10 counters driving the stock market bull-run

THE Zimbabwe Stock Exchange market capitalisation breached $8,1 billion on Friday as mainly local investors take refuge in assets to escape the chaos in the currency and money markets.

The bull run, which started when government introduced a quasi-currency in the form of bond notes last November, looks set to continue in the foreseeable future.

Here are the Top 10 stocks driving the bull run.

1.DELTA

The beverage maker, Delta is the largest company by market capitalisation on the ZSE, with a market cap of $2,17 billion, it constitutes 26,78 percent of the ZSE total market value.In a year to date the company has advanced 96,5 percent to close at 173,92 cents on Friday.

In its latest financial results, the company reported a 10 percent fall in revenue to $483 million in the full year to March 31, compared to $538 million in the previous year as demand remained depressed in the face of falling incomes. Net profit declined 13 percent to $69,9 million on depressed volumes across its segments. Its total assets stood at to $411 million from $400 million recorded in the previous year.

The company, which spent $40, 5 million in capital expansion compared to $49,4 million in the prior year, has no appetite to undertake any major capex projects in the current financial year. It declared a special dividend of 1 cent per share and a final dividend of 2,45 cents per share.The beverage company, however owes foreign shareholders and foreign creditors $28 million and $20 million respectively as a result of foreign payment delays. The trading environment will remain subdued as consumer disposable incomes continue to wane coupled with competition from beverage imports that continue to find their way into the country.

Delta is now an associate of Belgian brewer, AB InBev following the later’s acquisition of SABMiller last year

2. ECONET

Econet Wireless, Zimbabwe’s largest telecommunications company, is the second largest company on the local bourse with a market value of $1,05 billion, representing 12,99 percent of the ZSE total market capitalisation. Including, class A shares owned by its founder, Strive Masiyiwa, the company is valued at $1,4 billion.

In a year to date, Econet has gained 120 percent to 66 cents. The company reported a 10 percent fall in annual profit to $36,2 million, citing a decline in consumer spending.However, the company continues to leverage on data, as voice at SMS revenues take a dip.

The telecoms giant in January this year went into the market to raise $130 million from its shareholders to settle outstanding foreign loans as Zimbabwe struggled with a crippling dollar shortage and delays in foreign currency payments.

Total assets stood at $1,22 billion as at February from $1,2 billion previously. During the previous full year to February, the company lowered its capital expenditure by 60 percent to $32,5 million compared to $82,8 million in the previous year. It also declared a dividend of 0,467 cents per share amounting to $12,1 million for the year.

3. INNSCOR

Innscor is the third largest company by market capitalisation, with a market value of $471,5 million, constituting 5,81 percent of the ZSE total market capitalisation. In a year to date, the company has gained 81,3 percent to 87,05 cents.

In its latest half year results to December, the company reported a 16 percent growth in profit after tax to $18 million from $15,8 million in the prior year. In the same period, revenue rose to $311 million from $300 million in 2015 while earnings per share grew 28 percent to 2.32 cents from 1.78 cents.Capital expenditure stood at $9,3 million in the six months to December last year and was limited to critical maintenance and expansion projects.The company declared a dividend of 0,7 cents per share.

4. SEEDCO

Zimbabwe’s largest seed producer SeedCo with a market value of $441,6 million, is the fourth largest company by market capitalisation, constituting 5,44 percent of the ZSE total market capitalisation. In a year to date, SEEDCO has gained 81,7 percent to 183,47 cents.

The company reported a net income of $20,7 million for the full-year to March from $14,6 million last year, driven by a 40 percent increase in revenue to $134,6 million from $95,96 million previously.

SeedCo has operations in Botswana, Kenya, Malawi, Nigeria, Rwanda, Tanzania, Zambia and Zimbabwe, whose principal activities are producing agricultural seeds and is owed a total of $16,7 million by the governments of Botswana, Zambia, Malawi,Tanzania and Rwanda.

The company said it increased its seed production by 20 percent, including winter production in view of the anticipated increased demand in the new season. SeedCo declared a dividend of 2,92 cents per share and an additional once-off special dividend of 1,46 cents per share due to exceptional performance in the previous year.

The company is seeking shareholder approval to partially unbundle and list its external operations on a regional stock exchange to raise capital for expansion

5. PADENGA

Padenga has a market value of $428,8 million, constituting 5,28 percent of the ZSE total market capitalisation.In a year to date, the company has advanced 394,88 percent to close at 79,18 cents on Friday.

Padenga reported a 23 percent increase in after tax profit to $8,9 million in the full year to December 2016 on the back of increased revenue. The group’s revenue grew 13,75 percent from $27,5 million in the preceding year to $31,3 million.

In the previous financial year, the number of crocodiles culled increased by 4 percent to 47,806 while skin quality grade achieved improved from 96 percent first grade to 97 percent. The total number of grower crocodiles on the ground dropped from 161,572 to 150,172 in the previous financial year as the company bids to achieve a sustained annual production of 46,000 skins.

Total assets increased by 16 percent to $71,5 million in the previous financial year as the group expanded the capacity at Lone Star Alligator Farms in Texas. Six additional production barns were constructed in the previous year, thereby doubling the production capacity. Resultantly, the group’s capital expenditure stood at $4,3 million from $2,4 million spent in the previous year. The group declared a final dividend of 83 cents per share.

6. B.A.T.

Cigarette maker BAT is one of the heavyweight counters on the local bourse and its market value at $374,5 million, constitutes 4,63 percent of the ZSE total market capitalisation.

In a year to date, the company has advanced 19,3 percent to 1,819.84 cents. The company’s net income rose 27 percent to $4,6 million in the half-year to June, from $3,6 million achieved in the comparable period last year driven by improved efficiencies, although sales were flat, with a slight increase in low priced segment brands. Its total assets stood at $35,1 million as at June 30 and has a market share of 78 percent..

Management said cumulative dividends owed to foreign investors stood at $8 million and the company expects the trading environment to remain challenging, particularly in view of the ongoing dollar note shortage and challenges to settle foreign payments .

7. SIMBISA

Simbisa Brands has a market value of $361,1 million, constituting 4,45 percent of the ZSE total market capitalisation. In a year to date, the company has gained 305,3 percent to 64,85 cents.

The company reported a 4,7 percent increase in after-tax profit to $4.7 million in the half year to December on increased sales.In the same period, group revenue increased by 3 percent to $79,1 million from $77 million in the same period previous year.

The group invested $4,3 million for the expansion of its operations in Kenya, Zimbabwe and Mauritius. In Zimbabwe, the group has a total store count to 193 counters across the country, while it operates a total of 205 counters outside the country, with a presence in Kenya, Ghana, Mauritius, DRC and Zambia.

The group’s total assets stood at $67,1 million. Simbisa brands also plans to increase its footprint both in Zimbabwe and the region as it pursues growth in size, revenue and profitability in its largest regional market, Kenya.

The group declared a dividend of 0,23 cents per share for the six months to December 31.

8. OK Zimbabwe

Another large cap company, Zimbabwe’s largest retail operator, OK Zimbabwe, has a market value of $281,4 million, with a market share of 3,47 percent on the local bourse. In a year to date, the company has gained 238 percent to close at 24 cents.

The company reported an 800 percent increase in net income to $6,1 million in the year to March from $700,000 last year on improved revenue.OK Zimbabwe rebounded from a collapse in the 2016 full year, when a decline in sales and lower gross margins hurt profits.

The group spent $10,9 million on capex during the previous year.

The group is set to refurbish six stores to increase capacity and roll out more bakeries, and butcheries to improve its operational efficiency. Zimbabwe’s retail sector has remained resilient despite its sluggish economy and the explosion of informal commerce.

9. OLD MUTUAL

Old Mutual Zimbabwe, is valued at $263,77 million, with a market share of 3,25 percent on the local bourse. In a year to date, the company has advanced 40,5 percent to 490,71 cents.

The company’s after tax profit jumped seven-fold to $89,4 million in the six months to June from $12,5 million in the comparable period last year mainly due to an increase in investment income.

The group’s funds under management increased by 31 percent to $2,1 billion in the period , attributable to a surge in equities. The group’s total assets also increased to $2,39 billion from $2,16 billion previously, on the back of a an increase in investments and securities.

The group is building a SME centre which is now 50 percent complete and is expected to be commissioned in the first half of next year.

The company recently commissioned the Kupinga Hydroelectric project in Chipinge. Old Mutual invested $5 million in the Kupinga 1,6 MW Hydro power station project , and is expecting a 17 percent annual return from the project. The group has a 20-year power purchasing agreement with Zimbabwe Electricity Transmission and Distribution Company (ZETDC).

10. NATIONAL FOODS

Heavy weight counter, National Foods, is valued at $360,9 million, with a market share of 3,22 percent on the local bourse. In a year to date, the company has advanced 5,9 percent to 381,5 cents.

The company reported that after tax profit marginally decreased to $6.58 million from $6.63 million in the six months to December 31, 2016, largely weighed down by a poor performance by the maize division. Net borrowings amounted to $1,8 million while capital expenditure for the period was $2.1 million.

The group’s ability to settle foreign creditors deteriorated markedly over the period due to the difficulties experienced by the banking sector in making foreign remittances.As a result, the group incurs substantial cost due to penalties on late payments as well as more expensive foreign credit lines.

However several categories including flour and rice saw volume increases on the back of government’s policy to reduce imports of finished goods following the implementation of SI64 of 2016 as well as the challenges faced across the food sector in accessing foreign currency for raw materials.