Zimpapers Logo

a seismic shift is being felt across all sectors of the economy with different corporates reflecting what is on ground in terms of improved capacity utilisation.
With most of the leading counters expected to report to the market this week, our analysis definitely points to a significant increase in performance in terms of profits, liquidity, earnings per share, dividend declaration and quality of earnings.
A significant percentage of companies have released their results, availing to the market all they have, we are still convinced that most of the stocks are under-valued.
The potential for growth is so immense that we are bound to conclude that management deficiencies continues to weigh down on the recovery of most quoted corporates.
The liquidity risk seems to be softening notably in most financial institutions as witnessed by rising loan deposit ratio and increased deposit base across all banking institutions.
The rebound rationale seems to be working in this scenario with the financials having to come out of the deep following a restive period of economic upheavals.
The missing aspect in the effort by corporates to experience an immediate recovery remains the failure by parastatals such as Zesa and Zinwa to provide an efficient service hence continuously putting pressure on the operating costs and cost to income ratio.
A leading insurance company NicozDiamond posted a net premium increase of 71 percent to US$12,2 million against a background of a 54 percent increase of gross premium to US$18,6 million.
Most of the investments performed well save for their ZSE listed investments, which continue to act as a drawback to their aggregate portfolio.
The company is also feeling the pinch of dollarisation through increased claims coupled with new acquisitions, which contributed to a loss before tax of US$842 754.
The basic earnings per share was at 0,02 cents from 0,53 cents with the market share price to date being 1,35 cents from the price of 2,5 cents during the same time last year.
One of the leading financial institutions FBC continues with its policy of doing away with non-core activities but their stranglehold on Turnall remains intact.
The group is also actively participating in the insurance sector, which had contributed so positively to their bottom line.
Maintaining a conglomerate status seems to be a worthwhile option for the FBC management if the boss’ hint of going the TN Holdings way is anything to go by.
The increase in insurable assets as the industry continues to recover bodes well for their reinsurance business that posted a profit before tax of US$4,1 million.
The good news is the solid recovery of the core activities, which saw the interest income contributing 42 percent of the bank’s total income. A once off payments of US$3,5 million was spent on retrenchment, this saw the cost to income ratio soaring to 89 percent. A 19 percent increase in total deposits inspite of the current liquidity crunch saw them rising to US$113,3 million in deposits from US$94,82 million.
A 108 percent rise in interest income is definitely good news in a market where non-interest income used to form the bulk of the income. Could this lead to a stabilisation of bank charges? We only hope so.
RTG continues to disappoint the market, the same hymn of rising employment costs, operating expenses remains stubborn inspite of their efforts to hire students ahead of permanent employees.
A net loss of US$1,2 million compares unfavourably with the results for 2009, where they were sitting at US$159 000.
With renovations still continuing into this fiscal year, the bottom line is to remain compromised through a suppressed REVPAR variable.
The same day last year, the share price for RTG was at 1,4 cents and it is now sitting at 1,5cents. This is a pathetic feat judging by its implications even to the fund managers at the sister company, Zimnat which saw their TA linked unit trusts plummeting to unattractive levels. With room occupancy at 40 percent, any effort to renovate at this stage will be a discount to the potential profit levels of the group.
PG Industries had a group turnover of US$23 114 698 with losses after tax of US$7,5 million. The ripple effects of PG loss could be felt at ABC level when it made a US$3 million loss through its association with the “problem child” of the market.
The same day last year, PG share price was at 6 cents and is currently sitting at an average of 2,5 cents.
ABC’s deposit base grew to US$167,2 million last year while operating profit increased four fold to US$16,9 million from US$3,9 million. It is also commendable to note that core-banking activities form the majority of earnings for the bank.
All banking operations reported a profit for the first time in the history of the group.
Mr Oliver Chidawu who had been at the helm of the bank since 2000 is rumoured to be divesting from the group which might be creating a level of apprehension amongst the investors. The same day last year, ABC share was at 15 cents and is currently averaging 46 cents which is a 207 percent rise.
Edgars stores operating at close to full capacity seems to be regaining the confidence of the market following the successful launch of the VIP and other account models.
This is expected to continue shoring up its retail sales which went up 222 percent to US$35,5 million with trading profits rising 280 percent to US$4,2 million.
About 32 Edgars branches are in operation compared to 83 branches in the late 1990s, the branch network is expected to expand again with some of the stores having reduced their floor space to cut on costs following the operation Dzikisa Mutengo era.
The same day last year, Edgars’ share price was at 4 cents and is now pegged at 8,5 cents. Earnings per share rose by 170 percent to 0,62 cents.
Interim results for Innscor were so convincing and portray a very rosy picture whichever benchmark one is to use, profit before tax was up 158 percent to US$24,2 million with earnings per share also rising 116 percent to 2,61 cents.
As a cash based business, Innscor is well poised for continued growth even assuming a sluggish economic recovery for the next fiscal period. Its total revenue rose 22 percent to US$255,5 million and not significant competition is expected with “copy cats” of the strong brand expected to face hard times due to volatility of their cost base.
Today last year, Innscor share was at 60 cents and is currently pegged at 68 cents.
A strong management team at the fast food chain will remain a positive for the investors as real returns will remain positive in the long run. Barclays’ lacklustre performance showed in their results after they posted a loss of US$1,3 million with a disappointing 24 percent loan deposit ratio.
This might not augur well for an economy, which is desperate for a recovery with 93 percent of loans advanced to corporate.
Barclays is celebrating 100 years of being in Zimbabwe next year and is the only operating division in Africa without an expatriate working for the bank.
The bank’s model is largely liability driven, at the retail level and focused on corporate customers on the asset side with consumer constituting less than 10 percent of its total book.
Such market jitters due to pronouncements by the minister seem to be gathering momentum with counters such as RioZim, Barclays, Old Mutual expected to stutter in the short run.
Thank You and be blessed.
Quote of the week “All growth is a leap in the dark, a spontaneous, unpremeditated act without benefit of experience” Henry Miller.
l Christopher Takunda Mugaga
Head of Research
Econometer Global Capital
[email protected]
+263 772 340 353, +263 776 266 062