Longhorn share rises to Sh17.75 on second day of trade at bourse

Longhorn Kenya sustained its share price gain at the stock exchange, closing the second day of trading at Sh17.75 per share— a 27 per cent increase over Wednesday’s debut price of Sh14.

Thursday’s price saw Longhorn’s market capitalisation climb to Sh1.03 billion, up from the listing valuation of Sh819 million.

The second day of trading was also characterised by a small trading volume of 600 shares. Analysts reiterated their earlier position that it was still too early get a clear picture of the publisher’s market price.

“I think it is too soon to determine its value until it trades for a while and in larger quantities,” said Mr Renaldo DeSouza, a research analyst at Genghis Capital.

DeSouza however said the share is expected to trade above the Sh14 listing price. “Supply was relatively weak thus may support the price above Sh14 in tomorrow’s session. Interest was exclusively local,” said a market report by Sterling Capital after the first day of trading.

Longhorn shares closed 15 per cent higher on the publishing firm’s debut at the stock exchange on Wednesday, raising the company’s market valuation by nearly Sh125.5 million to Sh944.7million.

(Read: Longhorn Kenya shares surge 43pc on market debut)
The counter recorded a single trade of 1,000 shares touching a high of Sh20 per share a few hours after listing, but later closed at an average price of Sh16.15 on a total volume of 4,000 shares.

Longhorn Kenya became the first listing of 2012 after floating 58.5 million shares by introduction on the Alternative Investment Market Segment of the NSE.The majority owners are Centum Investment Company (20.47 million shares)—which is also listed at the NSE, and Francis Thombe Nyammo who directly holds 6.4 million shares and indirectly through Pacific Futures and Options Limited (14 million).CIC Insurance and Deacons are also expected to list by introduction.

Market hopes are that as the rate of inflation and interest rates drop, investors’ interest in stocks will also be rekindled.

Data from the Kenya National Bureau of Statistics (KNBS) indicates that inflation dropped to 13.06 per cent in April, down from 15.6 per cent in March, and treasury bills have been gradually falling with expectations to drop further to single-digit levels.

(Read: Kenya inflation slide signals lending rates fall)
This is expected to sweeten stocks which are trading at low valuations given the single-digit price to earnings ratios. But the weakening shilling against the dollar has put a spanner in the works, in addition to political and security risk.