Kampala. In a period of only three months, shares of Uganda Clays Limited, (UCL) have lost market value by Shs8.1b.
The share price, according to market statistics from the Uganda Securities Exchange (USE) indicate that Uganda Clays’ share price has dropped from Shs29 in April to Shs20 in June.
The drop has resulted into a decline in market capitalisation, which stood at Shs26.1b in April, a Shs8.1b difference from June, when it was at Shs18b.
UCL, which listed 900m ordinary shares in 2000 has had a turn of bad luck over the years, failing to make a profit.
However, the company has in the last two years returned to probability.
In 2017, Uganda Clays registered a profit after tax of Shs2.39b and grew its revenues by 4.5 per cent to Shs27.20b up from Shs26b in 2016.
However, according to Ms Barbara Akello, a stock broker at African alliance, while the share price has dropped in the past three months, it’s should not cause of alarm as the sales are a matter of demand and supply.
“Since it is been small volumes, they could be looking to make some money and it is why they are selling. At the moment, buyers are dictating the price, and not the sellers. Buyers have been bidding at low prices which the sellers have also taken,” she said.
She went on to say that those that are selling shares at Shs20, bought them at Shs12 so it manifests as a profit to them.
Asked if the drop will escalate, Ms Akello said since there is demand for the shares, buyers will continue to determine the price in the market and is likely to drift between Shs20 and Shs19.
Mr George Inholo, the Uganda Clays managing director, said at the weekend that he was confident the drop in share price is market driven and would soon recover.
Uganda Clays has since 2007 grappled with huge loans, key among them the Shs10.5b debt to NSSF that has weighed down the company.
However, Uganda Clays has recently returned to profitability and has turned some of its loans into equity.
At an annual general meeting held on July 4, UCL said it was searching for an investor to help it increase production capacity and profitability.
Searching for investor
Realising production capacity. Uganda Clays recently announced it was looking for a strategic investor to help it realise production capacity and increase profitability.
National Social Security Fund (NSSF), which is the largest shareholder in Uganda Clays, has combined efforts with the tiles manufacturer to search for a partner who will increase the company’s capital base with a view of acquiring new production technology to position the company as a major competitor.
Mr George Inholo, the Uganda Clays managing director says they have already embarked on the journey to get a strategic investor to partner with them in the clay business.
Uganda Clays, he said, in 2017 widened it’s distribution network and segmented the company into territories with key partners in new sales, creating 13 outlets across the country.