Supermarket business is not very scalable. Nakumatt has reached its peak. Logistics are quite a hurdle for these companies. Even US investors advise to stay out of chains with branches all over the country.

Though Walmart [a department store] did very well over the years...

Ati its peak? hahaha with a formal retail systems have just hit 30% penetration. Outside Nairobi there are very few supermarkets. As the economy grows, income grows then spending grows. Best places people leave their money are supermarkets. I encourage Nakumatt to grow even more with the quality they have been putting in. Their finance costs is their biggest problem but a simple IPO will fix this.

No.
IPOs in Kenya, are often about raising 'cheap' money not creating value. If Nakumatt raises funds in an IPO to improve processes, open new branches or invest in tech then value may be created. If it gets 'equity' from others just to pay down debt then there's no Enterprise Value created.

It's tough for all sorts of (genuine not briefcase/speculative) businesses in Kenya.

Crowding Out Effect: GoK is borrowing like crazy domestically and making credit expensive for PRIVATE concerns.

Borrowing & then wasting billions to fund KQ, Mumias, Panpaper, etc.
Borrowing to fund political offices.
Borrowing to fund recurrent expenditure that doesn't add value.

All this borrowing at rates at 12-20% [for medium to long-term debt] is a disincentive to INDUSTRIAL and AGRICULTURAL firms which often form the basis of sustainable development. An investor is often better off NOT expanding in the face of loans at high interest rates. Or investing in tax-free, risk-free T-Bonds at 12%.

IMHO, Nakumatt needs to cut back on its expansion and work on reducing debt:equity ratio by improving its processes, sales/sf and cutting down on waste/theft. [This applies to any number of businesses.]

Actually here are some numbers for 2014:

Revenue: 51.6 billion
PBT: 305 million (823 million 2013, westgate?)
Debt: 15 billion

From a BD article: http://www.businessdaily...8/-/x9i5cz/-/index.html[/quote]


From the above figures it means their PBT is 0.59%. That profit margin is quite low.

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What do you take me for

due to weak projection and weak momentum by the bears, expect a reversal soon

This should be inscripted in wazua laws: When buying shares,use the technical perspective.When selling,use the fundamental perspective.

Gvt is considering a dispatch of 1.2 B to Uchumi. Heard on news that final modalities are in the works to either structure this as a loan or equity.