The US$1 billion firm

Enacy Mapakame
ANALYSTS forecast that Innscor Africa Holdings Ltd’s revenues for fiscal year 2016 will rise 6,2 percent to US$865 million on new acquisitions, as the industrial behemoth slowly claws back towards its record billion-dollar revenue mark.
In 2014 the industrial giant became the only ZSE-listed firm to generate more than US$1 billion in its financials for the full-year ended June 30, 2014.
However, revenues crashed 18,6 percent to US$814 million in the year to June 30, 2015 weighed down by slow consumer demand and reduced maize deliveries at one of its key subsidiaries, National Foods Ltd.
Stockbrokers IH Securities say the recent acquisition of car spares distributor Transerv and Zimbabwe’s second-biggest stock feeds manufacturer ProFeeds will boost both future sales and revenue. Innscor is in the process of spinning-off the Quick Service Restaurant business, which owns fast food franchises Chicken Inn, Pizza Inn and Bakers Inn, in order to unlock shareholder value.
The unit is expected to list separately on the ZSE as Simbisa Brand Ltd on November 6, 2015, subject to shareholder consent.
“. . . we anticipate an uplift in revenue caused by the full consolidation of newly acquired businesses,” said IH Securities. “Given estimated margins at Transerv, we further anticipate positive impact on profitability further enhanced by contribution from ProFeeds at equity accounted earnings level.”
Earnings before interest, tax, depreciation and amortisation are projected to rise 29 percent to US$78,2 million from US$60,6 million a year ago.
IH Securities is targeting a 12-month share price of USc55, a 9,8 percent decline on Tuesday’s closing price of USc61.
The stock is, however, five percent up since January.
In the past year, Innscor has touched a high of USc70 and a low of USc53.

As Innscor continues to expand, some of its behaviour has been suspected to be anti-competitive.
The Competition and Tariffs Commission is investigating Innscor’s acquisition of a 29 percent stake in Profeeds.
CTC formerly objected to the transaction, which allegedly gives the business an unfair advantage over its competitors, particularly in the poultry industry.
Already, National Foods, the country’s largest stock feed producer, is majority controlled by the industrial conglomerate, while Irvines, which produces day-old chicks, chickens and eggs – representing different segments of the value chain – are also under its control.
Last year, te CTC fined Innscor Africa US$2,65 million for unfair business practices, a measure later reversed by the High Court.
Stocks and investment analyst Mr Albert Norumedzo indicated last week that by diversifying its portfolio, Innscor was trying to spread risk and augment revenue streams.
“It’s a good thing in a rocky environment, look for something with potential, grow it until it matures. The same thing can be said of other companies like Econet who are now into gas and renewable energy products,” he said.
Innscor Africa Ltd interests in the food industry are expansive.
It also owns fast food outlets Nandos and Steers, and controls the country’s largest egg and chicken producer, Irvines, as well as Zimbabwe’s biggest pork processor, Colcom Holdings Ltd.
In unbundling Quick Service Restaurant, Innscor intends to “create financial independence and enhanced transparency for the company so it can report independently to shareholders”.
This will enable QSR to undertake mergers and acquisitions of entities in complementary spheres without competing internally with other Innscor divisions. The proposed unbundling is subject to the approval of the shareholders of Innscor at the extraordinary general meeting on November 2, 2015.
It will be effected through a distribution of the entire issued share capital of Simbisa to shareholders of Innscor registered as such at the end of business on October 30, 2015 through a dividend in specie (in its present form).
The QSR business opened its inaugural Chicken Inn outlet in Harare in 1987 and now has 179 in Zimbabwe and 209 in the region through addition of new brands and franchising of existing ones through third party licenses.