Why easing of Covid-19 restrictions bodes well for Total Kenya

Total Kenya shares popped up after Uhuru lifted lockdowns on Nairobi and Mombasa. The company sells motor vehicle and aircraft fuels and lubricants. It made a profit of Ksh2.5 billion last year and will pay dividend this month.
Total Kenya Ltd (TOTL) shares jumped 6.60% on Monday (July 6) to close at Ksh25.05. The shares popped up after President Uhuru Kenyatta relaxed restrictions imposed since March to curb the spread of the coronavirus disease or Covid-19. Uhuru lifted lockdowns on Nairobi and Mombasa cities, the country’s commercial hubs. Moreover, the president said domestic flights will resume from July 15 and international flights from August 1.  


Although Kenya continues to report Covid-19 cases and deaths, Uhuru is reopening the country in a bid to revive a pandemic-battered economy that has left many businesses on their knees and shredded millions of jobs across industries.
Total Kenya, which has been in business since 1955, is engaged in the sale of petroleum fuels and engine lubricants. Its fuels and lubricants are used in motor vehicles and aircrafts. The lifting of Covid-19 travel restrictions promises to boost demand for fuel products as long distance public transport buses, cargo trucks and airlines resume operations.
Total Kenya operates more than 200 service stations across the country that serve motorists. Many of those stations also host restaurants, retail shops and car maintenance centres that generate extra revenue for the company. For the airline market, the company runs six aviation depots through which it serves domestic and international airlines.
Total Kenya also sells cooking gas and kerosene for domestic and commercial cooking and heating. Demand for these products could also go up as the economy reopens and households begin to earn more.
Total Kenya made a profit of Ksh2.5 billion on revenue of Ksh111.9 billion 2019. The profit increased from Ksh2.3 billion in 2018 and revenue jumped from Ksh107.9 billion. The company will pay a dividend of Ksh1.30 per share to its shareholders before the end of this month out of the profit it made in 2019.
Finally, at Ksh25 a share currently, Total Kenya stock trade 10% below the Ksh27.50 price investors were paying for it at the start of the year. Moreover, the stock trades 20% below the Ksh30 price that investors were paying for it at a time like this last year. Notably, Total Kenya is currently the only listed petroleum fuels company in Nairobi after its rival KenolKobil delisted last year after selling itself to a French corporation called Rubis Energie. Vivo Energy, which operates the Shell fuels and lubricants brand, is a private company.



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