Why you may not want to sell Centum shares despite Ksh2bn loss

Centum shares fell about 4.5% Friday to close at Ksh17 as investors reacted angrily to the company’s half-year loss. Centum made a loss of Ksh2 billion in the six months through September 2020. That marked a stark reversal of fortunes from a similar period last year when the company reported a Ksh6.8 billion profit.

Centum is an investment company with a diversified portfolio. It develops and sells real-estate property, including shopping malls, office complexes, and residential apartments. It also invests in shares of both private and public companies.

Private companies that Centum has stakes in include Sidian Bank, Isuzu East Africa and NAS Servair. Meanwhile, public companies that Centum has shares in include Longhorn Publishers, whose stock trades on the Nairobi Securities Exchange.

Why Centum reported a half-year loss

Centum attributed its half-year loss to the difficult economic environment caused Covid-19 pandemic impact. For example, demand for Centum’s real-estate property diminished in the half-year as individuals and businesses paused big spending in response to the pandemic.

Moreover, Centum did not receive dividend from its portfolio companies such as Longhorn Publishers in the half-year period.

Is Centum still a good investment after the half-year loss?

Many investors may not like the Centum loss. Indeed, no investor wants to put their money in a bad business. However, nobody can deny that these are extraordinary times and that the Covid-19 pandemic is hurting businesses around the world and Centum is feeling the same heat.

Centum has long been a strong business. The loss may well be a temporary setback that the company should recover from as the pandemic pinch eases. The highly effective vaccines from Pfizer, Moderna, and AstraZeneca have raised hopes that the pandemic might be nearing its end.

Stopping the pandemic should allow a quick return to normalcy and bring relief to businesses. Therefore, those investing in Centum for the long-term may have little to fret about the company’s half-year loss.

While Centum’s loss is making the headlines, many forget that the company actually continued to strengthen its balance sheet. For example, Centum reduced its debt by Ksh4.1 billion in the six months through September. A strong balance sheet should not only make Centum more resilient but also allow it to take advantage of opportunities arising from the pandemic.

Moreover, Centum CEO James Mworia said the company’s second-half is progressing well. For example, some of the companies that Centum has shares in have resumed distributing dividends.

How to buy Centum shares

Centum shares trade on the Nairobi Securities Exchange under “CTUM” ticker symbol. To be able to buy Centum shares, you will need to open a CDS account if you don’t already have it.

You can open the account with a stockbroker or a bank that have a stock trading department. Once you set up the CDS account, you can now proceed to start investing in Centum shares.

Decide the number of Centum shares you want to purchase and place your order. Make sure to provide the broker with the money to buy the shares for you. Moreover, bear in mind that the minimum number of Centum shares you can purchase in a single transaction is 100 units.