Tile maker’s stock gains 23pc as NSE drops points

PHOTO | FILE Olympia Capital chief executive director Michael Matu. The firm’s stock continued a rally that began two weeks ago despite what analysts termed as little strategic interest.

What you need to know:

  • Olympia Capital share rallies to a 12-month high as investors await anouncement of first quarter results by companies

Olympia Capital Holdings, a local maker of building materials, topped last week’s gainers at the Nairobi Securities Exchange as the market dropped three percentage points.

The stock continued the rally that began two weeks ago despite what analysts termed as little strategic interest to emerge as the biggest gainer after it appreciated 23.66 per cent to close the week at Sh5.75.

The share price of the small counter had at some point during trading on Friday, reached a 12-month high of Sh6 before settling at Sh5.75 at the close of trading.

“The counter has benefited from speculation and nothing really much,” Afrika Investment analyst Ronald Lugalia said on the phone.

The share price has largely received support from high demand for the stock, with very limited supply. Its shares are also liquid due to concentration of many shares in the hands of a few.

The firm’s main interests are in the manufacture of goods like floor adhesives, aluminium window and door frames, curtains, cleaning chemicals, fire prevention equipment, and water pumps, all targeting the construction industry.

A lot of potential

With subsidiaries like Dunlop Kenya Ltd, Olympia Capital Corporation (holding company Southern Africa operations), Kalahari Floor Tiles (based in Botswana), it sees a lot of potential in the growing real estate industry in Kenya and Africa.

But analysts say it is increasingly facing stiff competition from  importers of tiles and similar goods it deals in.

The market, on the other hand, succumbed to continued profit-taking and price corrections on some counters following a rally two weeks before to close the week lower, with the NSE 20 Share Index standing at 4868.29 points.

The index had closed the previous week at 5020.5, but analysts expect it to be driven up by the naming of the Cabinet by President Uhuru Kenyatta and expected release of the first quarter results by companies starting next week.

“Generally, the market has shown a mild correction, with investors realigning their portfolios in line with reported and expected earnings,” Standard Investment Bank (SIB) analysts said in their daily report on Friday.

The naming of the Cabinet, according to SIB analysts, is expected to unlock business opportunities with settlement of dues for large contracts — payments which had been frozen.

“We think the naming of Cabinet members next week may well prove to be a catalyst for the market as the government officially opens for business. Payment for large contracts — currently suspended — is expected to be lifted,” the analysts further noted.

Safaricom led the movers pack, accounting for 58.98 per cent of the market. This follows positive reactions from investors after Communications Commission of Kenya data showed that the telecom market share and overall performance across all business lines for the quarter to December 2012 had improved.