Stock Watch: KenGen

Kengen announced results for the full year 2015 results with the following highlights:

Total revenue grew by 45.1 percent from KES 18,075mn in 2014 to KES 26,227mn in 2015. The rise is attributable to a 46.9 percent increase in electricity revenue from increased capacity mainly from geothermal energy.

Operating expense went up to KES 8,406mn in June 2015, a 19.8 percent increase from KES 7,018mn recorded in June 2014. This was driven by costs associated with operation and maintenance of the newly completed plants.

The company recorded a 36.9 percent growth in total assets from KES 250,206mn in June 2014 to KES 342,520mn in 2015. This increase is attributed to a revaluation surplus on land and property, plant and equipment (PPE) that amounted to KES 77bn.

Profit before tax rose by 109.0 percent to KES 8,690mn in June 2015. Profit after tax jumped 307.5 percent from KES 2,826mn in 2014 to KES 11,517mn in 2015. These good performance is as a result of increased capacity and tax relief for the commissioning of the 280MW geothermal plant in Olkaria and Ngong.

The company recommends a final divided of KES 0.65 up from KES 0.40 paid in 2014.

Our view

We expect revenue to grow going forward, mainly driven by increased capacity from Olkaria V & VI which are estimated at 140MW each and increase in demand with rural electrification programme making strides.

Key risk

Majority of the debt taken up is multilateral exposing the company to currency risk.