Wealthy Opinions: Buying Opportunity??

I though to review KIPCO shares, which are listed on Kuwait Stock Exchange, after its recent announcement of profit for the year 2010.

KIPCO, a major investment holding company in the Middle East and North Africa (MENA) region, announced its financial results for the year 2010, making profit of KD 45 million, an increase of 22% on Y-o-Y basis. With this announcement, the company has delivered 19 uninterrupted years of profitability. The company is among few institutions who managed to sail the financial crises without any major breakdown. In recent past KIPCO's bonds were oversubscribed, reflecting strength in the management and in company's future.

All this is fine, but what is wrong with the share price? Though the financial position is improving, the share price movement is not in line with the progress. KIPCO's stock recently got hammered, due to sell-off. The stock has fallen over 16% after touching this years high (KD 0.465 fils), in comparison of just under 7% for KSE price index. Even on YTD basis the stock lags (fall of a little under 11%) index, which is fallen only 6%. The major reason I can associate the fall is the unrest in MENA region. KIPCO has subsidiaries almost in the entire MENA region including Egypt Libya and Tunisia, hence the negativity. Investors are concerned with unstable political situation these countries face which can affect KIPCO's profitability.

As a value investor one should not wait till things get to normal and rather should GRAB this opportunity to buy KIPCO shares NOW!!. The stock is trading at 9x its earnings (P/E, ttm). Its price to book value is less than 1, i.e. at 0.80. The stocks earning yield is well over 10% and the dividend yield is just over 6%. The management has announced improved performance in all its subsidiaries and has got huge plans which will eventually improve shares intrinsic value.

So why wait for the darkness to fade, I recommend to grab this opportunity before the sun pops out.

For more information, kindly refer to investors presentation here.

Happy Investing!!!