Home Afrika's stock dipped to an all-time low at the NSE on Monday, with the downward pressure attributed to its lack of clear revenue growth projections and investors' valuation worries.
The real estate developer, which listed on the growth enterprise market segment at the Nairobi Securities Exchange 12 months ago, saw its share price close at Sh3.80 a piece.
This is less than a third of the Initial Public Offering price of Sh12 a share, which was widely viewed as over-valued considering the short history of the developer's financial performance.
Analysts polled by The Star expect the price to fall a little further before stabilising at a fair value as the buyer side is out-sized by sellers seeking exit.
"Despite a good set of results reported and an ambitious strategy not only in Kenya but Africa, (it) has been on a downward spiral," said Moses Waireri, head of research at Sterling Capital.
Davis Mika, a research analyst at Contrarian Investing Kenya Ltd, said the recent restatement of the developer's profits to conform to accounting requirements has watered down investor confidence on the counter.
"Investors are still sceptical about the viability of some of the company's ambitious projects such as those outside Nairobi i.e. in Kisumu and Machakos, given the fact that they haven't made any headway in raising capital to fund them," Mika said.
Daniel Kuyoh, a research analyst at Kingdom Securities, said: "We are seeing the company slow on their revenue growth trajectory, probably due to lack of funds with significant capital tied down in real estate investments. The turnaround time is longer than they had estimated."
Kuyoh said Home Afrika's price-to-earnings ratio is highly skewed owing to its low earnings in 2013 and investors may be struggling to find a fair value for the stock.
"We've seen increased supply in the market so we could expect a further slide, however once it reaches a floor price, we expect some upward potential," he said.
Further pressure on the counter is expected as more investors exit to buy better prospects in historically proven sectors such as banking and finance.
"(The) stock will only pick up when investors start seeing that they (Home Afrika) have made headway in some of their projects," said Mika.
The firm's net profit dropped by 25.4 per cent in 2013 to Sh80.63 million from Sh108.11 million following restatement of accounts to conform to the International Financial Reporting Standards relating to real estate. It did not pay dividend for the period.