By James Anyanzwa
The Kenya Commercial bank (KCB) stock is undervalued, according to Mr Peter Muthoka, the bank’s board chairman.
This means the bank’s share price at the Nairobi Stock Exchange (NSE) does not reflect its true worth, considering the bank’s growth prospects and strong fundamentals.
But it is widely expected that consolidation or repurchasing of shares, particularly when a company’s share price is perceived as undervalued or depressed may result in a strong return on investment.
Muthoka said the board and management of the bank were committed to improving the price of the share.
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Share Price
KCB’s share is currently trading at around Sh18. per share.
"We want to implement a structured programme to enable our investors understand our business in terms of future prospects and value generation initiatives so that they can continue to invest in the business," he said.
Muthoka was speaking during the bell-ringing ceremony to mark the commencement of trading of KCB’s additional shares at the NSE trading floor in Nairobi, yesterday.
"At KCB, we offer a unique investment opportunity to our shareholders and we are confident that we can deliver value for them through both capital appreciation at the NSE and dividend payment through enhanced profitability," he said.
KCB raised Sh12.5 billion additional capital through a rights issue by issuing 732.4 million new shares to its shareholders, priced at Sh17 per share. The new shares comprise 637.3 million rights taken up by shareholders and 95.1 million additional shares allotted.
The issue offered two new shares for every five held. This resulted in over 2.9 billion issued ordinary KCB shares that are eligible to trade on the NSE, Dar es Salaam Stock Exchange, the Uganda Securities Exchange and the Rwanda market, where the bank’s shares are cross-listed.
Muthoka said the new capital position will allow the bank to double its business within the Central Bank’s prudential capital ratios, grow key asset areas such as mortgage lending and support young subsidiaries to stabilise and start returning profits.
"We want to make our operations more efficient and profitable, which is the only way to go if we have to live up to the huge stakeholder expectations on our shoulders," he said.
