Uchumi Supermarkets is considered one of the top performers at the Nairobi Securities Exchange(NSE), its share price being considered the fastest rising this year. The counter has been on the investors’ radar for the past fortnight and a constant feature on the daily and weekly top price gainers at the NSE. At the close of NSE trading session last week, the retailer’s share price surged 54% to KSh 0.74, its highest level since 2019.
When trading ended this Monday 24th November, the retailer was one of the biggest movers, its share price rising by 8.11% to KSh 0.80 ahead of Safaricom, KenGen, Cooperative Bank and Kenya Reinsurance Corporation, which though on the list of top movers, had their prices decline by 3.52%, 0.98%, 1.25% and 0.32% respectively.
Investigations by this publication has revealed that the retailer is now active off-field in several retail outlets after being away from the market for more than two years, one of the reasons the share price is springing up, making it a good add on the watchlist of many discerning investors.
Uchumi shares performance
Available data shows that the counter, with a market capitalization of KSh 270 million, has a 335.29% year-to-date performance, only behind top performer Sameer Africa, whose share’s YTD performance is 482.30%. The counter currently has a huge volume of buyers with no sellers.
The retailer has had a good run at the NSE, despite the fact that the listed retailer is just one court case away from liquidation. Activity at the counter has been heightened, boosted by its recent earnings report, which showed a paltry KSh 8 Million Net Profit, the first positive new on Uchumi in years.
For tactical and informed investors at the NSE, Uchumi shares presents an opportunity and have been making money on the year throughout this year.
According to investment insiders, the rally in Uchumi shares has majorly been driven by investor sentiments and speculator activity, even as the retailer is fundamentally still struggling and only earning huge rental income from one of its stores that have been rented out.
The Uchumi script has striking similarities to that of Mumias Sugar where speculators made money from it a few years back, until they became fully aware of the extent of the sugar miller’s debt load.
Interestingly, investor activity on Uchumi’s counter has not slowed down even after details emerge that auditors misled the public on the retailer’s Rights Issue, whose proceeds were used for unintended purposes, including paying off debts owed to suppliers and creditors.
While the retailer is just a court case away from liquidation, investors are still hovering over the counter as long as the firm continues to issue positive news. Sentiments, in this case, is ruling over fundamentals, an investor habit that is replicated in other stock markets the world over.
Since being declared insolvent in 2019, the retailer has held six creditors’ meetings the last one agreeing to sell off the Kasarani Mall Limited property. The sale is now still subject matter in court. as well as land measuring 17 acres.
Additionally, the retailer has been on a debt restructuring and extension of repayment terms of its debts. A moratorium is in place to protect the retailer’s assets from forced recovery actions. The sale of the Kasarani Mall property is still a subject of court proceedings. The plan was to do a partial conversion of some of Uchumi debts into preferential shares.
The Government (GOK) and Kenya Development Corporation [KDC] debts have since been converted into long-term, non-interest-bearing loans, which are payable from 2026.
The Insolvency manager states that investigations conducted by the Office of the Attorney General and the Director of Public Prosecution confirms that Kasarani Mall Limited, has a valid Title.
He warns that if Uchumi’s appeal court against this property is unsuccessful, the only other option will be to liquidate Uchumi Supermarkets.
In its 2024 Annual Report, the retailer mentions that while challenges remain-particularly around liquidity, litigation risk, and market competition—the foundations laid in 2024, asset protection measures, and corporate business development are expected to support continued recovery.
The retailer has also successfully leased the Lang’ata Property to a third-party tenant ensuring a consistent rental
income stream. This property is no longer underutilized and is secured from the risk of a distress sale. The property’s long-term commercial opportunities, said the retailer, are thus preserved.
The retailer has also reached an Out-of-Court Settlement with UBA Bank, ensuring that it secures the Lang’ata Property. The firm said it this annual report that this settlement with UBA has significantly reduced the retailer’s litigation risk and ensured its control over this critical asset that is already earmarked for creditor repayments.
The Financial Status of Uchumi Supermarkets
In its 2024 Annual Report and Financial Statements for the period ended 30th June 2024, the retailer mentions that its recovery now hinges on the outcome of its dispute with Kenya Defence Forces(KDF) over the Kasarani Mall Limited investment property that also includes 17 acres of prime land. The retailer intends to dispose off these assets to settle its remaining debts.
In 2024, the firm recorded an increase in sales to KSh 65.4 million from KSh 36.1 million in 2023. Gross Profit was KSh 15 million compared to KSh 5.5 million in 2023 while total income grew to KSh 47.6 million from KSh 13.6 million in 2023.
The Group recorded an operating loss of KSh 62.1 million compared to KSh. 50 million) in 2023. Non trading. The Total Comprehensive Income for the year was KSh 111.9 million compared to a loss of KSh 311.5 million in 2023.
As at 30th June 2024, the retailer’s balance sheet size was worth KSh 3.15 billion compared to KSh 3.43 billion in 2023. The Net Working Capital remained negative at KSh 7.72 billion against KSh 7.86 billion in 2023. The firm’s Shareholders’ Fund, what owners of the business are to be paid were the business face liquidation, was a deficit of KSh 6.98 billion compared to KSh 7.09 billion in 2022.
“We are not blind to the challenges ahead. The retail sector remains highly competitive, our liquidity remains tight, and our recovery hinges on the continued cooperation of creditors, the timely resolution of pending legal maters, and our ability to preserve cash flows from leasing and corporate sales,” said John Karani, Uchumi Supermarkets Limited Board of Directors
ALSO READ: Uchumi Stirs NSE with a KSh8m Net Profit
Leave a comment