adminindustrial index to register significant gains.
Mobile phone operator Econet continued to dominate trades, with US$11,6 million worth of shares traded in May while furniture and electrical retailer Innscor and brewer Delta traded US$9,36 million and US$5,73 million in value, respectively.
“Turnover was back up in May, after taking a dip in April with total value traded rising 54,15 percent to US$39,4 million,” said equities research firm IH Securities.
The market continued to strengthen in May, with total market capitalisation rising 11,88 percent to close the month at US$6,13 billion (39,75 percent year to date), however, including shares of ZSE listed companies on foreign registers.
During May the main industrial index registered an 11,98 percent gain to close the month at 212,4 points as Econet (US72,6c) rose 14,53 percent, Delta (US145c) jumped 14,97 percent while Innscor (US92,3c) gained 6,95 percent. Mid-cap stocks continued to trade higher in May, with OK Zimbabwe (US27c), National Foods (US270c) and Pearl Properties (US3,3c) gaining 41,07 percent, 22,73 percent and 22,22 percent respectively.
The mining index also closed the month higher after gains of 2,79 percent to end the month at 74 points after Hwange (US16c) rose 15,38 percent, Riozim (US50c) gained 11,11 percent and Bindura (US2,86c) rose 2,51 percent.
Some of the top gainers of the month of April were Masimba (US9c), up 190,32 percent, was up 160 percent and PG (US1c) moved up 100 percent. Among the largest losers during the period under review were starafrica (US1,20) and Cafca (US40c), which fell by 31,43 percent and 20 percent, respectively.
May was a key month for financial reporting with heavyweights Delta Corporation and Econet Wireless both releasing their finals during the period. Despite a relative plateau in volumes, brewer Delta achieved top-line growth well ahead of inflation driven by the group’s strategy of its brands, operating margin expanded to 24,7 percent from 20,5 percent the prior year.
“Going forward we foresee limited downside in the name and the imposition of a liquidity premium from marginal foreign buyers. Econet numbers, while sturdy at the top-line, showed a 16 percent decline in PAT driven by higher depreciation and increased interest costs.
“It is our view that cost of debt along with outflows for the licence fee and recapitalisation of TN Bank will apply some pressure to future operating cashflows.
It seems likely that in the short term some temporary weakness in Econet Wireless may offset sustained demand in Delta resulting in some sideways movement in the market as we end quarter 3.
We now await OK Zimbabwe’s results on 12 June that should provide another accurate barometer of the level of activity in the consumer sector.
“Despite the prevalent liquidity constraints, we expect top-line growth of 24 percent to US$511 million, Earnings before interest and tax margin uplift from 3,8 percent to 5 percent and bottom-line earnings growth of 39 percent,” said IH Securities.
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