3 Things anyone buying Kenya Power shares needs to know
Investors have soured on Kenya Power shares this year. The company expects to report disappointing results for its financial year ended June 2020. Dividends have been hard to come by for Kenya Power investors lately.
Kenya Power and Lighting Ltd (KPLC) is the country’s sole electricity distributor. It makes money from connecting homes and businesses to the electricity grid and charging them for power consumption.
Notably, Kenya Power is one of the few utility stocks investors can buy on the Nairobi Securities Exchange. The other utility stock is Kenya Electricity Generating Company Plc (KEGN) or KenGen, which is actually Kenya Power’s main supplier.
Here are three things any investor looking to put their money in Kenya Power shares needs to know.
1. Kenya Power shares are down 32% this year
Kenya Power shares closed at Ksh1.92 on Wednesday (July 15) after dropping 1.03% for the day. At $1.92 a share currently, Kenya Power stock has dropped 32% from its Ksh2.81 price at the beginning of the year. Moreover, Kenya Power shares have plunged 52% from the Ksh4 price investors were paying for them at a time like this last year.
2. Kenya Power board turmoil
Kenya Power announcedon Tuesday (July 14) that five members of its board of directors have resigned. That represents half of the company’s board. While Kenya Power did not explain why the directors stepped down, Energy Secretary Charles Keter said the directors’ exit was part of an ongoing shakeup and reorganization at the company in a bid to turn around its fortune.
According to the Uhuru administration official, the shakeup started in Kenya Power’s management team and has now moved to the board.
3. Kenya Power expects another drop in profit
Kenya Power’s financial year starts in July and runs through June. The company is currently preparing to report results for its financial year ended June 2020 and it expects to disappoint investors. It has warnedthat profit for the year ended June 2020 would drop at least 25% compared to the previous year.
Kenya Power blames the coronavirus outbreak and soaring operating costs for the expected drop in profit. It says the coronavirus situation has reduced power demand, hence affecting its sales. But Kenya Power’s fortunes had been shrinking even before the coronavirus pandemic struck. The company’s profit fell more than 90% to Ksh262 million in the previous financial year ended June 2019.
Finally, Kenya Power has not paid dividends to its shareholders since 2017.