June 8 (Bloomberg) -- Uchumi Supermarkets Ltd., a Kenyan retailer that resumed trading last week after a five-year suspension due to bankruptcy, rose for the second day on speculation its shares fell too far too fast, making its stock attractive relative to peers.
The shares climbed as much as 6.1 percent to 10.5 shillings before trading 3 percent higher at 10.2 shillings by 1:24 p.m. in the capital, Nairobi. The stock lost 29 percent in four days after trading restarted May 31. Uchumi trades on a multiple of 4.4 times reported earnings compared with 14.8 times profit for the MSCI Frontier Market Index.
Uchumi went into receivership in June 2006 with debts of 2.2 billion shillings ($26 million), of which 957 million shillings was owed to Kenya Commercial Bank Ltd. and PTA Bank Ltd. The receivership ended on March 4, 2010, after most of the company’s debts were cleared and others converted into shares.
“There was knee-jerk selling from retail investors who have been holding paper that they want to convert to money,” Aly-Khan Satchu, an independent analyst, said in a phone interview from Nairobi today. “The reflex selling is over and we can see Uchumi has been cleaned up and is a strong candidate for a potential suitor. The consumer sector is extremely attractive for foreign investors.”
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