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Business Writer
Delta Corporation’s financial director Mathongonolo Mothibedi Valela recently upped his stake in Delta, a move market watchers say is a good signal of things to come.
On the 23rd of December 2020, Valela bought 173 000 Delta shares worth $4.325 million through his family business Amaval Investments Private Limited.
This is in addition to another purchase of 161 900 shares worth $3.9 million he bought on the 9th of December 2020 at $24.3 per share.
The ordinary share purchases, take his holding of Delta shares to 12 668 500 shares. The entire stake is valued at $317.2 million (US$3.9 million).
As previously reported by this publication, market watchers say when company executives buy shares of a company in which they are the key decision-makers, it is a good signal of things to come given management should have a better understanding of the day to day operations.
Insiders can often act well in advance of good news so the phrase “stay the course” is relevant.
The more directors transacting (and the more material the stake) the better the signal, observers say.
A famous quote by Peter Lynch is often used:
“Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.”
Delta Corporation as a business has had it tough in the last couple of years as it saw volumes tumbling across the board.
Its last set of results for the half-year to September 30, 2020 were however encouraging as lager beer sales volume grew by 3 percent, sparkling beverages by 22 percent, with the only blemish coming from sorghum beer were volumes fell by 31 percent.
The company also declared a dividend of 45,00 cents per share.
To grow its revenue base, Delta this year acquired United National Breweries Private Limited (SA) an acquisition that is expected to increase the group’s regional footprint in the sorghum beer sector.
The company is also finalising discussions with The Coca-Cola Company for the extension of the sparkling beverages franchise territory to include Manicaland and has entered an agreement to purchase the bottling assets of Mutare Bottling Company (MBC). MBC is currently owned by Econet Wireless Zimbabwe.
This development is expected to allow the Company to leverage its scale and combined asset base to meet the sparkling beverages demand across the country.
Delta’s share price performance of a year-to-date gain of 635 percent is however lagging other Zimbabwe Stock Exchange Listed entities such as CBZ which has gained 11 354 percent since the start of the year.
Bongani Ndlovu