Sugar on display at a supermarket. 09/06/15. PHOTO: TITUS MUNALA/STANDARD
Mumias Sugar and Home Afrika both have a beautiful history. One is the only listed sugar miller and the other is the sole listed real estate company.
But a horrid story has caught up with them and they are now at the centre of focus on the Nairobi Securities Exchange (NSE) trading floor. They are the only stocks currently trading below Sh1.
At Sh0.90, Kenya’s oldest sugar company, Mumias Sugar has wiped out 85.6 per cent of its value when compared to the 2001 listing price of Sh6.25. This means the current 1.53 billion shareholders have seen their wealth eroded up to the floor price.
For a share which at one point rose to as high as Sh60, trading at below Sh1 leaves investors regretting why they competed to own a stake in this now bitter yet still ‘Natural Sweetness’ counter.
Five years after a successful IPO, the firm came back to the market for more money in 2006 through additional offering. This time, it sold each share at an offer price of Sh49.50, a clear indication that it was a money maker for investors.
At that time, one of its largest single shareholder Baloobhai Patel, an entrepreneur and philanthropist with 17 million shares, would have made a cool Sh841.5 million had he decided to offload his stake.
But then he held on, perhaps setting his eyes at good old days of Sh60 per share. By the time he gave up and called it quits around 2014 as revealed by a change in shareholding list that saw him exit top ten list, his wealth had been eroded.
He made about Sh42.5 million as the share was averaging Sh2.50. Today, had he kept his stake, he would fetch only Sh15.3 million, a 64 per cent drop.
In June 2014, docked with mismanagement and industry challenges, the firm’s counter was axed from NSE20 index, an indication that it was no longer reflecting the market conditions for best 20 stocks.
Abdul Karim Charturbhai Popat, the fifth highest shareholder as at June 2014 with 14.4 million shares is now worth Sh13.68 million yet in 2006, his wealth from this counter was Sh712.8 million.
For the Kenyan government, the principal shareholder with 306 million shares, their stake’s value is now Sh1.81 billion less than it was 16 years ago. Had it wanted to exit the Western Kenya based counter in 2006, it would have pocketed Sh825.4 million higher.
Compared with the high of Sh60, selling their stake now would give them a loss of Sh1.15 billion. Combined investors whose 1.081 billion shares are out of top ten zone will only fetch Sh997.3 million now yet in the good old days of Sh60 per share, their paper wealth would have been Sh65.5 billion.
This scary tale is catching up with a new entrant Home Afrika. It entered the bourse in 2013 through the Growth Enterprise Market Segment (Gems) and has eroded the value by 92.5 per cent. From Sh12, it is now only worth Sh0.90.
Profit warnings in a record three years has helped erode the value of a share that once hit a high of Sh25 on the first day of trading as investors tasted the supposed-to-be new found gem in Gems market.
On July 15, 2013, just after listing, the share took almost immediately to more than double its price to Sh25. This means that on the first day of trading, investors had made a cool Sh5.27 billion paper gain on their stakes in Home Afrika. Perhaps, holding on with hope that it would keep looking to the skies is a decision they’ll live to bite fingers for.
Between mid-July 2013 and early October 2013, the price fell to Sh6 as ow courting paper loss of Sh3.8 million or Sh19 loss on every share sold.
Between mid-October 2013 and early January 2014, it fell to another low of Sh5.40. For an investor still holding his original stake at time of listing, their wealth is now down by Sh2.67 billion. For those who bought when it had hit its peak at Sh25, they were worse off.
From a price of Sh4.10 in 2014, the share shed 37 per cent of its value in 2015 followed by a further 52 per cent drop last year. It closed the week trading at Sh0.90.
This means that for an investor who bought 200,000 shares in 2014 and gives up now, a loss of Sh640,000 will be his or her portion.
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And for the one who bought the same number of shares when it was at its peak of Sh25, getting rid of it now will have to swallow a bitter pill of Sh4.82 million loss.
Overall, from a high market capitalisation of Sh10.13 billion in 2013, the firm is only worth Sh365 million now, 96.4 per cent lower.