Centum Investment Co. Ltd (NSE: ICDC) announced their audited audited results for the period ended 31st March 2015 on 17th June 2015.
Recommendation: BUY – KES 91.51 (Upside 44.1%)
KES 9.0 Billion increase in Net Worth to KES 31.9 Billion; EPS up 130% to KES 10.44
The Group’s total net worth advanced to KES 31.9 Billion up from the previous year’s KES 22.9 Billion. This transpires in to a 39.3% growth in Net Asset Value (NAV) for the year ended 31st March 2015. The NAV per share appreciated from KES 34.47 in FY14 to KES 48.0 bringing the cumulative increase in shareholder funds to 441% over the past six years. Profit before tax span by 120% to KES 8.82 Billion owing to significant gains made from the KES 5.0 Billion sale of UAP investments. EPS rose 130% to KES 10.44 during FY14/15.
Profit After Tax Advances by 162% as Realized Gains soar 624%
Consolidated profit after tax expanded by 162% during the period under review to hit KES 7.94 Billion. This was largely driven by 624% spike in realized gains to KES 7.19 Billion from exits in key assets. During the financial period ICDC netted more than KES 5.0 Billion in the transaction sale of 13.75% stake in UAP investments to Old Mutual Plc. Additionally, exits from 2 PE funds saw the investment group net a further KES 500 Million. Fund management income from its asset management subsidiaries- Genesis Kenya Investment Management and Nabo Capital span by an impressive 140% to KES 639 Million.
Board Remains Committed to Zero Divined Policy; KES 8.0 Billion Corporate Bond
In line with its Centum 3.0 strategy, the board did not recommend payments of dividends as retained earnings are channeled to value creation ventures that will see shareholders’ rewarded through capital gains. This policy is expected to carry into a further 4 years as Centum launches further in the strategy. Investors await results from the just-concluded 13% KES 6.0 Billion blended corporate bond set to be a funding component to be applied to the development of proprietary opportunities in the group’s deal pipeline.
The counter continues to deliver market beating returns with FY15 shareholder return standing at 39% against a target of 35%. Using the group’s 3.0 strategy management plans to develop investment grade opportunities across 8 sectors of Real Estate, Financial Services, FMCG, Agriculture, Energy, Healthcare, Education and ICT. Centum has sustained diversification away from the public market with QPE accounting for just 18.4% (FY15) down from 37.3% (FY10). Despite growth in the Real Estate portfolio over the last five years, Private Equity is the largest contributor to Centum’s total return performance whereby increase in portfolio value was mainly driven by realized gains of KES 2.9 Billion in the year and fair value increase in portfolio of KES 7.4 Billion. Centum continues to achieve this degree of growth while sticking with its cost efficiency target whereby cost to asset ratio stood as 2.1% of total assets against the set ceiling of 2.5%.