Uganda: Batu Share Finally Leaps Above IPO Price

Source from:  The Monitor (Kampala) 29 January 2008 01/29/2008

HAPPINESS is at last returning to thousands of shareholders who invested millions of shillings to acquire a stake in the tobacco processor, British American Tobacco Uganda. The excitement follows last weeks' spring back by the company's share price to Shs1020 just Shs20 above the Initial Public Offering price (IPO) of the stock seven years ago. Batu's latest share price leap also ended its close to three years trading jinx below its IPO price (Shs1000). The company's share price surged to Shs1,200 before it started its tumbling spree to its lowest price of Shs300 last year. As a result, the company recoded losses amounting to over Shs11.8 billion. However, during the last quarter of 2007, the entity announced Shs31 million in profit from its 2007/8 half year results. The announcement drew several investors to the Batu's counter with hope of harvesting better results the then low prices stock. The fresh demand for the entity's stock kick started the rise of its share price from shs305 to shs500 and closing at Shs990 the previous week. Mr Edward Ruyonga, the manager of Equity Stock Brokers told Business Power that the surge of the price is still flying high on expectations of better financial results from the company and hope of rising from the stock market limbo in which they have slept for more than 30 months. "It is because of projections that Batu could make good profit in the future and that they could earn good dividends," Mr Ruyonga said. In an earlier interview, Ms Cathy Adengo, Batu's publicist also told Business Power that the company earned $58 million in net revenue from export of 19 million kilogrammes of processed leaf up from 12.7 million kilogrammes and return of $29 million, in 2006. "So, there's a lot of demand but those who have the stock don't want to sale. They say have been holding on it for long and now they cannot sell it because they project that in a year or two things will get better and will earn higher dividends," Mr Ruyoka added. "Our share price has tripled since the last quarter of 2007. This is an indication of improved investor confidence in our business. It is very good thing for us to see that people are very keen to buy our shares," Ms Adengo said. She added that it is also notable is that people are very keen to buy and those who already have out stock are not willing to sale. People are holding on to their stock. During the last week's trading session, the Batu counter registered a remarkable 13,500 shares in volumes traded. Other counters that registered gains included New Vision Ltd which opened the week at Shs1,330 but closed at Shs1,360 and Bank of Baroda Uganda. The latter opened at Shs2,385 but closed at an all time high of Shs2,415 on Thursday. "Trading turnover gained over 71 per cent to Shs207.8 million, from the previous Shs121.3 million, buoyed by an 81 per cent increase in trade volumes on Stanbic Uganda from the previous session. The counter opened trading at Shs235 but with demand levels concentrated the shs230 level, the share shed 2.1 percent to close at Shs230," said a daily trading report from stock brokers Africa Alliance. Development Finance Company of Uganda closed at its opening value, Shs700, after losing Shs5 on Tuesday. Meanwhile the poor performance of the cross listed companies including Jubilee Insurance Kenya Airways and East African Breweries limited pulled down the USE All Share Index to 846.5 from 914.8 on Monday. The stocks are stilling suffering the negative aftermath of Kenya's election and post election which have prevailed since last year but there's hope for them to bounce back this year. Enditem