Home Afrika touches lowest price since July listing

Tuesday, August 27, 2013 — updated on December 26, 2020 - 2 min read

NSE chairman Eddy Njoroge (from left), Vision 2030 Secretariat director-general Mugo Kibati and Home Afrika chairman Lee Karuri during the bell ringing ceremony, marking the company’s debut at the NSE last month. Photo/Salaton Njau

Home Afrika’s share touched the Sh12 listing price in Tuesday’s trading, marking its lowest point since its debut on the Nairobi Securities Exchange (NSE) in mid-July.

The real estate developer traded at between Sh13.25 and Sh12 to close the day at an average of Sh12.40 on a volume of 14,800 shares.

The company was tipped to reach the listing price after shooting to Sh25 on the first day of listing, which saw it trade at multiples much higher than the market average.

“For a third week, Home Afrika continued heading south, shedding off 12.8 per cent in this week. Bids for the stock continued pushing it lower and we expect the drop to cool off at levels of Sh12,” said a weekly report by ABC Capital.

This will mark the fourth straight week that the share has been on a consistent decline nearly seven weeks after it listed on the NSE’s newly created Growth Enterprise Market Segment (GEMS).

Last week, it was the biggest loser on the stock market, dropping by 12.83 per cent to Sh13.25 from Sh15.20 the previous week. Its market value has more than halved from the Sh10 billion reached on its debut at the bourse.

The real estate developer listed by introduction, which means it did not sell any shares to the public.

At the time of listing, it said it would use the stock market as a launching pad for raising capital, including an initial public offering or a bond offer, whose proceeds would be used for financing expansion.

Investment analysts had predicted a price correction on the stock.

“At Sh22.50, Home Afrika trades on a trailing price-to- earnings of 54.8 compared to the NSE’s PE of 14.4. The company also trades on a price to /net asset value share multiple of 24.7, which is quite expensive,” said a coverage note by Davis Mika, a research analyst at Contrarian Investing, who assigned the firm a fair price of Sh12.40.

At its recent AGM, shareholders gave the firm’s board the go-ahead to set up two Real Estate Investment Trusts (REITs) and a Sh10 billion property fund.

The firm said that investment banks, legal firms and other transaction advisers have begun working on a development REITs.