DIVERSIFIED company, Padenga Holdings’ pivot to gold will get a boost by its listing on the Victoria Falls Stock Exchange (VFEX) particularly with regards to the higher export retention incentive, analysts say.
Emerging challenges and weakness in its crocodile skins businesses compelled Padenga to strategically pivot to gold and the move has been showing upside with the gold subsidiary’s contribution to FY2020’s topline becoming increasingly significant.
According to Padenga’s FY2020 results, Dallaglio (the group’s gold subsidiary) accounted for over half of total revenues since its full consolidation into the group just last year. Over the year just ended, Dallaglio’s revenue amounted to $40,3 million, constituting 57 percent of total revenue at $71,3 million.
The expected higher export retention due to its move to the VFEX will further boost revenues, say analysts at IH Securities.
“Overall revenues for the business are expected to remain on a strong upward trend carried by extension of the gold mining operations as well as higher forex retention once the migration to the VFEX is complete.
“The proposed transaction to migrate listing to the VFEX is primarily driven by the need to benefit from incentives articulated by the Ministry of Finance (and Economic Development) whereby companies listed on the VFEX will be entitled to higher retention rates of their incremental exports.
“In addition, the listing on the VFEX enables Padenga to raise capital in foreign currency from a deeper investor base to pursue viable acquisitions in related export sectors.”
Padenga resumed trading on the VFEX on Monday, and as expected, trades have been at premium.