Safaricom shares below IPO price
NAIROBI - Mobile telephone operator Safaricom’s shares went below the Ksh5 price at which it sold during the initial public offering in May. The share price closed at an average of Ksh5.15 after hitting the Ksh4.95 mark for some deals in a market characterised by a bear run.
NAIROBI - Mobile telephone operator Safaricom’s shares went below the Ksh5 price at which it sold during the initial public offering in May.
The share price closed at an average of Ksh5.15 after hitting the Ksh4.95 mark for some deals in a market characterised by a bear run. The share sold at a high of Ksh5.50 in what is turning out to be a hard time for stock market speculators.
The company’s market value or capitalisation dipped to a new low of Ksh206 billion from a high of Ksh326 billion in the initial days of trading.
Though local investors are feeling the heat, pressure is seen to be more intense on foreign speculators who had hoped to exit with a quick kill, but now face the grim prospect of losses should they decide to sell and leave.
The bear run in the market is evidenced by a drop in the Nairobi Stock Exchange 20-share index from over 5,000 points to less than 4,588 points by close of business yesterday. Safaricom is among the 20-share index constituent counters.
Two investment banks, however, gave Safaricom share a fair value — an unbiased estimate of the worth of a good — above the trading values at the NSE. African Alliance at the end of June put the fair value of the share at Ksh5.70, only 20 cents above the foreign IPO issue price of Ksh5.50.
Morgan Stanley International — who along with Dyer & Blair were the transaction advisors for the IPO — gave the company a fair value of Ksh7.05 in their report dated July 15.
Before the IPO trading was launched, some analysts had said the IPO price was high and one even put the value at Ksh2.50 considering that it was only returning an earning per share (EPS) of 35 cents.
This was an improvement from 30 cents. Safaricom has the lowest EPS among listed firms, except two firms on the agricultural sector, two on the services sector and five on the alternative investment segment.
Business Daily
The share price closed at an average of Ksh5.15 after hitting the Ksh4.95 mark for some deals in a market characterised by a bear run. The share sold at a high of Ksh5.50 in what is turning out to be a hard time for stock market speculators.
The company’s market value or capitalisation dipped to a new low of Ksh206 billion from a high of Ksh326 billion in the initial days of trading.
Though local investors are feeling the heat, pressure is seen to be more intense on foreign speculators who had hoped to exit with a quick kill, but now face the grim prospect of losses should they decide to sell and leave.
The bear run in the market is evidenced by a drop in the Nairobi Stock Exchange 20-share index from over 5,000 points to less than 4,588 points by close of business yesterday. Safaricom is among the 20-share index constituent counters.
Two investment banks, however, gave Safaricom share a fair value — an unbiased estimate of the worth of a good — above the trading values at the NSE. African Alliance at the end of June put the fair value of the share at Ksh5.70, only 20 cents above the foreign IPO issue price of Ksh5.50.
Morgan Stanley International — who along with Dyer & Blair were the transaction advisors for the IPO — gave the company a fair value of Ksh7.05 in their report dated July 15.
Before the IPO trading was launched, some analysts had said the IPO price was high and one even put the value at Ksh2.50 considering that it was only returning an earning per share (EPS) of 35 cents.
This was an improvement from 30 cents. Safaricom has the lowest EPS among listed firms, except two firms on the agricultural sector, two on the services sector and five on the alternative investment segment.
Business Daily