Uchumi Supermarkets Ltd., Kenya’s only publicly traded retailer, dropped the most in a week after its recommendation was cut to hold from buy at Old Mutual Securities Ltd, citing the stock’s rally this year.
The shares declined 0.6 percent to 15.95 shillings at the close in Nairobi, the biggest retreat since June 29. The stock has still more than doubled this year, the best performer on the Nairobi Securities Exchange All Share Index.
“The price has already risen significantly,” Old Mutual said yesterday in an e-mailed note to clients. “We expect revenue to be strong but costs might be high as well due to the opening of new branches during the year.”
Uchumi, which opened its first store in Dar es Salaam, Tanzania’s commercial capital, in August and a second one in Uganda, plans to open another seven outlets in the region, three in Uganda and four in Kenya, Managing Director Jonathan Ciano said in September. Sales in the year through June may climb 34 percent, he said at the time.
Pretax profit for the six months through December climbed 26 percent to 204.3 million shillings ($2.39 million), Uchumi said in January.
Uchumi resumed trading in Nairobi in May 2011, following a five-year suspension, after most of its debts were cleared and others were converted into shares, according to data compiled by Bloomberg.