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Satchu's Rich Wrap-Up
Thursday 03rd of May 2018

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Home Thoughts

Its just myself and the Two Golden Retrievers at one for a few days.
Its not very often that I ave been all on my own at Home. Far prefer
having the Missus about and the Daughters too even if they are
typically locked into their own redoubts doing their own thing and
occasionally surfacing to be fed.

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Kim Jong Un is masterfully playing Trump's game @business
Law & Politics

Donald Trump will soon sit down to the most consequential negotiation
of his career if, as expected, he becomes the first U.S. president to
meet a North Korean leader since the devastating war on the peninsula
in the 1950s. Trump, of course, wrote a book on dealmaking, only this
time nuclear war and peace will hang in the balance, rather than a
real estate contract. And on the evidence so far, his sparring partner
Kim Jong Un has mastered The Art of the Deal, too. In fact, frequent
North Korea visitor Dennis Rodman told TMZ he gave Kim a copy of the
book for his birthday in 2017.
Trump offered 11 pieces of advice to budding negotiators in his 1987
book, and Kim seems to have put at least half of them to good use,
starting with the first: Think Big. It was Kim who proposed a meeting
with Trump earlier this year as he sought to de-escalate a spiral of
threats and counterthreats over a series of nuclear and ballistic
missile tests. What nobody knows, as new national security adviser
John Bolton acknowledged on April 29 on CBS’s Face the Nation, is
whether Kim really means to put North Korea’s complete, verifiable,
and irreversible disarmament on the table.
The language on denuclearization that Kim has used isn’t new, and
longtime observers of North Korea’s seemingly endless dance with the
U.S. are skeptical. His true goals may instead be to split the U.S.
from its allies in South Korea and Japan, loosen the economic
sanctions that are strangling his country’s economy, and string out
nuclear talks until the White House has a less explosive occupant. In
some of those areas, Kim has already changed the conversation while
giving away very little, beyond a moratorium on nuclear tests that may
no longer be needed. “He’s done this masterfully, obviously wedging
and decoupling to make daylight between these alliances,” says
Jonathan Berkshire Miller, a senior visiting fellow at the Japan
Institute of International Affairs, a Tokyo-based think tank.
Next up among the pages Kim already seems to have torn from Trump’s
dealmaking book: Know Your Market—in this case Trump. Kim appears to
have recognized that the latest White House occupant would be more
willing than any before (and most likely after) to ignore both North
Korea’s appalling human-rights record and warnings from the U.S.
foreign policy community about the risks of holding such a meeting.
Quickly organized and without scripted outcomes, the summit is a
high-stakes endeavor, especially given Pyongyang’s past history of
double-dealing over nuclear commitments.
“I’ve been through three North-South summits,” says Daniel Sneider, a
lecturer in East Asian studies at Stanford, recalling that Kim
Dae-jung, a former South Korean president, won the Nobel Peace Prize
after a similarly ballyhooed meeting with North Korea in 2000. “Does
it lead to denuclearization? I don’t think so.”
This is where Kim has the most to gain. Sanctions have exacted a
severe toll on North Korea. While no reliable official data exist for
the economy—outside estimates have to be made by extrapolating from
consumption of cooking oil, among other creative methods—this is
undoubtedly a poor country. According to South Korea’s central bank,
North Korea’s nominal gross domestic product was about $30 billion
($1,300 per capita) in 2016, compared with $1.4 trillion (more than
$27,000 per capita) in the South. United Nations sanctions have played
a role, driving exports down to $1.9 billion last year from as much as
$3.5 billion in 2012, according to the International Monetary Fund.
That’s left North Korea reliant on China for 86 percent of its
exports, more than twice the share from a decade ago. The resulting
squeeze on foreign currency reserves may have drawn Kim to the
negotiating table, according to analysis by Bloomberg Economics.
One rule in Trump’s book that neither man seems to be following is to
maximize alternatives in case things go wrong during negotiations. An
acrimonious collapse of talks, between men who not long ago were
deriding each other as the “Little Rocket Man” and “mentally
deranged,” could leave the peninsula as close to war as if there had
been no talk of a summit at all.

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30-APR-2018 :: "A new history starts now. An age of peace, from the starting point of history."
Law & Politics

The Events that took place on Friday at the truce village of Panmunjom
and during the Inter-Korean Summit were breathtaking for the Hollywood
Optics. The Opening Shot of Kim Jong Un surrounded by a Phalanx of
North Korean Officials [later replayed as Chairman Kim sat in his
Presidential Vehicle surrounded by his Ninja bodyguards] was almost as
good as the opening Sequence in PT Anderson's Boogie Nights [Steadicam
operator Andy Shuttleworth]. This was Cinema of the highest level
which is no surprise when You consider that Kim Jong-Il the Father was
obsessed with Cinema and amassed arguably the world’s largest personal
film collection: over 20,000 bootlegged 35mm screening copies. Kim
Jong-Il also had a penchant for Hennessy Paradis cognac and for two
years in the mid-1990s, he was the world's largest buyer of Hennessy
Paradis cognac, importing up to $800,000 of the stuff a year.  Kim
Jong-Il began his career as the head of the state’s propaganda and
agitation department and its clear that Kim Jong-Un's sister Kim Yo
Jong who holds the same role and evidently handles all the optics, is
a chip off the old Block. Friday was tip-top Geopolitical Optics. Mike
Pompeo, the newly minted US Secretary of State [His predecessor was
fired via Twitter] had visited Pyongyang the previous week and
pronounced; that the young North Korean leader was "a smart guy who's
doing his homework"

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China installs missiles in South China Sea, says report @FT
Law & Politics

China has installed long-range anti-ship and anti-aircraft missiles on
three of its artificial islands in the South China Sea, further
solidifying Beijing’s military domination of the disputed waters,
according to a news report.

US network CNBC on Wednesday cited sources with direct knowledge of
the situation, saying that the deployment of the missiles had occurred
within the past 30 days. If true, it would represent a dramatic
military escalation in the region by China, which claims 80-90 per
cent of the disputed waters of the South China Sea.

China has in the past said it would not militarise the islands.
However, it has also said that the islands were its sovereign
territory and it had the right to defend them.

CNBC said the missiles had been deployed at Fiery Cross Reef, Subi
Reef and Mischief Reef — three islands that have been dredged out of
coral reefs in the past five years.

But experts said it was unclear why Beijing was choosing now to deploy
the missiles. “That is the $64,000 question, why now?” said Bonnie
Glaser of CSIS, “But I’m not convinced there was any particular
trigger . . . The Chinese are on their own timing for when they want
to do these things,” she said.

“They think they can get away with it and they are probably right,”
she added. “China continues to expand their control over the air and
sea in the South China Sea.”

While short-range weapons have been deployed temporarily in the
Spratlys in the past, this — if true — would mark the first time that
long-range, anti-ship and anti-aircraft missiles have been based
there. The militarisation further cements China’s military control
over the sensitive sea lanes, through which pass much of the world’s
seaborne oil cargoes.

CNBC said China’s YJ-12B anti-ship cruise missiles would allow it to
strike vessels within 295 nautical miles, while its HQ-9B long-range
surface-to-air missiles could target aircraft, drones and cruise
missiles within 160 nautical miles.

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28-AUG-2017 China has established control over the South China Sea.
Law & Politics

China has established control over the South China Sea. It has created
artificial Islands and then militarised those artificial islands
across the South China Sea. It is a mind-boggling geopolitical advance
any which way you care to cut it.

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For now though the tide has turned. The dollar has surged over three percent in two weeks @ReutersJamie
International Trade

For now though the tide has turned. The dollar has surged over three
percent in two weeks and U.S. Treasury yields US10YT=RR - a major
driver of global borrowing costs - have broken above three percent for
the first time in four years.

That has caused familiar jitters about the mountain of
dollar-denominated debt that has been issued in the developing world
in recent years.

They have borrowed at vastly cheaper rates by using dollars, but the
rise in the U.S. currency now makes the repayments more costly unless
they have been hedged.

The Bank for International Settlements this week said that a record 22
percent surge in debt sales last year pushed up the annual growth in
EM dollar debt 10 percent to $3.7 trillion.

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The company burned through more than $1 billion for the third time in four quarters.
International Trade

Musk, 46, said he won’t need to go back to equity or debt markets this
year to seek additional funds for Tesla, but crossing Wall Street may
be a bad idea. The billionaire wooed investors into buying $1.8
billion worth of bonds in August, which fell within a week. Five
months earlier, Tesla sold about $1.25 billion worth of stock and
convertible debt.

Musk aimed his sharpest words at Toni Sacconaghi of Sanford C.
Bernstein, who rates Tesla the equivalent of a hold. After the analyst
asked a question about whether the company could reach its 25 percent
gross margin target on the Model 3, Chief Financial Officer Deepak
Ahuja said recently imposed tariffs, more expensive commodities and
higher labor costs factored into the company’s guidance.

“Yeah, but we’re talking about a 3 percent to 5 percent difference,
and that’s something that we’ll solve like within three months to six
months later,” Musk said. “So don’t make a federal case out of it.”

Sacconaghi pressed ahead with another query about Tesla lowering its
2018 capital expenditure projection to $3 billion, from $3.4 billion.
Ahuja said the carmaker would spend less by simplifying its approach
to automation and curtailing infrastructure outlays.

“And so where specifically will you be in terms of capital
requirements?” Sacconaghi said.

“Excuse me. Next. Next,” Musk said to the call operator. “Boring,
bonehead questions are not cool. Next?”

“I think that if people are concerned about volatility, they should
definitely not buy our stock,” Musk replied. “I’m not here to convince
you to buy our stock. Do not buy it if volatility is scary. There you

“First of all, I think moats are lame,” Musk said. “They’re like nice
in a sort of quaint, vestigial way. But if your only defense against
invading armies is a moat, you will not last long. What matters is the
pace of innovation. That is the fundamental determinant of

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Tesla and General Motors both have a market cap of $51 billion @charliebilello
International Trade

Tesla Sales, TTM: $12 billion
GM Sales, TTM: $144 billion

Tesla Price to Sales Ratio: 4x
GM Price to Sales Ratio: 0.4x

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1987
Dollar Index 92.51 The US Dollar is up 3.6% in just over 2 weeks.  And
now stand at its highest level since Dec 2017
Japan Yen 109.59
Swiss Franc 0.9970
Pound 1.3605
Aussie 0.7522
India Rupee 66.615
South Korea Won 1075.64
Brazil Real 3.5510
Egypt Pound 17.6465
South Africa Rand 12.6519

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Telegram token sale is likely a victim of rising ICO scrutiny @business
World Currencies

Telegram Group Inc., an encrypted messaging app, has reportedly
scrapped plans to issue digital tokens in a public sale after raising
a whopping $1.7 billion privately.

“From a regulatory perspective, I think a public sale is considerably
riskier for Telegram than a private sale,” Bogart wrote in an email.
“Considering the amounts raised by Telegram via private sale, there’s
really no need to incur the additional risk of a public sale.”

Telegram, which has become a popular platform for ICO teams and
investors to communicate, held two rounds of private sales in February
and March, raising $850 million in each round from fewer than 200
investors. The British Virgin Islands-registered firm filed
documentation to the SEC known as Form Ds in compliance with Rule
506(c), which is an exemption for private placements, and the minimum
investment in the March sale was $1 million.

ICOs, which have raised more than $7 billion so far this year, have
been hailed by crypto enthusiasts as a way to democratize venture
investments. In that sense, Telegram’s fund raiser goes against what
ICOs were meant to achieve, Erik Voorhees, founder and chief executive
officer of cryptocurrency exchange ShapeShift, said in a tweet. “The
SEC has created an environment where only the rich (aka “accredited
investors”) are able to get access to financial deals. The plebeians
must stick to the lottery,” Voorhees said.

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Local emerging-market bonds have had a rough month
Emerging Markets

But for now, “on the margin, higher foreign ownership does imply more
sensitivity to a further sell-off in core rates markets,” Ozerov and
Trivedi wrote in a note to clients Wednesday.

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Gone, though, are the days when a French businessman's little difficulties on the continent can be solved by a discreet call from the Elysee Palace. It is Mr Bollore who has been abandoned @FT

Unfortunately for Mr Bolloré, the world of Francafrique has crumbled.
François Hollande, the former president, sought to put Franco-African
relations on a more modern footing, though his plans were partially
sidetracked when Paris resorted to old-style military intervention
after jihadis over-ran northern Mali in 2012.

Emmanuel Macron is having another go. Pierre Haski, an expert on
Franco-African relations, says the president has been influenced by
advocates of closer strategic ties between Europe and Africa. Mr
Macron wants to de-emphasise the military and rebuild commercial
links, minus the murk that characterised Francafrique.

Those attempts have run into problems, born of the lingering
resentment in former colonies that is just as potent as the admiration
identified by Mr Bolloré. Mr Macron’s assertion in a speech in Burkina
Faso that Africa has “civilisational” challenges provoked accusations
of racism.

Despite such teething problems, Mr Macron rightly emphasises that he
is the first president born after France’s former colonies gained
independence. The 40-year-old president can say, and almost with a
straight face: “I am from a generation that doesn’t come to tell
Africans what to do.”

Mr Macron would strongly contest Mr Bolloré’s assertion that France
risks abandoning Africa. Gone, though, are the days when a French
businessman’s little difficulties on the continent can be solved by a
discreet call from the Elysée Palace. It is Mr Bolloré who has been

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The Challenge for Ethiopia's New Leader: Unleash the Economy

Hailemariam said he last year introduced a proposal to the ruling
coalition’s 180-member decision-making council to partially liberalize
all but the financial sector of the economy, including the state
telecommunications monopoly EthioTelecom.

While the debate isn’t finished, Hailemariam said he’s laid the
foundations for partial liberalization. “I am sure Abiy is going to
complete it,” he said in an interview in the capital, Addis Ababa.

A problem hampering growth has been foreign-exchange shortages, a
result, Hailemariam said, of a widening gap between exports and
imports. The country’s trade deficit quadrupled to $14 billion in 2016
from $3.19 billion a decade earlier, as imports grew by a similar
margin, according to United Nations data.

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On Sale: This Year's Juiciest Dollar Bond, Paying Close to 10%

Angola came to market on Wednesday morning offering a 30-year Eurobond
with initial price talk of around 9.625 percent, along with a 10-year
tranche at 8.5 percent.

The deal, which may price on Wednesday, is set to be the juiciest from
a sovereign for a while. The last government to sell a dollar bond
yielding more than 10 percent was Ghana back in October 2015, while
Ecuador issued at 9.65 percent in December 2016. This year, the
highest-yielding deal has come from Kenya, which sold a 30-year
tranche at 8.25 percent in mid-February.

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"I am not the only leader who deeply felt the need to restore unity: the Right Hon @RailaOdinga did so too" @MEsipisu

“I am not the only leader who deeply felt the need to restore unity:
the Right Hon @RailaOdinga did so too. So let me praise the
statesmanship he showed when, on 9 March this year, he and I publicly
committed to reconciliation, with the Kenyan people as our witnesses”

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Crown Paints reports FY 2017 EPS +69.73% Earnings

Par Value:                  5/-
Closing Price:           85.00
Total Shares Issued:          71181000.00
Market Capitalization:        6,050,385,000
EPS:            3.14
PE:             27.07

Crown Paints FY 2017 results through 31st December 2017 vs. 31st December 2016

Total Assets 5.871607b vs. 5.059029b +16.062%
Equity 1.757616b vs. 1.562116b +12.515%
FY Revenue 7.351326b vs. 7.347557b +0.051%
FY Profit before tax 398.129m vs. 272.043m +46.348%
FY Profit for the year 223.294m vs. 131.796m +69.424%
FY Other comprehensive income 6.371m vs. 101.630m -93.731%
Basic and diluted EPS 3.14 vs. 1.85 +69.730%
Cash and cash equivalents at the end of the year [114.676m] vs.
71.258m -260.931%
Final dividend 0.60 vs. 0.60 –

Company commentary

Paint Sector experienced low growth which led to stiff competition
Tanzania - foreign investment and as well as domestic market
sentiments that are quite negative to business.


Strong results theconext of a +0.051% Year on Year Revenue expansion.

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Deacons reports FY 2017 EPS [6.81] Earnings

Par Value:
Closing Price:           2.35
Total Shares Issued:          123558228.00
Market Capitalization:        290,361,836
EPS:             -6.82

Deacons (East Africa) PLC full year 2017 results through 31st December
2017 vs. 31st December 2016
FY Revenue 2.005767b vs. 2.309091b -13.136%
FY Cost of sales [1.344997b] vs. [1.295175b] +3.847%
FY Gross profit 660.770m vs. 1.013916b -34.830%
FY Other income 13.562m vs. 16.080m -15.659%
FY Total income 674.332m vs. 1.029996b -34.531%
FY Administrative expenses [1.484191b] vs. [1.372886b] +8.107%
FY Net foreign exchange loss [13.341m] vs. [42.167m] -68.362%
FY Total expenses [1.497532b] vs. [1.415053b] +5.829%
FY Operating [Loss] before taxation [832.200m] vs. [385.057m] -116.124%
FY [Loss] for the year [841.428m] vs. [276.345m] -204.485%
Basic and diluted EPS [6.81] vs. [2.24] -204.018%
Total Assets 1.552835b vs. 2.281680b -31.943%
Shareholders’ Funds 330.018m vs. 1.172632b -71.857%
Cash & cash equivalents as at 31st December [103.389m] vs. [12.343m] -737.633%
No dividend

Company Commentary

Group faced a challenging economic environment during the year 2017 in Kenya.
Formal retail sector in Kenya had further challenges that depressed
its overall performance.
-> Over supply of formal retail property leading to cannibalisation
-> Collapse of Key Anchor Tenants that reduced customer Footfall into
sopping malls by over 60%
-> Increased competition and change in customer shopping trends

Group also faced disruptions in its supply chain following the
decision by Mr. Price to reduce trading margins, which led to cash
flow constraints that negatively affected performance of all brands.
Group revenues declined by 303m
MR Price brand alone contributed a decline of 324m with a margin loss
of 154m as a result of discontinued supply of stock by the Franchisor.
MR Price fixtures and inventory impairment amounted to 150.6m with an
overall loss contribution of 78% to the bottom line
Business bore further impairment from discontinued operations of the
baby sop store at the Junction Mall. and the Angelo store at the Sarit
centre of 15m
F&F brand continued to post positive results across the Chain with a
revenue of 131m in 2017
Board has appointed a Transaction Advisor to restructure the Capital Base.


I remain of the view that E-Commerce is a big Disruptor.

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by Aly Khan Satchu (www.rich.co.ke)
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May 2018

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