Olympia share in rebound on Nairobi real estate pledge

Olympia Capital Holdings has made a major comeback to crawl back ground lost last week, doubling price in the past two trading days as some investors took positively its pledge to focus on real estate.

Olympia moved to Sh7.50 a share on Wednesday on 18,000 shares, having opened the week at Sh3.70 on Tuesday.

On Tuesday the stock rose 86.5 per cent since it was trading without the regulatory 10 per cent price movement and and followed up Wednesday with a gain of nine per cent. It closed books on 25 cent a share dividend on Friday.

A week ago the stock shed 57.2 per cent while touching a one-year low of Sh2.50 despite posting improved half year 2014 results amidst reduced turnover and the return of Michael Matu to the helm.

Analysts said investor sentiment improved with the announcement that the company is redeveloping its real estate on Enterprise Road in Industrial Area, Nairobi, at a cost of Sh500 million as well as selling a property based on Nanyuki Road, Nairobi, by March next year.

“Any time a company mentions a venture into real estate their stocks have rallied. It is a sweet spot for investors at the moment,” said ABC Capital corporate finance manager Johnson Nderi.

READ: Olympia top owners bail out subsidiaries

While Olympia sales declined by 7.2 per cent to Sh330.3 million, profit after tax was up by 45.6 per cent to Sh6.6 million.

A decline in cost of sales meant operating profit rose 98.4 per cent to Sh38.2 million, boosting net earnings. The management attributed the fall in revenue to importation of cheap and low quality by competition.

Olympia Capital’s main investments are in companies dealing in the manufacturing and sale of construction industry products like floor tiles, adhesives, PVC windows, door frames, cleaning chemicals, fire equipment and water pumps.

The outlook for the whole bourse, however, remains constrained by tightening liquidity in the money market, which has seen trading activity, especially on bigger counters slowing down.

Car & General, that is also targeting real estate, has seen strong performance this week gaining four per cent to Sh54, and touching a one year intra-day trading high of Sh57 on Wednesday. Trading has generally declined at the bourse in recent days.

“A combination of heavy distribution activities by investors and CBK’s move to mop up excess liquidity in the money markets that has parched up the equities market continue to stoke the bourse’s decline,” said Genghis Capital in a market note.