JATU shares’ price is falling at an accelerating pace after nose-diving by 40 per cent in the last three weeks. The shares plunged from 3,260/- at the beginning of the year to 1,920/- on Tuesday.
Tanzania Securities said in its daily market report that Jatu counter was still active trading albeit at falling prices.
“Jatu counter is still trading, but with falling prices,” Tanzania Securities’ report said. Jatu, listed late last November, appreciated seven times. The price rallied from 420/- to reach its peak of almost 4,000/- and made an abrupt U-turn in the second week of this year. “There has been no fundamental ground on Jatu’s share price increase or a technical factor that justifies the same,” Tanzania Securities’ Jatu Equity Research report said.
The report, however, said lack of supply had been the main reason for share price appreciation. Jatu, for about three years, posted a net profit of about 6.0m/- to 40m/-. But Tanzania Securities projected the firm to make a loss in 2020.
Tanzania Securities forecasts Jatu’s profit after tax for 2020 to decline to a loss of 110.78m/- from the profit of 40.08m/- in 2019.
“This indicates that the company may look too aggressive in their forecasts and ignore the fact that start-ups companies face a lot of challenges and risks despite Jatu being in the cash cow industry,” Tanzania Securities’ report said.
However, Jatu forecast a loss of 33m/- in 2020 while in a real sense it made a loss of 48.04m/- for the year ending last June. Tanzania Securities also said Jatu’s share was overvalued and the company fair value price was 407/56 per share.
However, independent valuation, included in an information memorandum used during the listing, placed values of Jatu between 410/- and 430/-. Orbit Securities, a leading stock brokerage firm, said in a report earlier that the mystery of the sharp rise in the price of Jatu was mostly due to two main factors.
“One is the membership requirement to own at least 200 shares to be eligible to participate in the farming project...with a limited number of shares,” Orbit said in its weekly Market Synopsis report.
The firm also said the second factor was the sharp rise itself which sets a momentum of speculators to vie for the shares.
Currently, Jatu has a total authorised share capital of 125bn/-, consisting of 250 million ordinary shares at a nominal value of 500/- per share. The total issued and paid-up share capital amounts to 1.082bn/-.