The shares of Williamson Tea Kenya and its affiliate Kapchorua Tea have rallied to all-time highs in the past week at the Nairobi Securities Exchange (NSE), after they received regulatory approval to issue bonus shares.
Williamson Tea closed trading at Sh334.50 on Monday, representing a one-week gain of 34.7 percent, while Kapchorua Tea added 26.5 percent in the period to settle at Sh413.50.
The two affiliated agriculture firms said on September 29 that they had received approval from the Capital Markets Authority (CMA) to proceed with their proposed bonus issues, which will see shareholders receive one new share for each held.
Williamson Tea owns 39.5 percent of Kapchorua, meaning it stands to add to its stock of shares under the bonus issuance.
The two companies have also registered higher traded volumes over the past week, indicating that some investors were keen to get into the stocks or increase their existing holdings ahead of the book closure for the bonus issues.
“This offer applies to individuals listed as shareholders in the respective company’s records at the close of business on Monday, October 13,” the two companies’ boards said in a statement last week.
Williamson Tea traded an average of 58,759 shares per day in the six trading sessions after the bonus approval disclosure, compared to an average of 2,616 shares daily in the previous week, while Kapchorua Tea traded an average of 4,414 shares daily after the announcement compared to 430.4 shares per session in the prior week.
Williamson Tea is seeking to raise Sh87.5 million by issuing 17.51 million shares of a par value of Sh5 each to shareholders, while Kapchorua Tea is issuing 7.82 million shares to capitalise Sh39.1 million. The bonus ratio of one for one means that the companies are effectively doubling the number of shares they have in issue.
The two firms are the latest at the NSE to run a bonus issue to capitalise some of their retained earnings, while rewarding shareholders with additional shares that have the potential of adding capital gains in future.
CIC Insurance Group was the most recent to issue a bonus in March 2025 at a ratio of one share for every 10 held, while Kenya Re issued a bonus of one share of r each held in May 2024.
In a bonus issue, a stock’s face value is not reduced like is the case in a share split. However, the share price normally adjusts in proportion to the issuance ratio, meaning that those buying up for the issuance will not initially see any valuation gain on their portfolios.
The two tea firms are looking to capitalise retained earnings at a time when profits for the sector have been hit by depressed market prices, following an oversupply of the produce and a strengthening of the shilling against the dollar that hit converted earnings for exporters.
In the year to March 2025, Williamson Tea reported a net loss of Sh166 million, reversing a net profit of Sh526 million a year earlier. Kapchorua Tea meanwhile saw its net profit for the period fall by 54.6 percent to Sh181 million.
Despite the loss, Williamson Tea and Kapchorua Tea paid first and final dividends of Sh10 and Sh25 per share respectively for the period.
The dividends were paid out on September 2 to shareholders on register as at July 31, meaning that the bonus shares being issued will not be eligible for a payout.
