Home Afrika Falls by Half Since Trading Debut: Nairobi Mover

Home Afrika Ltd., Kenya’s worst-performing stock this month, extended a slide to cut its listing price in half amid speculation the shares were too expensive relative to companies on the Nairobi Securities Exchange.

The shares fell 6.4 percent to 12.40 shillings by the end of trading in the Kenyan capital. That compares with a closing price of 25 shillings on July 15 at Home Afrika’s debut. The 14-day relative strength index has been below 30 since then, a level that signals to some technical traders that a security is oversold and poised to gain.

“At the beginning the shares rallied sharply on very thin volumes,” Aly-Khan Satchu, chief executive officer of Rich Management Ltd., a Nairobi-based adviser to companies and high net-worth individuals, said by phone. “We are now at a more equilibrium price and to get the price much higher than here people will need to see some real project execution by the company.”

Shares of Kenya’s only publicly traded real-estate developer were offered at 12 shillings, valuing the company at 54.8 times earnings, Davis Mika, an analyst at Nairobi-based Contrarian Investing Kenya Ltd., said last month. That compares with a price-to-earnings ratio of 16.9 for the NSE 20 Index on July 15 and 9.2 for the all-share gauge, according to data compiled by Bloomberg.

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