Kenya Orchards: Just A Wild Investment Thought

Kenya Orchards, a publicly listed company involved in fruit and vegetable canning and processing, has made a 532,280 shilling pre-tax profit for the six months between January and June this year – 300,000 shillings less than a Kenyan MPs’ average monthly salary.

The company’s shares have been at 3 shillings per share at the NSE for more than four years which is one of the lowest prices of any share with the exception of Eveready East Africa.

Assuming you find a willing seller and buy a 1 percent ownership stake in Kenya Orchards, you would pay 386,043 shillings -  less than half a million -  for 128,681 shares. However, the value of your shares will be higher because each Kenya Orchards share has an actual value of 4.4 shillings based on the value of assets the company owns.

If these assets are sold at their book value (their worth at 56.6 million shillings according to Kenya Orchards' balance sheet), your 1 percent stake will yield 566,196 shillings with a profit of 180,153 shillings on what you paid for the shares. With barely 1 million in yearly earnings, a sale of the Kenya Orchard's assets would be the only foreseeable way to reap from an investment in the company based on its current state.

Kenya Orchards has one of the lowest Earnings Per Share (EPS) – a company's profit divided equally for each share held by investors  - at KES 0.04 which is an improvement from KES 0.03 at the end of June last year.

The company’s revenue in the six months to June this year was 15 percent lower at 11 million shillings down from 13 million shillings last year. Kenya Orchard’s comparatively small margins were mainly due to business costs - known as cost of sales - which were at 10.21 million shillings; just 765,608 shillings less than the revenue collected in the six months.

For the end of last year Kenya Orchards posted a 100 percent rise in pre-tax profit to 1.3 million shillings. Read more here.

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