East African Breweries Ltd, the region’s biggest beermaker, fell for an eighth day, its longest losing streak in almost two years, on speculation dividends will be cut because of declining profit.
The stock slipped 5.3 percent to 304 shillings by 3 p.m. in Nairobi, down 10 percent over eight days, the longest stretch of losses since Sept. 30, 2011. About 496,400 shares were traded, equivalent to 1.8 times of the three-month daily average volume.
Pre-tax profit for the fiscal year ended June will probably drop to 12.36 billion shillings ($141 million) from 15.25 billion shillings a year earlier, according to the median estimate of seven analysts in a Bloomberg survey. Earnings will be released on Aug. 23. First-half profit through December dropped 18 percent to 3.76 billion shillings as financing costs more than tripled, the company said in February.
The full-year dividend will probably fall to about 7.75 shillings per share compared with 8.75 shilling a year earlier, Eric Munywoki, a research analyst at Nairobi-based Old Mutual (OML) Securities Ltd., said in a phone interview. “Part of the reason for the share price decline is expectations of lower earnings” and its impact on dividend payout, Munywoki said.
EABL was rated lighten, equivalent to sell, in new coverage at Old Mutual last month, with a price target of 279 shillings.
The decline in shares today lowered EABL’s 14-day relative strength index to 21, according to data compiled by Bloomberg. A reading below 30 signals to some technical analysts the stock is oversold and poised for a rebound.
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