Mumias drops to Sh2 as BAT soars to new highs

Money Markets

The entrance to Mumias Sugar Company. The firm's stock closed at Sh2.05 on Tuesday. PHOTO | ISAAC WALE 

By CHARLES MWANIKI

In Summary

• Mumias stock, already the lowest priced at the market, has endured a sustained period of negative investor sentiment.
• BAT continued its gains when it touched a new all-time trading high of Sh825, this time without the block trading that helped the stock register near maximum gains on Tuesday.

Mumias Sugar Company touched the Sh2 barrier at the stock market on Wednesday, weighed down by selling pressure from foreign investors.

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The stock, already the lowest priced at the market, has endured a sustained period of negative investor sentiment caused by management and financial performance woes.

Analysts say with losses per share at Sh1.1, it compares poorly with the Nairobi Securities Exchange manufacturing sector that has a sector price- to- earnings (P/E) ratio of 32.

“The share has not been very attractive to investors. Renewed interest in the stock can only come if investors are able to see concrete plans towards a revival of the company from both the management and the government,” said Old Mutual Securities research analyst Geoffrey Maina of the stock that closed at Sh2.05 on Wednesday.

Currently, the sugar sector is bracing for more upheaval after an announcement by the Kenya Sugar Board (KSB) of an impending deficit in sugarcane supply that could force several sugar millers to close shop.

A cane census report by the industry regulator released last month indicated that only 7.57 million tonnes will be available for crushing, against a demand of 8.3 million tonnes by the 12 sugar millers.

Mumias’ requirement stands at about 2.35 million tonnes, against projected supply of 1.16 million tonnes. Mumias was Wednesday joined on the big decliners’ list by plantation stock Eaagads which shed 9.6 per cent to stand at Sh30.75.

Crown Paints lost 5.7 per cent to close at Sh100 and BOC Gases shed 4.8 per cent to Sh139. BAT continued its gains when it touched a new all-time trading high of Sh825, this time without the block trading that helped the stock register near maximum gains on Tuesday.

The tobacco stock closed above Sh800 for the first time at Sh801, continuing to benefit from the lack of free float at the market where investors are actively seeking the tobacco stock anticipating its high dividend payout.

The Tobacco Control Board’s requirement that cigarette packs carry pictorial health warnings also threatens sales.