TPS bills are what I'm talking about. Don't think I have I'm deviating from your from the speech. You might think, oh, he has now started those economics. No, I'm still on your boats and and T bills because the accumulation of those are the ones we call national debt.

[00:06:38]So it is 13 trillion.

[00:06:42]60% of that is your money.

[00:06:45]that is deep I mean domestic borrowing and they happen majorly in those two elements 80% of that 60% is domestic debt 80% of our domestic debt is owed to financial institutions 80%.

[00:07:08]households who are me and you is I think around 3% or there about NGOs's around 1%.

[00:07:18]So we go back to the default setting that's what I want us to analyze together because that's what we are doing here. So yeah 13 trillion because for the last four years we have borrowed more than 40 trillion. That's the reason why we are there. It's because for the last time from 2022 we have actually borrowed close to 4.5 trillion.

[00:07:46]So 2022 that is 600 billion. 10 years go that becomes 1.7 1.8 trillion. So he borrows 1.2 trillion in net terms. But the revenue grows by five times from 200 billion to a trillion. There's a reason I'm saying that. Then from 2013 our debt grows from 1.7 1.8 trillion to 8.7 trillion. So in 10 years we borrow 7 trillion. Our revenues in the same period grows from 1 trillion to two. So the debt triples more than triples but the revenue doubles. So you can tell now in that pace who is actually a Kenyan marathoner and others in that post marathon. You can tell who is a Kenyan. The Kenyan there is a dead and no marathoner is a referee. So the Kenya is way ahead. the other marathoners areified in terms of the growth.

[00:08:58]So we are in 2022 marathon is continuing debt growth from 8.7 trillion.

[00:09:06]We are now even not yet done with the first half with a with with a with a with with five years with five years we are not done with 5 years the test is now 13 trillion.

[00:09:20]So we are in a race to borrow in 10 years. If we are in a race to borrow in 5 years what we borrowed in 5 years the previous government.

[00:09:32]What you borrowed in 10 years in the previous government and now you are borrowing in a year what you borrowed in 10 years.

[00:09:40]Now, so I here because that is the that we are still in ports in your boats.

[00:09:50]We are still in your investments.

[00:09:52]So the debt has grown from 8.7 to This is a little domestic.

[00:11:09]So out of 100 we'll be spending if we include principle 90 cities out of 100 to service.

[00:11:20]So to ramp up that story those story is about Kenya but you as an investor you need to very fast find a friend from Ghana.

[00:11:36]get afraid from Ghana and have a call after this session and then recap the story I've given.

[00:11:43]It is definite it's so definite if we do not get course what we think as a solid rock will soon disintegrate because how is that going to survive?

[00:12:00]How?

[00:12:02]So I am foreseeing in the future not very long future a boardroom like this the person who will be studying here is government not government have government as a person the government will come and pick the microphone and you'll be seated where you are sitting the bank mostly will be in that table m and team will be here because you must be in the front row to get the message correctly.

[00:12:38]Insurance companies will be there where there is a microphones and all of us as Kenyans will also be listening.

[00:12:48]Maybe the hall will be too small for all of us. Others will be out just listening.

[00:12:56]Then the program will start running by today. Let's have some brief remarks from the CEO of the group LMG and after that the main speaker who is the government. The government will take the mic and tell you a good good evening. It will be an evening that time most likely cuz mornings are not made for those kind of news.

[00:13:22]Then they come and tell you I know and I agree you're a good Kenyan. You gave me a million shillings last month because you bought pressure and I'm very grateful because you are able to pay some recurrent expenditure which will really blessing us and the government will go ahead and tell you you know Kenya is for all of us.

[00:13:44]We all belong here. We are Kenyan and we are patriotic and I want to commend you for your patriotism.

[00:13:51]And it's because of that patriotism I come to request you our debt is 13 trillion and 60% I owe it to you but out of the interest rate I'm paying of 1.25 only.25 25 I am paying to external cuz external debt is always cheaper that's why you see 40% of our debt is only accuring to 50 billion of interest but 50% of our debt is accuring a trillion in interest so the government will now tell you people now they they hard they hard because they are not listening to us so let's leave them. We pay them their 250 billion every year. And that's the reason I called you as Kenance. Let's see what you can do about this one because there are some roads going to your home and there is a school we went to for primary school. There is something we doing about those two things. That's why we are requesting.

[00:15:01]We know for sure we owe you a million shillings. But because I'm the sovereign on this Tuesday evening we have just decided from our from our meeting as the government that out of this 1 million we owe you 700,000 then you start up your neighbor did you hear then the government will tell you yes I am very happy for your patriotism out of a million shillings from today I owe you 700,000 in papas shop and salon rag which we call that a haircut and then I tell you we know we also owe you to pay you next 6 months some money we are requesting for the next 2 years you may not hear from us but immediately after 2 years you start hearing from us. So you remember the board you bought for 10 years. We have just made it 12 years.

[00:16:04]Only that for these two years in front of us here, don't wait to hear from us.

[00:16:09]Thank you for your attention to this matter. See you another day. Signed the government.

[00:16:17]I know that sound like a story. So after this call your Gian friend and then make sure you call a person who is also a Gian.

[00:16:28]The ripple effect is that this money from financial institutions are deposits which I have also sent to the bank as a deposit.

[00:16:39]I am not trying to to paint a picture but I do want all the experts here after we finish. Anyone with an answer to that come and pick the mic tell me the alternative to that in the next many not many in the next few years to come. Tell me.

[00:17:01]So we either take course as a country or these boats we are holding they are not worth what you are holding because the other alternative is to print money then print money it is the same scenario it lowers the quality of your money. So let me go now to the optimistic side.

[00:17:24]Hey I almost made a very gross mistake.

[00:17:28]Sers and equities whatever name you may pick from it. So why do I prefer this me as an investor other than all the others I've given again because of time around this time in Kenya I think I'm well positioned sh of course you start by looking global when you look global D Jones is over 50,000 now within Iran not outside of Iran within within the Iran issue they have chosen are now over um 50,000 the index almost almost touching the record high which it starts earlier this year.

[00:18:16]If you look at all the other indices in the US, some by yesterday touch touched their alltime high. That's good or it's fine cuz the stock market in the US always goes up. Forget about the bounce of recessions and heating of the market.

[00:18:33]If you draw the graph, you smoothen it.

[00:18:35]It is upward all the time. Depends percentage. But that's not the point.

[00:18:41]So the world has been expansionary during COVID time then contractionary after COVID because of inflation.

[00:18:55]Before I run the world was expansionary. Expansionary meaning we were lowering interest rates everywhere.

[00:19:05]the last three from before February across the world the the federals or the central banks were lowering interest rates including ours including the US even with the push for more cuts by the executive there now inflation has climbed the only month we have measured very well after I learn in Kenya inflation is up inflation figures in Kenya will be coming out this weekend. Of course, you may expect something more than 7.5%.

[00:19:40]Most likely, definitely.

[00:19:43]So, what does that mean? When the next CBR is meeting, when the when the Federal Res meets in the US, the very best to accommodate executives, the very best they can do is to sustain the rate. But, but that's not even feasible. The sensible thing is to raise CPR is to raise. So we are back to contractionary.

[00:20:08]So we back to contractionary meaning will be going up. Revisit the issue of death I talked about in your maybe two because so you have now started a journey of raising interest rates. So that's contractionary monetary policy.

[00:20:31]If the limit of shares that point lift it, take it back to Ghana and start now doing it. Actually in the house you go do your homework with this extract with this raising of rates with the other problem I described. Then tell me where we are headed and then tell me what you foresee in terms of subscriptions of boats and bills in the next few weeks. Then you make your decision. Let me go back to the inquities.

[00:20:59]So P ratio of the US market because this fall is filled by people who should actually be holding the mic and me listening. So you well P ratio in the US markets is over 17 27 if you both know the US companies.

[00:21:24]H Johannesburg could be maybe over 15 the P ratio um Nigeria maybe around 11 by the way in this do we all know what P is because I think I'm assuming 2 months we know you know if they start talking Greek then I'm talking to myself if you bought this hotel today at 10 million shillings and the annual revenue is 1 million net revenue. How long will it take you to recover your money?

[00:22:09]Talk to me guys 10 years. That's the P ratio. That's the P ratio. If I bought Absa Kenya today and their net revenue, If I bought Absa for 100 billion today and their annual net revenue is 10 billion, how long would it take me using what is called trading PE, the most recent trading PEO 7, how long will it take me to recover my money that I invested in?

[00:22:47]That's what is called PE, price over earning ratio or market cap over net earnings.

[00:22:57]It will give you the same. If you bought all the companies listed in the US, the P ratio is 27. It will take you 27 years. There are some that are low, but there are some that are people are buying future. Take Tesla. Tesla is over 200p ratio.

[00:23:16]Most tech companies have higher P ratios cuz you're buying the future more than the present.

[00:23:23]JC Job Bank is around 17 maybe 15 to 17. Nigeria around 11.

[00:23:33]Kenya the average P ratio of the Kenyan company is five.

[00:23:41]So I'm standing here as a very patriotic Kenyan that in the current moment I don't know why I should not buy sh in Kenya. I and I have no reason to buy in any other market and I have actually no reason to care about what the government is doing because some of the companies are too solid for any government to do anything.

[00:24:05]That's why in this period since you started hearing me talking about these issues there is I don't know any market in the world better than a Kenyan market. None.

[00:24:18]I don't know any.

[00:24:21]And I'll give you homework. This is the last thing I'm doing.

[00:24:24]Keep quiet. Take your phones, your smartphones.

[00:24:32]AI will do this for you.

[00:24:37]Sarisa, can I get volunteers? Four of them. Just four. So that this presentation is not mine alone.

[00:24:49]Four present. Just four. Four people with phones to come. Yes. Come.

[00:24:56]Yes. Please come up. ladies too late now to pass now as I as I come my school of thought is this I said I have listened to so many things from morning my school of thought is maybe in terms of investing I either invest to get rich or I don't invest so I'm just saying in the risk profile don't create me at the age of my father my risk profile must be higher.

[00:25:31]So is either I am putting in money I get rich or what kind.

[00:25:37]So if you start telling me you have a million I put in somewhere to give me at the end of the year 20%.

[00:25:44]So I have a million so give me 1.2 million. So I have 100,000. You are promising me after a year to give you a 20,000.

[00:25:54]So what cost in my mind is this. So I already look for the million without knowing you.

[00:26:01]You are helping me make 120,000 then I don't need to know you.

[00:26:05]So my school of doctors is that I put in a million. I talk about multiples. I'm a kind is that investment changes my life or I don't do it. Maybe it's about my age, maybe about my risk profile, maybe about my exposure to many instruments. I don't know the reason. Okay. There is a thin line between getting multiples. There is also the downside. But for me, I would rather handle that than handling assurance invest a million promise 200,000.

[00:26:45]How a person having a million, what will 200,000 do to you?

[00:26:53]It means if you are in a rental house paying 100,000 somebody is telling you to move you know investment and money should in quotes make our standards of life higher. So let's take where you live as the standard of life. So you pay 50,000 somebody is telling you to work so hard by investing so that you move from a house of 50,000 to one of 60,000. What is the difference between a house of 50,000 and 60,000?

[00:27:23]You not even move the estate.

[00:27:28]Even at the front your next door neighbor will be paying 60,000.

[00:27:32]Actually when you move and return in the same house, you realize they are waiting for you to move so that they increase the rent. So it will not ching your life. So is it like moving from a house you pay 50,000 to one 15 that's my investment reasoning take your phone you you'll do for me start a chart bank whatever thing I'm going to ask start a chart a bank my brother will do for me equity bank my brother will do for me let me diversify from banking I'm looking for listed companies do for me car in general car in general have you heard of car in general >> very good there is a talk I had in the UK earlier this year then somebody asked if you had 20 million why would you invest then I mentioned K general that time it was okay in a Yeah. Then I saw people looking at each other.

[00:28:44]That time it was 45 shillings in the market. I don't know what it is now. You take you'll do for me.

[00:28:58]Now I want I mean AI will do for you. So you just go don't even do anything.

[00:29:06]I want you to check for me what is the PE ratio of all those companies I mentioned according to the one you handling.

[00:29:13]What is the PE ratio of then right at the company we talked about we'll be starting here so that what is the P E ratio of standard chart Kenya remember Kenya because that chart is global yes maybe that's why it's confusing This is important. I know you know it's important uh the people it's called because this is summarizes a lot of things to me as an individual investor.

[00:30:00]P is summarizes a lot of information about the company and the beauty it does not communicate to me the hope it communicates to me the current situation can start integrated h let's start from here and you mention the company because I'm writing and you write the and you mention the ps uh you're saying between 2021 to 2025 the ratio is 10%. It's 10 actually. It's not past P versus P versus E. I hope you understand. But you you got it right.

[00:30:45]It's close to there. I think >> standard K. Yes. Let's go. So it says the current price to earnings ratio for equity group holdings is approximately 3.8.

[00:31:00]I know you think he's wrong, but he's not wrong. It is true.

[00:31:06]cuz you have a company is now valued in the market at 270 approximately billion and they making 75.5 billion in net profits without accounting for using the first quarter they've already started again reporting increment in profits so I'm actually using trading P I'm using trading P if I use forward P let's go P general P ratio 2.6. I also know think most of you think he's wrong.

[00:31:40]He's not.

[00:31:44]A company valued at 6 billion and I reported I think over 2 billion in net profit. I think you are buying a flat in the case of equity. You are buying a flat for 27 million shillings.

[00:32:04]But the net after the net rent per year is 7.5 million.

[00:32:13]That's that's a case of equity. I've just removed the zeros.

[00:32:18]Let me repeat.

[00:32:20]You are going to take 3.7 years to recover your money using trading P.

[00:32:26]Let's go to the last one.

[00:32:29]KPLC Kenya power trading PE is 1.45.

[00:32:35]>> I think you can cl even for saying that.

[00:32:41]Even for saying that no good Kenyans we let's be actual here as Kenyans just tell me you have 10 million.

[00:32:55]Why would you invest in any other thing other than this? Just tell me especially when you're dealing with banks and this is my last thing. Sorry you give me the talk about investment but I assure you this is the last thing I'm saying.

[00:33:12]Local banks when you're evaluating banks also use something called price to move value.

[00:33:18]You'll get some things there that are just obnoxiously exciting to an investor. So I'm going to redo to you now do stand chart I want to show you a difference between our local banks and international banks operating in Kenya. There is something very clear on how they behave or how our market prices them and then we can discuss about the reason why standards deal with Stanic. Stan is a South African bank. It is a salary bank. Then my brother deal with Equity Bank or KCB anything that you like of the two deal so that because National Media could hosted us and their former dominister company.

[00:34:23]So all of you now Google Google this from the companies that I gave you all are banks because beyond P for banks I also apply this as a tool price to book means there is a price of the price meaning if I to buy this bank today what is the price I would pay that is the price book means what is the actual value of the bank actual Meaning the core let's say core core capital of a bank in Kenya is a billion. So you have a fresh new bank today. So the core capital is a billion.

[00:35:02]That's the book value. The price value is yes valued at 1 billion. If somebody offers to buyers what are they offering?

[00:35:13]So if they offer anything below the 1 billion it and we accept to sell to them it means we are selling to them at a discount.

[00:35:25]If we mean to sell to them at a higher price than a billion it means we are selling to them at a premium.

[00:35:33]So if we sell to them at a billion it means no premium and no discount. So the the price book will be one.

[00:35:44]So the the starting point is one. If the price is equals to book value then you bought it as a fair price. No discount no premium.

[00:36:01]So let's now check in our own market.

[00:36:03]Now the same companies that I gave you tech hold the price to move value of the companies I talked about and they all banks we start with chart because we start with these two because they are all Kenyan then you see they are Kenyan yes but the parent company is not Kenyan >> for standard chart the price book ratio is 2.7 that's AI I The actual one is true the very actual anyone with the if you do oh they actually announced a drop in profit that's why maybe it used to be two who can volunteer what that means the price to buy is two what does that mean somebody just it is two. What does that mean?

[00:37:05]Price what you're buying over what the actual value is is two.

[00:37:13]Yes.

[00:37:21]Please say your name in the company. You must be working for a very good company.

[00:37:29]>> Michael, that must be your employee.

[00:37:32]how politicians do this when they hear it was this ide so that we all hear because that's the correct answer. So what it means is that when you pay two two times book value the price you're paying in the market is twice the value of everything. If you were to sell that company everything out you're paying twice that value. So you find a high price to book then you pay a very high it's expensive if it is below one means you're buying a discount. So standard is looking expensive.

[00:38:10]>> Premium you use the same premium >> premium or what% >> uh 200%.

[00:38:15]>> Ah very good. Excellent.

[00:38:21]Standby holdings you'll see currently has a price to book ratio of approximately 1.36.

[00:38:31]Tell us what you put me on the spot. Okay.

[00:38:38]>> Essentially I take it it means that if I was to offer to buy it I pay a premium of >> Yeah. of around 30%.

[00:38:49]>> 36%. We have not all understood that.

[00:38:53]Now here these ones now check uh update both the KCB equity they all discount. So KCB let's say equity equity is 0.85 85 which means the value of equity in terms of assets um and what you're buying on the stock price the assets are more than the price cuz you're buying at a discount KCB discount of what% uh 15 15% precisely these are actually not assets these are funds you know bank is an intermediary fund is a money where if we if You keep you on your deposits and you pay us your loans and you account for NPS what remains on the table. Those are the funds real money and KCB and and KCB 0.65.

[00:39:52]So it's it's nearly half 35% discount. And remember AI is using full year last year financials here. Our sister company Diamond Trust Bank.

[00:40:10]Wow.

[00:40:14]Diamond Trust Bank. P the price to book ratio is hovering between 0.36 to 0.44.

[00:40:26]I know by the look of your eyes you think she's wrong, but it is you is wrong. She's actually right. Anyone who volunteers, tell us what that means.

[00:40:41]Tell us what that means. Not the people on the stage. The people are all of us.

[00:40:55]Tell us. You just took lunch.

[00:41:03]uh that means you're paying 40% of the value. Can you imagine that? So somebody would argue why these two our market has a gap of information. So what do we do? We are totally a dividend driven market. We don't even care anything else. A current investor in the NC picks the divided time 10 and gives their age.

[00:41:30]Their price is usually time 10 to 12.

[00:41:34]They close the chapter.

[00:41:36]Oh sh that shing around 12 shares.

[00:41:40]That's that's the reason of the current market.

[00:41:44]That's why these two banks they declare more dividends because it's not their business to expand to DC.

[00:41:51]It is standard bank of South Africa that should expand to DRC not be Kenya. So when makes profits he declares almost everything to everyone because the most expansion he can do is to open a brand within Kenya not to go to Uganda. It is a parent company to do that the same with Sunchart. So in terms of value then you realize monkey there monkey makes 75.5 billion in profits pays us 22 billion the rest he go to buy a bank and then passes by a cor to buy another one so as a shareholder then I am positioned I think monkey is using my shielding to me more money that's why my I have more inclination to these two myself. Why? If this two says today we are done with expansion, if equity bank paid the same debited payout as these two, the share price should be more than double that. Just using what you've got here, it has for P ratio.

[00:43:00]Now talk about diamond that there are people in Kenya sitting in a room to start a bank. They are starting at 1:1.

[00:43:08]Why bother? just come and buy a pack at 40% discount. Anyway, thank you very much.

[00:43:26]>> I think session are in agreement.

[00:43:29]>> Yes. Now, um honorable, thank you so much. Let's give him another round of applause. And of course, um also appreciate Mr. Russell and team for accepting to give us different examples.

[00:43:45]Now we'll only take three questions.

[00:43:50]Is that okay?

[00:43:54]Just three.

[00:43:58]There's one at the back.

[00:44:01]Okay.

[00:44:04]one, two, and the lady. So, we'll start off with the lady and thank you so much for your time. My name is CPO infredo and I'm honored to ask my question today. Uh my question actually goes to all the industry players. uh I believe all of us or majority of us have some level of education but uh what are we doing to ensure that the common man is getting that information to ensure that they make uh great investment decisions. Uh case example, we have seen companies like Safariccom. Everybody knows Safariccom, including the person who sells the kiosk. Uh any like the low income person, they know Safari, but they have never gotten tired of advertising. Anytime I switch on my TV, I'm always seeing an advertisement of Safariccom uh running across my TV screen. So as a as a pioneers or as a as our leaders, what are you doing to make sure that that person has a little bit information of what is a stock as as well as what is a stock? How how can I invest in the stock market? How can I buy maybe that bond instead because I believe most of them fall into gambling because of that lack of that information.

[00:45:30]uh uh the low income earners will say this is the only thing that I know if I put my 100 shilling here I can I have a chance of doubling it okay I also have a chance of losing it but I also have a chance of doubling it why can't we have road shows where N is going around even the what are they called Viji to ensure every person gets that financial literacy that's my question for I'm very delighted m I want to really to ask because you are an MP is it possible you can really create a law or a policy so that we can be able to educate our children from CBC now introducing the issue of shares and investment so that we can be like Americans where the over 50% are really training shares to where KPC together. I know you don't know me but then we will know each other. Uh what is the impact of opening Kenya power because they're saying the APA is opening the issue of the power to other sectors to really compete with KPC.

[00:46:46]And finally Misha thank you for good job which you are doing for this country. I think you are really maybe you'll be the future leaders. I think economics at M University indeed is one of the figures we used to admire and for that matter I'll appreciate the work you do and encourage you to walk the talk.

[00:47:15]So on that case I've seen discussions about debt and there is this matter called fiscal deficit. The government doesn't speak about it reducing our expenditure. We spend more than we get. Kindly as you expedate the food issues, expedate this as we will let them reduce the expenses.

[00:47:35]That is the fastest way we can heal in our economy. Back to the matter at hand that is diversification.

[00:47:41]To me uh there are norms. Somebody might think that diversification is around having many assets but then it should be having assets that respond differently to economic stress. And that brings me to my question on uh the microeconomic shift that uh uh in East Africa over the next 10 the next 5 to 10 years that you think investors are currently underpricing.

[00:48:11]Thank you.

[00:48:13]to respond to that kindly take the floor.

[00:48:20]Thank you very much. Um, Madame Vish, I think was more of a comment and I agree with you that CMA being the anchor around our markets should be the one attracted to a lot of advertisements because our our investment companies and especially investment banks, if you look at those who work there, none could actually be able to massage the kind of advertisement that is needed to cover the entire country because you have many investment banks for a small market. So only CMA in my opinion should adequately do that. Wilson, I precisely agree. Some of us were lucky by default. In my first year, I went to a farm called that was called Kayoki.

[00:49:10]But I was going to say hi to my former MP from Kiharo as a student in campus and I was going there so that he gives me something.

[00:49:24]He ended up giving me a job and I ended up knowing all this. So you see now this is by default we should make it by mainstream that our capital markets when you you are from SA you are from Taieta you should grow up knowing investing is fine but when you are making use for that land but there are these more other alternatives there is no company in the world none that grew without having a robust capital markets because that is the bridge of capital increase. So that's one thing that we must do for ourselves to gain but also do it for our economy to gain.

[00:50:11]they thank you very much you are in there and we are all we are all retailers so we actually don't take part in decision making cuz I always get that question and I can see there are many Kenyans who invest in our local markets and even in that particular company in my opinion is actually a good thing Kenya generates around our our usage is like 3,000 megawatt I mean we should be many times that and We I'm sure we should and we will.

[00:50:44]Therefore it means the field is so big and efficiency is how I see it is like asking telecom and back then now that other entries are coming shouldn't we transform this telecom to be a kind of safar that's how I see it not in terms of constructive destruction of the company but in terms of constructive evolution that when there is competition there is likely to be efficiencies to be gained and I think he's good always know this Warren Buffet says it utility companies when you buy them you must be prepared to buy at a premium because the customers for utility are so sticky that you guys the lines you have for the lines you bought when you compass That's how stick is cuz nowaday moving from a utility of water and electricity where are you going to go the change in infrastructure for our new entry before our part where it's complex and always remember the infrastructure to carry that product is also belongs to where you are as a shareholder. So even if you buy it here, I'm going to be explicit so that it remains here. So if you buy that product here as this customer, you still use their infrastructure to take it to where you want and you'll pay.

[00:52:29]I hope I've answered.

[00:52:33]Sorry, some things we talk in parables because we don't want to be misqued.

[00:52:41]Francis Min, thank you very much. The biggest existential threat Kenya faces is dead.

[00:52:52]The sooner we accept that, the sooner we start being head on on deal with that situation. It cannot continue like this without a proper reset that you give people haircuts and another head others will chop off heads.

[00:53:12]Forget about our haircuts.

[00:53:15]Death has the ability to chop off a head economically speaking. So the sooner we realize this, the more credible we become in looking for the solution.

[00:53:27]And the other issue of diversification that was my topic and I talked about it without using the name diversification.

[00:53:36]I belong to school of health that when you went to lunch and there is in the buffet there are 20 things to eat.

[00:53:49]There's fry then and then greens.

[00:54:10]What do you do? You go to your pite.

[00:54:13]You go and pick some ribs of chamatoma.

[00:54:15]You are done with meat. White meat. You take a some chicken and by default you take the lie. I don't know why we always do that when we start in a group.

[00:54:27]Then you go and take spinach and leave the others. You take your favorite. So you only passify when you are eating when you don't know how the food tastes.

[00:54:39]So you go to a foreign country, there is nothing you know there.

[00:54:44]You go to Ethiopia, it is served. There is no kind of food.

[00:54:49]You know, you only know colors. That one looks green and this one white. So what do you do? You take a piece of B of everything. So that if one disappoints, you don't come back to the session, the afternoon session where you are ugly. So you are hedging against your ignorance.

[00:55:12]If you knew, you don't need to hedge.

[00:55:14]But because you don't know, you need to cover yourself. So what do you do? Ah, let me test a little bit of it. No, don't die to us. Is because you don't even know how it tastes. Forget about testing. You don't even know what it is.

[00:55:29]So when you find you are buyers in your portfolio, there is I saw in your portfolio you have 25 stocks.

[00:55:39]Are you or are you an investor?

[00:55:46]Then we should make you the NSE.

[00:55:49]When you find you're buying 25 companies at in the banking sector you have all banks in insurance you have Jubilee and K and then you have SAM commercial you have KQ you have everything only one sector you have K general as one because he's only one in that sector of automotives you are just telling us we are able So when you know exactly what you're doing, you do not over diversify and because you call me to talk about my case, my portfolio, I have no more I have no more than five stocks and out of this conversation I know you know which ones because why do you if you parade state banks this is a question Warren Buffet asks if your priority let's say you tourism destinations you want to go for holiday you create tourism destination number one up to 30 so you have created your tourism destinations according to your preferences and according to fundamentals so he asks you listed number one to that what are you doing with number 28 that's the question he asks your domain should be A little fool.

[00:57:53]Because unless Yes.

[00:58:53]You had a problem Okay.

[00:59:18]But if you involved all the tools and you created what are you doing with the number 11?

[01:00:00]So that is the issue of our diversification both in sectors and actual counters.

[01:00:06]In terms of investment what I need to do I both is a no for now. Fixing money of course is a no. Anything fixed is a no.

[01:00:17]I zero profits this year and next year for sure.

[01:00:24]The last then I go to regions. I look at this profit I made. how much is from Kenya and how much is from the region.

[01:00:32]Then from there in my investments so that I jump in there and I keep quiet and I wait.

[01:00:40]So I go I because I do my own analysis that's another thing I want to say I actually don't believe in to facilitate the transaction. If you have the brain to for 10 million why do you need somebody to tell you how to do your 10 million? Yeah, you had all the time to do for your 10 million maximum of your spare time, not the full days.

[01:01:03]I'm not talking about the experts here.

[01:01:05]I'm talking about investing in stocks.

[01:01:07]60 companies listed the other ones becomes additional information. So I did some analysis that time. So I check checked stability. I gated the payout.

[01:01:18]Then I I I went into the energy. Now I bumped into that company. It was not exciting to me before. Then I look at the assets. By that time assets were 250 billion. Now the assets of that company is 41 billion.

[01:01:35]Market cap that time was 3.5 billion.

[01:01:40]A company covering the entire Kenya then in my mind depending on how Pants is already more than the 3.5 billion the valuation. It means all the wires around here and all of us as customers are not even counted in the value of the business.

[01:02:04]Okay, that time it goes haywire all of us will be black out with that repeatable no then I decided I don't even want to consult anyone. Bye bye bye. I remember the first time I told the stock broker buy this. They told me, "What are you saying?" Yes, buy that one.

[01:02:22]You know where she's making? Yes. Yes, I know. It's making a lot. So, I was asking them, "Do you want me to buy one?

[01:02:30]Is making profits."

[01:02:33]Then I jumped in and I decided to actually concentrate not by we talking about 2024 the price it was.

[01:02:43]I had bought over like 2 years prior or there about. But by 2024 today 2026 today it was 50/50 having as a team before.

[01:02:57]So it means a million then 1.8 million then 1.8 8 million shillings then in 2024 is 15.5 million today honorable before you leave we just have one last question from our chief commercial officer asked me to ask you for your bank account number but that's not what I'm about to ask.

[01:03:30]Um, thanks for the very insightful comments.

[01:03:34]There's a question I've been carrying for quite some time. You recently made news to have invested significantly in Kenya Airways.

[01:03:44]When you look at the BA BA ratio of Kenya Airways, it is nil.

[01:03:51]They've not issued any dividends and they are making losses.

[01:03:57]Do you know something that we need to learn?

[01:04:05]as I answer that because you guys are market people.

[01:04:10]There is nothing I have said here that you could not have held before.

[01:04:18]All the price to book values, all the fees, all that information was public before you came here. It is still public by the time you are leaving here.

[01:04:28]Now there's a reason I'm saying that there could be a misconception that somebody is a leader somewhere maybe you have some information I have told you about care power the initial initial the initiives I actually bought when I was deep in the opposition in the last government deep it was actually making losses But the reasoning is usually this when I'm buying shares before I come to this KQ issue. me I don't buy shares I buy a company I'm buy one share the is like I'm buying the entire so when you're buying a thousand shares of you must have a tina of buying the entire when you're buying salam have the pat is now the largest shareholder like you're buying the entire company that's why that's why you start crowding on fundamentals.

[01:05:35]When you buy shares, you grab yourself on analysis of the stock movement and you go by scanning for the last 2 years.

[01:05:46]So you start now tracking the market when you are buying sales. But when you have a demand of buying the company, you start tracking their performance for the last many years.

[01:05:57]That's what I did to K to Kenya Power by the way. So there were some three years, two years I think or so it made I think one year or two it made losses. Then I started going historically and I realized these two years were outliers.

[01:06:14]But I also realized one more thing.

[01:06:17]People have been dampened by this information.

[01:06:22]This should work for me.

[01:06:24]You know the gap between what you know as an investor and what the market knows. Let me repeat.

[01:06:33]You make money in the market through the difference between what you know and what the market knows.

[01:06:45]Always get the market as an individual person.

[01:06:49]The market will be superficial. Most of the time the market will also be superficial.

[01:06:55]It will not go so deep. The market not even the people the market ah they made a loss from there the market becomes rained on. So you have a hook.

[01:07:08]It has been rained on.

[01:07:11]When it's rained on, it looks like that cook is that the best time to give an offer.

[01:07:19]Then you take it away from the rain. You don't even have to take it away from the rain. You definitely know the rain usually stops.

[01:07:27]So you buy it when it was raining an hour ago. In the afternoon there is sunshine. go in and you post it for a song.

[01:07:39]So that the the difference in information usually comes when you dig deeper. These issues I'm talking about PE price of book um history where they expanding to quote like the the banking the reasoning of the market in fact banking is the best example the reasoning of our market is dividended it there.

[01:08:04]So that's why the banks that are paying dividends are highly priced than the ones not paying. But you realize the ones that are not paying are having annual incremental profits higher than the ones paying. So it means these banks are becoming bigger and the value is being created more. I was just trying to avoid the question of K that's why I engage in a lot of so my reasoning again should I buy making profit that's my reasoning I don't want to go so deep but every information about KQ is public and even what made me buy is also public in fact I posted two days after business daily put it public whatever the reason it All right. Quick comment from my chief.

[01:23:28]sector. You have all banks in insurance.

[01:23:31]You have Jubilee and K and then you have SA in commercial. You have KQ, you have everything.

[01:23:43]only one sector you have in general as one because there's only one in that sector of automotives you are just telling us we are so when you know exactly what you're doing you do not over diversify and because you call me just talk about my case my portfolio I have no I have no more than five stocks And out of this conversation I know you know which ones because why do you if you parent state banks this is the question Warren Buffett asks if you have priority let's say you tourism destinations you want to go for holiday you create tourism destination number one up to 30.

[01:24:34]So you have graded your tourism destinations according to your preferences and according to fundamentals.

[01:24:40]So he asks, "You've reached number one to 30. What are you doing with number 28?"

[01:24:48]That's the the question he asks. Your domain should be around the top four because unless you had a problem in grading, but if you involved all the tools and you graded, what are you doing with the number 11?

[01:25:06]So that is the issue of over diversification. both in sectors and actually counters in terms of investment what I need to do I both is a no for now fixing money of course is a no anything fixed is a no I zero into sector profits this year and next year for sure the that I go to regions I look at this profit I made how much is from Kenya and how much is from the region Then from there you can see me in my investments. So I jump in there and I keep quiet and I wait.

[01:25:49]So I will go I because I do my own analysis. That's another thing I want to say. I actually don't believe in to facilitate the transaction. If you had the brain to look for 10 million, why do you need somebody to tell you how to do your 10 million and you had all the time to look for your 10 million? you maximum of your spare time, not the full days.

[01:26:13]I'm I'm not talking here about the experts here. I'm talking about investing in stocks. 60 companies listed in the other ones becomes additional information. So I did some analysis that time. So I checked checked ability. I look at dividend payout. Then I I I went into the energy. Now I bumped into that company. It was not exciting to me before. Then I looked at the assets. By that time assets were 250 billion. Now the assets of that company is 41 billion.

[01:26:47]Market cap that time was 3.5 billion.

[01:26:53]a company covering the entire Kenya then in my mind depending on how we think parklands is already more than the 3.5 billion the valuation it means all the out here and all of us as customers are not even counted in the value of the business okay that time