Kenya Power stock hits a 15-year low at the bourse

Stockbrokers at the Nairobi Securities Exchange. FILE PHOTO | NMG

What you need to know:

  • Kenya Power is set to release its financial results for the year ending June 2018 next week, having already issued a profit warning for the period, which means its earnings will be at the lowest level in four years.
  • The firm’s stock opened the week at a decade and half low of Sh3.60, but regained some ground to close at Sh3.75 on Tuesday.
  • The counter has shed 58 per cent since the beginning of the year, ranking the fifth worst performer at the bourse in the period behind Uchumi, Deacons, Kenya Orchards and Nairobi Business Ventures.

Kenya Power stock has fallen to a 15-year low as negative corporate news take a toll on investor confidence at the Nairobi Securities Exchange (NSE).

The company is set to release its financial results for the year ending June 2018 next week, having already issued a profit warning for the period, which means its earnings will be at the lowest level in four years.

The firm’s stock opened the week at a decade and half low of Sh3.60, but regained some ground to close at Sh3.75 on Tuesday. The counter has shed 58 per cent since the beginning of the year, ranking the fifth worst performer at the bourse in the period behind Uchumi, Deacons, Kenya Orchards and Nairobi Business Ventures.

Other than the expected lower profits, analysts say last month’s downward review of power tariffs for small commercial customers consuming less than 100 units per month is a negative for the firm, which has been banking on the previous tariff increase done in July to boost revenue. “The reduction in tariffs is a positive for small commercial and domestic consumers between 10 and 100 units (whose energy charge per unit has been reduced from Sh15.60 to Sh10) but a negative for Kenya Power’s revenues,” said Standard Investment Bank in a note on the change.

“Typically, tariff adjustments are meant to leave Kenya Power revenue neutral but the current amendment appears negative to the utility firm.”

In recent months, the firm has also been in the news over corporate governance issues, notably the charging of its executives with economic crimes over the procurement of transformers.

They have denied the charges.