Umeme Limited, a dual listed company, saw its shares drop heavily by 71% to KES.6.94 as market closed on 23rd September at the Nairobi Securities Exchange (NSE). While the company`s shares were going down in NSE, they remained relatively stable on the Ugandan Securities Exchange (USE), closing at 405 Ugandan shillings on September 23rd reflecting a 2.41% plunge year to date.
The share price decrease follows a July rally by Umeme to raise KES 13 billion for dividend payout when investors clumped into the company to seize a record interim payout of 222 Ugandan shillings per share
Factors leading to the share price decline.
Early this year Umeme`s 20-year electricity distribution concession came to an end, which led to a buyout dispute with the Ugandan government over unrecovered investment. The company expected the government to pay back USD 410 million but instead the Ugandan government paid only USD 118 million. This affected the company`s performance since Umeme`s trading was suspended from April to May. The uncertainty on the buyout dispute, has had a bearish investor sentiment, raising concerns about the delayed compensation.
Additionally, Umeme posted a loss of 166 billion Ugandan shillings in the recent half year results, which was a shift from the previous year`s profit, which made the company issue a profit warning.
Umeme`s future outlook
Impending financial results for the full year performance will shade light on the company`s trajectory. Moreover, development in the arbitration process will further impact the company`s current standpoint and also affect investor sentiment.
