How KenGen plans to make more money
Investors looking for the best companies to invest in Kenya may want to consider KenGen shares. KenGen, officially known as Kenya Electricity Generating Company, is working on a plan to expand its business. It wants to go beyond generating electricity to include distributing it as well.
Kenya Power currently enjoys monopoly in electricity distribution in the country. KenGen is now gearing up to challenge it in this business. The Parliament passed a law that allows other companies to plug into Kenya Power’s existing infrastructure to run their competing electricity distribution business. KenGen looks to take advantage of this opening to expand its business and make more money.
KenGen’s main business is generating electricity from sources such as hydro and geothermal. But it doesn’t sell the electricity directly to consumers. Instead, KenGen sells it to Kenya Power, which in turn sells it to consumers.
By selling electricity to consumers directly, KenGen should not only be able to generate more revenue but also improve its profit margin. That may in turn draw more investors to KenGen shares and push the price up. KenGen share closed at Ksh4.55 Thursday.
KenGen’s bid to enter electricity distribution business comes as Kenya Power faces a potentially crippling customer loss. A growing number of companies and universities are setting up solar farms. The goal is to reduce their reliance on Kenya Power’s electricity supply. Customers accounting for at least 50% of Kenya Power’s revenue are working on their own electricity supply projects.
KenGen’s financial results
KenGen’s financial results look good. First, investors should note that KenGen’s financial year ends in June. For the year ended June 2019, KenGen’s financial results show that revenue jumped to Ksh46 billion from Ksh45 billion in the previous year. The company made a profit of Ksh7.9 billion that year.
Does KenGen pay dividends to shareholders? KenGen is one of the companies that investors like in Kenya for dividend income. The company plans to distribute a dividend of Ksh0.25 per share next month. It will spend a total of Ksh1.6 billion on the dividend payout.
How to buy KenGen shares
KenGen shares trade on the Nairobi Securities Exchange under “KEGN” ticker symbol. You will need to open a CDS account to be able to buy KenGen shares. You can open the account through an investment bank or stockbroker.
Once you set up the CDS account, you can proceed to place your order for KenGen shares. Decide the amount of shares you want to purchase and provide the broker with the money to buy the shares for you. Keep in mind that you can only purchase a minimum 100 KenGen shares for every transaction.