Uchumi Falls to Lowest in Six Months on Valuation: Nairobi Mover

Uchumi Supermarkets Ltd., Kenya’s only publicly traded retailer, fell to the lowest level in more than six months as investors sold the stock on bets its valuation is too high compared with the nation’s bourse.

The stock dropped 6.1 percent to 18.55 shillings by the close in Nairobi, the lowest since Oct. 17. Almost 11 times the three-month daily average volume of shares were traded, according to data compiled by Bloomberg.

Uchmi’s price-to-earnings ratio is 18 percent, compared with 14.8 percent for the Nairobi Securities Exchange (NSEASI) All Share Index.

The ratio “is quite high so it is trading at a premium compared to the market, it is overvalued,” Davis Mika an analyst with Nairobi-based Contrarian Investing Kenya Ltd., said by phone.“They have been struggling to maintain operating costs and grow sales so most investors are interpreting this negatively and exiting.”

Neither Chief Executive Officer Jonathan Ciano nor Finance Manager Chadwick Okumu were immediately available to comment, according to a person who answered the phone at the company’s office and didn’t give her name.

Sales in the six months through December climbed 1 percent to 7.59 billion shillings ($91 million) while operating expenses jumped 28 percent to 1.55 billion shillings, the company said in February. Profit before tax was 131.9 million shillings, compared with 204.3 million shillings a year earlier.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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