UCHUMI SUPERMARKETS PLC — Investor Summary

Based on 2024 audited results

About Uchumi Supermarkets PLC

Uchumi Supermarkets PLC is one of Kenya’s oldest retail chains, founded in 1975 as a government-backed supermarket brand. It grew into a national retailer and was later listed on the Nairobi Securities Exchange (NSE), where it became one of the most recognized consumer-sector stocks.

Over the years, Uchumi expanded aggressively, but financial mismanagement, mounting debts, operational inefficiencies, and heavy competition led to repeated crises. The company was suspended from the NSE in 2006, later readmitted, but continued to struggle with losses, store closures, and shrinking market share.

Today, Uchumi trades at the lower end of the NSE market, supported mainly by speculation rather than fundamentals. With only two operating stores, high debt levels, and an unresolved land dispute, the company is far from the strong retailer it once was—transitioning from a national retail icon to a distressed, high-risk investment.

✅ 1. Quick Snapshot

Metric	Value
Sales (2024)	KSh 65.4M
Gross Profit	KSh 15M
Operating Loss	KSh 62M
Non-Trading Income	KSh 189.7M
Comprehensive Income	KSh 111.9M
Total Assets	KSh 3.15B
Total Liabilities	KSh 10.14B
Working Capital	–KSh 7.72B
Shareholders’ Equity	–KSh 6.98B
Legal Risk	Lost Kasarani land case → appealed

📌 2. Business Status

• Only 2 stores operating.
• Growth mainly from bulk corporate sales and Lang’ata rental income.
• Company still under CVA restructuring.
• Cash flow extremely weak.

it is a speculative gamble with very high downside and almost no fundamental upside at this stage.

BUY / HOLD / SELL  ANALYSIS

Verdict: SELL / DO NOT BUY

Uchumi’s 2024 financials show severe insolvency, heavy debt, legal risk, and a business model that cannot sustain operations.

Below is the detailed breakdown

🔴 Insolvent Balance Sheet

From the 2024 financials:

• Total Assets: KSh 3.15B
• Total Liabilities: KSh 10.14B
• Shareholders’ Equity: –KSh 6.98B (negative)

Meaning:

Uchumi owes far more than it owns.

Shareholders are deeply underwater.

An insolvent company cannot create long-term shareholder value.

🔴 Operating Losses Continue

Even though sales improved year-on-year:

• Sales (2024): KSh 65.4M
• Operating Loss: KSh 62M

Breakdown of cost pressure:

• Administration: 30.6M
• Staff costs: 18.1M
• Legal & professional: 15.6M
• General expenses: 13.4M

Meaning:

Costs are far higher than the gross profit.

With only 2 operating stores and corporate bulk sales, Uchumi cannot generate sustainable profit.

🔴 The 2024 Profit Is Not from Real Trading

Uchumi reported KSh 111.9M total comprehensive income, but:

• Operating loss: –62M
• True business loss before non-trading income: –65M
• “Profit” only appears after adding over KSh 170M in non-trading income (revaluations, adjustments)

Meaning:

The reported profit is an accounting gain, not actual supermarket performance.

It is not sustainable or recurring.

🔴 Kasarani Land Legal Loss — Critical Risk

• Court cancelled Uchumi’s title to the Kasarani land.
• Uchumi has appealed.
• The CVA recovery plan depends heavily on selling or leveraging this land.

If the appeal fails:

The CVA collapses → creditors may enforce recoveries → shareholders risk near-total wipeout.

🔴 Severe Going-Concern Warning

Directors openly state there is:

“Material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern.”

This is one of the strongest warnings a listed company can receive.

🔴 Cash Position Still Critically Weak

• Cash at bank: KSh 9.8M
• Bank overdraft: KSh 760M

Meaning:

Net cash is deeply negative.

Uchumi is surviving mainly on debt, CVA protection, asset revaluations — not cash flow.

🟡 Recommendation by Investor Type

Long-term investor:

❌ Do NOT buy

(Insolvent, no growth prospects, high legal uncertainty)

Dividend investor:

❌ Do NOT buy

(Has not paid dividends for years and cannot afford to)

Growth investor:

❌ Do NOT buy

(Business shrinking, only 2 stores left)

Value investor:

❌ Do NOT buy

(Negative equity makes the “value” illusionary)

Speculative trader:

⚠ MAYBE, but extremely risky

Only if you are gambling on:

• A successful land appeal
• A major turnaround
• A radical restructuring

Expect potential total loss.

📌 FINAL CALL

Uchumi shares are NOT a buy for 99% of investors.

The stock is only suitable for high-risk speculators who fully accept the possibility of a complete wipeout.

RISK SCORECARD 

Overall Risk Level: EXTREME

This scorecard highlights the key risks that make Uchumi a very high-risk investment.

Financial Risk: VERY HIGH

• Uchumi is heavily insolvent.
• Liabilities are more than triple its assets.
• Equity is deeply negative.
• The business needs major restructuring to survive.

Interpretation: The company owes far more than it owns. Without significant changes, it cannot continue operating normally.

Profitability Risk: VERY HIGH

• Core operations are still losing money.
• Reported profit comes from non-cash revaluation gains, not real trading.
• Sustainability is weak.

Interpretation: Uchumi isn’t making real money from its business operations. Any profit on paper doesn’t reflect actual cash earned, making long-term survival uncertain.

Liquidity Risk: EXTREME

• Working capital is massively negative.
• The company struggles to meet short-term obligations.
• Cash flow depends on asset sales and external support.

Interpretation: Uchumi lacks the cash to pay its bills and relies on selling assets or getting outside help to survive.

Legal Risk: VERY HIGH

• Uchumi lost the Kasarani land case.
• The appeal outcome is uncertain.
• If the appeal fails, the recovery plan (CVA) may collapse.

Interpretation: Legal challenges threaten the company’s recovery. Losing the appeal could make Uchumi’s turnaround plan fail completely.

Operational Risk: HIGH

• Only two stores remain.
• Brand strength is weak.
• Competition in retail is intense.
• Recovery requires significant investment, which Uchumi cannot fund internally.

Interpretation: Uchumi has limited operations and weak market presence. Fixing the business would require funds the company doesn’t have.

Governance & Going-Concern Risk: EXTREME

• Auditors issued a “material uncertainty” warning about Uchumi’s survival.
• This is one of the strongest red flags a company can receive.
• Future viability is not guaranteed.

Interpretation: Even the auditors are warning that Uchumi might not survive. This is a serious alert for investors.

Market Risk: HIGH

• Investor confidence is low.
• Share liquidity is thin.
• Price volatility is high due to speculative trading.

Interpretation: Few investors trust Uchumi, shares trade infrequently, and prices can swing wildly.

Shareholder Risk: EXTREME

• Shareholders are last in line during insolvency.
• Negative equity means high probability of dilution or wipeout in restructuring.

Interpretation: If the company fails or restructures, current shareholders may lose most or all of their investment.

Risk Summary

• Financial Health: Extreme
• Profitability: Very High Risk
• Legal Position: Very High Risk
• Operational Strength: High Risk
• Shareholder Safety: Extreme Risk
• Overall: Uchumi is a very high-risk, near-distress investment.

VALUATION SCENARIOS (BEST CASE vs WORST CASE)

This section shows what Uchumi shares could be worth under different outcomes.

It is not a prediction — it is scenario modelling based on current facts.

Scenario 1: Best Case (Optimistic Turnaround)

Outcome: Low probability

Description: Uchumi wins the Kasarani land appeal, sells assets at good value, restructures debt, and stabilizes operations.

What it means for valuation:

Share dilution still likely, but the company survives.

Share price may see a temporary speculative rally.

True fundamental recovery would take years.

Investor outcome:

High risk with only moderate upside.

Speculators may benefit short term; long-term investors still face uncertainty.

Scenario 2: Middle Case (Weak Survival)

Outcome: Medium probability

Description: Appeal is delayed or partially successful, CVA timelines extended, stores remain operational but unprofitable.

What it means for valuation:

Share price stays low.

No dividends.

High chance of new debt or share dilution to keep business alive.

Company survives but remains financially stressed.

Investor outcome:

Shareholders likely see little to no capital gain.

High chance of erosion of share value over time.

Scenario 3: Worst Case (Failure or Heavy Dilution)

Outcome: Most likely

Description: Uchumi loses the appeal or asset sales fail to meet debt targets.

CVA collapses, leading to forced restructuring, massive dilution, or liquidation moves.

What it means for valuation:

Share price could fall further or become nearly worthless.

In a restructuring, existing shareholders may be diluted to almost zero.

In liquidation, shareholders get nothing.

Investor outcome:

Very high probability of significant losses.

Shareholders may be wiped out.

Scenario Probabilities (Realistic Estimates)

• Best Case: Low probability
• Middle Case: Moderate probability
• Worst Case: High probability

Valuation Bottom Line

Uchumi’s share value is currently driven by speculation, not fundamentals.

The downside risk is far greater than the upside potential.

Only high-risk traders should consider taking a position.

RECOVERY PROBABILITY ANALYSIS

This section outlines how likely Uchumi is to recover, based on financials, legal status, and operational realities.

Strong Recovery (Full Turnaround)

Probability: Very Low

What this means:

Uchumi wins the Kasarani appeal, sells assets at strong values, attracts new investors, clears CVA obligations, and reopens or expands operations.

Why unlikely:

The company is deeply insolvent, and major capital injection would be required.

Weak Recovery (Survival Without Growth)

Probability: Moderate

What this means:

Uchumi survives through prolonged CVA extensions, limited asset sales, and renting out properties.

Operations continue at minimal capacity.

Why possible:

The business still generates small revenue and has rental income.

But debt remains overwhelming.

Failure Scenario (Collapse or Massive Dilution)

Probability: High

What this means:

Uchumi loses the appeal or fails to sell assets in time.

CVA collapses.

The company undergoes forced restructuring, major dilution, or effective collapse.

Shareholders may be left with little or nothing.

Factors Affecting Recovery

• Financial pressure: Extremely high
• Legal risk: Extremely high
• Cash flow strength: Very weak
• Investor confidence: Low
• Asset base: Strong but tied up in disputes
• Operations: Minimal and unprofitable

Recovery Bottom Line

Uchumi’s recovery chances are limited.

The most realistic path is weak survival, not strong turnaround.

The risk of collapse or shareholder wipeout remains high.