adminrunning out of bread yet she did not provide the budget for the cakes.
When those holding offices in economic affairs pronounce “cakes” to the listed companies when the chances of achieving such policy action is in limbo, the stock market will view such a gesture as an Antoinette affair.
At the close of trade on Tuesday, the Zimbabwe Stock Exchange’s mining and industrial indices were pegged at 160,36 and 164,44 points respectively.
Both technical and fundamental philosophers of the market believe the market cannot remain unmoved by market events.
The launch of the Medium Term Plan, the outcome of the Sadc team in South Africa on matters concerning Zimbabwean politics and a positive comment from Forbes on economic matters in Zimbabwe have all been swallowed without consistent digestion by the 81-counter bourse in Zimbabwe.
The primary trend of ZSE seems to be outweighed by secondary reactions to the extent of confusing between the two movements.
The month of July had seen most of the counters shedding value if a direct comparison is made with the current period.
On the June 16, Seed Co’s share was sitting on 131 cents, it shed 9,9 percent to close on Tuesday at 118 cents.
Hwange was at 68 cents, it lost 17,6 percent to close at 56 cents, CBZ was at 19 cents, it declined 15,8 percent to 16 cents, Delta was at 81 cents, it is now at 78,5 cents and Innscor shed 4,5 cents to close at 64 cents.
Whether the fundamentals are pointing downwards remains a mystery, the financials which were released by some of these counters portray a heavily discounted market if one is to consider it, notably the company and industry factors while keeping the economic factors constant.
Delta’s full-year financials to March 2011 showed that the biggest company on the ZSE continued to stutter and offer a raw deal to the investor in comparison with its adversaries elsewhere on the continent.
Delta is an industry in itself which implies that it is an absolute monopoly controlling 96 percent of clear and lager beer, 92 percent of sorghum beer and about 70 percent of winery and spirits through its Afdis arm.
For the beverages manufacturer to have a zig- zagging stock price, which cannot resist an 80 cents mark, smacks of a suppressed intrinsic value.
We are talking of a company which had revenue of US$408 million net of value added tax and a tried and tested counter by virtue of its 65 years as a quoted company.
The counter cannot remain “drunk ” inspite of it brewing the “tears of the queen”. Is a share split the solution to the CBZ?
I am not sure but its baffling for its share to be hovering at 16 cents when it has defied the absence of lender of a last resort status to continue churning out some handsome figures.
Their decision to defer dividend payments is still understandable considering the fragility of the banking sector. The bank has been impressive with a total income of US$81,6 million, which is not a laughing matter.
It’s already capitalised to the tune of US$85,7 million when the central bank was just requesting US$23 million from their group’s banking operations. What a smart highway to fulfil BASEL II requirements!
The relationship between the group’s cost income ratio and the loan deposit ratio as shown in the graph below remains worrisome.
We are convinced that the stock is trading at a discount and with the ailing of fellow banking institutions, which means a potentially wider deposit base, the share could be trading at 25 cents at present.
NMB, which in 1997 listed on both LSE and ZSE amid pomp and fanfare, seems to be losing its lustre as the 1,4 cent stock price is expected to remain stagnant.
Given that the bank’s cost income ratio of 95 percent, high retrenchment costs, a basic EPS of 0,03 and their nine branches countrywide it is safe to conclude that the counter’s share price is certainly trading within its range.
The announcement of the Medium Term Plan remained a non-event on the local bourse, given that there was no reaction from the eight dominant counters.
This shows that the policy targets set by the Minister of Economic Planning and Investment Promotion in the MTP will remain on paper unless implemented, a factor that has been overemphasised by the market.
Most of these counters are already operating above the target capacity utilisation envisaged in the MTP document that leaves the blueprint lagging behind the market leaders.
Thank you and God bless you.
Christopher Takunda Mugaga
Head of Research
Econometer Global Capital
[email protected]
+263 772 340 353, +263 776 266 062
Online Reporter