[2007-09-05]  Buy BATU Shares - Advisors
INVESTORS on the Uganda stock exchange have been advised to buy BATU shares following an unpredicted quick return to profit making by the company this year.

Batu was losing millions of shillings due to high costs of production, illicit trade and low quality leaf exports since 2003.


The cigarette manufacturer posted Shs31 million in its 2007 half year profits up from a loss of over Shs1.2 billion in its 2006. The occurrence is expected to drive up the price of the company's share starting this week.

"Last week we upgraded Batu to a buy mainly because we bought in the management's strategy and ability to control the costs and improve leaf quality. The company however beat our forecasts, and management is confident that they will be able to continue to deliver by controlling costs and improving efficiency," said a report from Renaissance Capital's trading and research officials Mr Peter Mushangwe and Gabriel Omongot on Friday.

Renaissance, a registered fund manager, investments advisor and dealer/broker and a member of the Uganda Securities Exchange.

The investment advisors had previously advised investors against depositing their eggs in the Batu basket because the company's share price was slumping.

Batu share price started of at Shs1000 during its initial public offering, rose to Shs1, 200 and subsequently crashed to the current Shs300.

Confidence in the company dropped due to mismanagement issues that have been rectified according to Mr Mushangwe.

The brokerage firm noted that Batu recorded a positive jump in both its revenue and net profit, for the first time since 2003, following its painful rationalisation strategy that kicked off in 2005.

After last week's announcement of its profits, Batu's share price is forecast to rise above Shs 480 this year, according to market analysts.

About 2.4 million shares were sold on its counter last week following (second only to) Standard Bank's 9.5 million shares.

Renaissance says Batu's turnover grew by more than half from Shs 55 billion in the first half of 2005 to over Shs 84 billion in the first half of this year.

"Turnover grew due to increased efficiency that resulted in speeding up of shipments," the Renaissance report said.


Source: All Africa