ZSE inches higher but ATS challenges delay trading

ZSE inches higher but ATS challenges delay trading 
HARARE – The stock market opened late afternoon on Tuesday due to a technical challenge with the Automated Trading System. Trading only opened way after lunch but inspite the delays, the Industrials Index continued to inch higher.
At the close of trades, the mainstream Index added 0.81 points to close the session at 161.20. The resources sector closed unchanged after Hwange traded flat at 2.35c with 300,000 shares changing hands. Turnover came in at $268,589.
Econet once again dominated the trading session after adding 0.10c to close at 30.15c with 723.981 shares exchanging hands. Demand for the counter continues to be elevated with limited sellers ahead of the release of its February year end results tomorrow.
Heavyweight Innscor continued on its bull run adding an impressive 7% to trade at 60c with only 1.232 shares changing hands. The counter closed at 57.10 with 1772 shares bid lower at 55.25c.
Insurance giant FMHL added 0.50c to close at 8c with 6,402 shares changing hands. The counter closed with 850,000 shares bid lower at 7c. Crocodile farmer, Padenga also traded in the black adding 0.04c to close at 21.25c with 2580 shares changing hands.
Demand for CFI remains strong but with limited sellers, the agro concern traded flat with 275,175 shares changing hands. Earlier today, the counter announced the appointment of Ephraim Chawoneka and Douglas Mamvura to their board.
Dairibord traded in the red losing 0.08c to close at 5.62c with only 1,200 shares changing hands. Proplastics traded flat at 5c with 7,548 changing hands

Zimplow units in improved sales growth in 4 months to April

Zimplow units in improved sales growth in 4 months to April

 HARARE –Firm producer prices for maize, cotton and wheat announced by Government have positively affected Zimplow Holdings as this has improved disposable income among smallholder farmers and commercial farmers.

Group CE Mark Hulett told the AGM that turnover for the year to April was 2% above the prior comparable period and should improve on the back of the improvements registered in the agriculture sector this season. 

He however said “the trading environment remains fluid” with uncertainties in foreign exchange payments which has affected all businesses, particularly Barzem in the first two months of the year. Furthermore most capital projects in the mining sector remain in the pipeline with liquidity being the key constraint. 

Hulett also said there were a number of capital projects lined up including the Beitbridge- Chirundu highway project which are likely to offer opportunities to the group’s equipment business (Barzem) 

Barzem started with a backlog of foreign currency payments which significantly affected the company’s level of service delivery. Nonetheless intervention and support from the Reserve Bank of Zimbabwe unlocked the bottleneck placing the business back on track.  The number of CAT units sold in the first four months grew by 450% on the back of expansion in the energy, gold and chrome mining sectors. The CAT powered generator sales continued to improve with volumes 200% ahead of the previous comparable period. 

At Mealie Brand, trading volumes for animal drawn implements in the first quarter improved by a notable 1,373% compared to the same period last year. The increase was mainly attributed to export orders. The volume of implements exported improved by 7,500% while local implements grew by 317%.

 “We welcome the protection provided to our animal drawn business through Statutory Instrument 64 which has positively impacted the business. 

“The company will continue benefit from the introduction of import controls while the strong mineral and tobacco exports are resulting in improved forex availability.” 

Sales for the first quarter at Farmec improved by 182% compared to the same period last year. 

“The good 2016/7 rainfall season coupled with the introduction of the economical yet efficient Massey Ferguson 300 series boosted the business unit’s performance.” 

Implement sales grew by 58% in the first four months, however service hours were 8% below last year mainly due low activity in the lowveld. 

The sales of Perkins power generator units continued to slow down with a 7% decline being registered on the back of very good power availability from ZESA. Perkins part sales were strong with service hours improving by 20% mainly due to improved customer engagement. 

At CT Bolts, the incessant rains negatively affected operations in the mining sector, a key market for the business unit. Consequently volumes for mild steel fasteners for the first four months were down 14%. The high tensile bolts improved by 3%. 

The business expects improvement in working capital availability in the second half of 2017 mainly as a result of the company’s gearing that has been reduced with a medium term loan which will be paid off in July 2017. 

Going forward, in addition to the ongoing restructuring, the group will focus on a disciplined and anticipatory approach to procurement, a focus on culture productivity and performance which resulted in higher service hours per technician

ZSE bull run continues albeit in subdued trades

ZSE bull run continues albeit in subdued trades

HARARE- The Zimbabwe Stock Exchange opened the week higher albeit marginally as investors continue to scrap for the few shares available on the market.

Big caps Old Mutual and Econet continued on their bull run adding 0.75c and 0.05c respectively.  The Insurance heavyweight traded at 377c with only 1236 shares exchanging hands while the telecoms giant traded at 30.05 with 614,611 shares changing hands.

Consequently the main stream index added a marginal 0.10 points to close the muted session at 160.40. Demand for the blue chips remains elevated especially in Econet however sellers remain elusive.  OkZim also recorded a notable trade; the retailer traded flat at 7c with 632,020 shares changing hands.

OKZim  management have indicated that they will focus on improving market share by efficiently using existing capacity, rolling-out bakeries as well as growing fruit & veg and butcheries; analysts believe the group can extract higher margins from these units. Emphasis will also be placed on cost reduction and margin improvement.

Turnover tumbled by almost 95% to $237,672 from Friday. Axia and Dawn properties traded flat with 12,906 and 14,631 shares changing hands at 8.10c and 1.3c respectively. Bankers FBC added 0.2c to close at 10.80c with 19,384 shares exchanging hands.

Activity remains subdued on the Mining sector despite some of the companies having been on the press recently for different reasons. Bindura which underwent recent board changes due to some fraud allegations did not trade, but remained well bid with no sellers in sight.

Despite successfully concluding its Creditors’ Scheme, investors remain not keen on Hwange which 32,000 shares at 2.35c. Hwange Colliery held a creditors’ scheme of arrangement meeting where 88% of the creditors voted in support of the scheme while 10% voted against. The company is also seeking to raise up to $15m to fund its short term capital needs after its creditors agreed to enter into structured payment plans with the coal miner. The resources subsector closed 69.23 adding 0.02points

Credit Registry loads 85% of total loans since January

Credit Registry loads 85% of total loans since January

HARARE – The Reserve Bank of Zimbabwe (RBZ)’s Credit Registry system which became operational in January 2017 has to date loaded 84.75 % of total loans extended by the banking sector in its data base.

According to a press statement on the update of ease of doing business, the Office of The President and Cabinet said the banking sector has a total of 371 485 loans given to 361 525 individuals and 9 960 corporations.

“The OPC as the coordinator of the Ease of Doing Business measures is happy to report that the Reserve Bank of Zimbabwe successfully deployed the Credit Registry system in November and December 2016 and the system became operational in January 2017.

“All the nineteen banking institutions are subscribers to the credit registry system, meaning that banking institutions are required to check with the registry before granting loans, in order to get information on the credit history of the applicant before granting loans,” read part of the statement.

The OPC said the Credit Registry is already in the process of registering the top 20 micro-finance institutions as subscribers to the system.

It said these institutions represent 84% of the assets of the microfinance sector and once registered will have full access to the registry with effect from the 30 May 2017.

“There are also plans to co-opt the rest of the micro-finance institutions, numbering approximately 160, after their personnel have under gone training.”

The Reserve Bank of Zimbabwe will commence training of micro-finance institutions as data providers in June 2017.

The OPC said during the process of creating the Credit Registry, the RBZ met with a number of key stakeholders to ensure that the system is “fit for purpose” and able to address the concerns of key stakeholders in the micro-finance sector.

It added that studies have shown that comprehensive data on consumer credit histories significantly reduces the costs to new lenders entering loan markets, and may eventually enable the banking and micro-finance sector to tap into global capital markets to obtain funds for lending.

Mazimbe to retire from Astra Industries, to be succeeded by Nhende

Mazimbe to retire from Astra Industries, to be succeeded by Nhende

HARARE – Astra Industries managing director Mackenzie Mazimbe is set to retire from the group at the end of this month, after serving in that capacity since 2004.

He will be succeeded by Herritage Nhende, who is currently the financial director, effective June 1.

Astra delisted from the Zimbabwe Stock Exchange in 2015 following a buyout of minorities by foreign company Kansai Plascon

Meanwhile in a trading update, Astra said performance in the first quarter had been affected by the rains especially the flagship paint business.

Turnover in the four months to April was flat on prior year while volumes were down 7%.

The group said GPs were down 2 percentage points from prior year while in dollar terms gross profit is 6% below prior year

Operating profit for the period is up significantly from last year as a result of benefits arising from the streamlining of operations following the decision taken to restructure operations which resulted in the closure of Chemical Enterprise and reallocation of production to our two main Paint and Chemical businesses.

Willdale to invest $10 mln in new technology after shareholders approve land sale

Willdale to invest $10 mln in new technology after shareholders approve land sale

HARARE – Brick manufacturer, Willdale Limited has been granted the green light by shareholders to go ahead with the disposal of 190.1 hectares of land that is currently not suitable for mining. The company expects to raise a minimum of $4.75m from the disposal.

Proceeds from the sale will be channelled to clean the company’s balance sheet through settling of the company’s interest bearing obligations, in order to increase the company’s chances of attracting new loans for recapitalisation.

The land forms part of Swanwick of Teneriffe of Kinavarra in Mount Hampden, adjacent to the land currently being utilized by the company in extracting the clay used in brick manufacturing.

The offer price, at $2.50 per square meter but the company expects to get better offers. Already three institutional bidders have expressed interest.

The company’s obligations relate to a $2.68 mln interest bearing bank loan and overdraft owed to CBZ Bank Limited. The loan has been accruing interest of 10% per annum.  The other obligation is the $863,283 accumulated but unpaid Preference Share dividend. The dividend has been accumulating since 2014 when the preference shares were issued but the company did not have capacity to meet the semi-annual preference dividend obligations.

Priority three of the obligations is a $3.25 mln redemption of Preference shares. The company issued 10% redeemable cumulative Preference Shares in 2014 through a rights issue to shareholders.  The shares are redeemable from this year to year five and subject to agreement with the holders of the preference shares. The company intends to redeem them in a phased manner in order to reduce fixed obligations on the company.

In an interview after the extra-ordinary general meeting, chief executive officer Nyasha Matonda told FinX that after settling the obligations, the company will have a clean balance sheet. It has plans to invest between $10 mln and $12 mln on new manufacturing technology to enhance efficiency and productivity.

“Our future plan is to upgrade the current manufacturing technology. From our initial findings (from equipment suppliers), we are looking at investments of up to $12 mln but this will depend heavily on the source where we will procure from”

Matonda said the new technologies of manufacturing will also heavily depend on the market because at current rates, it may not justify the investment.

“It is our hope that the property and housing sector continues to evolve as is happening now, with various government supported housing projects coming up and the National Building Society’s housing projects being rolled out”

Willdale currently owns over 514 hectares of idle land near its factory in Mount Hampden.

In terms of operations, Matonda said the company has to date produced about 10 mln bricks.

“This is only one month’s production since we started late due to the prolonged rain season. We are however looking at increasing capacity as we move into the peak season. As a result there will be minimal impact on our full year production target,” he said. The company’s plants have capacity to produce between 10 to 12 mln bricks per month. Currently  common bricks account for 80% of total volume production while  face bricks account for the remaining 20%.

NMBZ to pursue growth strategy

NMBZ to pursue growth strategy

HARARE- NMBZ CE, Benefit Washaya told the company’s Annual General Meeting this morning that, operating income plunged 8% at US$12,6 million during the first quarter of 2017 largely due to constrained lending on the back of growing liquidity challenges.

However when compared to month on month performance, the April 2017 operating income was 5% higher than the comparative period last year.

Operating expenses were up 2% mainly due to a once off cost in the period under review, without which costs would have gone down by 2%.

“Being cognisant of the tough operating environment, we continue to pursue a controlled growth path, bearing in mind the emerging risks. Our focus is on cost effective ways to deliver banking products to our customers in ways that ensure sustainability for both our customers and the banks,” said Washaya.

Washaya stated that, despite significant deterioration in the economy, the bank expected 2017 to surpass the 2016 performance as the financial institution is currently operating above profit after tax (PAT) budget.
NMBZ also revealed that a further US$5 million line of credit would be available after a regional finance house approved the facility for productive sectors, including small to medium enterprises.

Last year US$15 million was availed from two European development financial institutions DFIs.
The lines of credit compliment the bank’s efforts of improving its credit facility.

Total deposits during the first quarter shot up 2% to US$262. 4 million with 58% being cheaper demand deposits.

Loans and advances on the other end recorded a slight decline of 1% to close at US$202.3 million compared to the figure recorded as at December 31, 2016. During the period under review, NMBZ recorded an improved cost to income ratio for the four months to 73% compared to 75% during the same period last year.

Still to be ranked as a Tier 1 bank with a capital level of US$100 million by 2020, NMBZ is currently working towards improving its capital position. As at April 30 2017, the bank’s core capital stood at US$51, 4 million against the regulatory minimum of US$25 million.

“We will continue to target to grow our capital organically subject to a significant and sustained improvement in the operating environment,” said Washaya.

In effort to address growing liquidity challenges, NMBZ has continued to deploy more POS machines in the market although the costs of supporting a mass rollout have continued to soar.

The bank is currently evaluating cheaper alternative devices in order to improve market penetration.
The annual general meeting approved Directors’ fees at US$311, 430.

Enerst & Young won the bid to be the company’s Auditors for the next financial year ending December, 31, 2017 after KPMG completed its five year tenure.

DZL banks on new business model to spur growth

DZL banks on new business model to spur growth

HARARE – Dairibord Zimbabwe’s ongoing transformation anchored on a new business model has begun to show positive returns with overall outturn for H1 2017 expected to be better than the prior comparable period.

Giving a trading update for the four months to April 2017 at the company’s AGM held today, chief executive officer Antony Mandiwanza said, “Overall performance is better than last year, a manifestation of the benefits of the turnaround strategy deployed by the Group effective January 2017”.

According to Mandiwanza, the business has been remodelled to align revenue and costs. Performance however improved in March and April and is on a cumulative recovery. During the four month period, selling price per litre and market share remained stable.

“In FY16 we agreed on a strategy that will move the company forward, largely due to a mismatch that existed between revenues and costs. As a result of that we are beginning to see the benefits and we want to promise shareholders that 2017 will not be as bad as was FY16,” he said.

Mandiwanza said Group revenue to end of April is 2% below that of 2016, largely because the period January and February was affected by incessant rains and system migration challenges during consolidation. Profit margins improved as operating costs are trending lower than prior year and in line with the turnaround strategy.

He said supply of cartonised Chimombe is now stable following the full commissioning of the new UHT carton plant. He added that product quality has also significantly improved.

Mandiwanza also said the Group enhanced its information systems to improve control environment around inventories and trade receivables. He added that the SI64 instrument is positively impacting the foods category.

Nonetheless, raw milk intake declined during the quarter due to incessant rains in January and February which adversely impacted yields per cow.

“To mitigate the decline, milk powders are imported to bridge the gap and reduce the overall cost of milk. Milk supply base however remains strong,” he said.

Mandiwanza said consolidation of operations is progressing as planned and manning levels reduced by 10% from December 2016.

According to the CE, rationalisation costs incurred to date are at $866k against a budget of $1 million but actual costs are not expected to exceed budget.

Dairibord expect significant economic headwinds going forward, driven by projected weak economic performance, low disposable incomes and inflation driving cost of inputs upwards.

Continued challenges in accessing foreign currency will continue but Group performance will be underpinned by sustained benefits of SI64 and a good agriculture season and improved mining sector performance.

At the AGM, directors’ fees were approved at $167,811 and auditors’ fees at $126,875.

AfDB projects 1.3% growth rate for Zimbabwe for 2017

AfDB projects 1.3% growth rate for Zimbabwe for 2017

HARARE -Zimbabwe’s gross domestic product (GDP) growth is projected to increase by 1.3% in 2017, supported by improvements in the agriculture, tourism, manufacturing, construction and financial sectors, according to the 2017 African Economic Outlook released by the African Development Bank (AfDB).  The projected growth rate is less optimistic when compared to the World Bank’s 3.8% and International Monetary Fund’s 2%.

The report noted that Zimbabwe received above normal rainfall, which is a major boost for the economy. Zimbabwe’ GDP declined to a record low since dollarization last year, but good rains supported by robust agriculture inputs programmes helped to turnaround fortunes in this agricultural season. The report suggests that Zimbabwe needs to stimulate entrepreneurship and industralisation but this will require deep reforms to improve the business environment and promote employment creation.

It says the economy has experienced cash shortages owing to rising informalisation in the economy, with fiscal revenue underperformance, declining capital inflows and export receipts, a high fiscal deficit and public indebtedness; external imbalances and capital flight also contributing.

On bond notes, introduced in November last year by the Central Bank, the report said: “The introduction of bond notes initially created apprehension but they have been broadly accepted as a medium of exchange. Economic activity in the near term will depend to a large extent on how quickly measures instituted by the government will be implemented,” it said.

The report says that Africa’s economic growth expected to rebound to 3.4% in 2017 and 4.3% in 2018 on assumptions that as commodity prices recover, the world economy will be strengthened and domestic macroeconomic reforms are entrenched.In 2016, Africa’s economic growth slowed down to 2.2% from 3.4% in 2015 due to low commodity prices, weak global recovery and adverse weather conditions, which impacted on agriculture production in some regions.

“Although economic headwinds experienced in the last two years appear to have altered the ‘Africa rising’ narrative’, we firmly believe the continent remains resilient, with non-resource dependent economies sustaining higher growth for much longer spell.

“With dynamic private sectors, entrepreneurial spirit and vast resources, Africa has the potential to grow even faster and more inclusively,” Abebe Shimeles, Acting Director, Macroeconomic Policy, Forecasting and Research Department, at the AfDB said.

According to the Outlook, Africa has high untapped potential for entrepreneurship. In 18 African countries for which statistics are available, 11% of the working-age population set up their own firms to tap specific business opportunities, a level which is actually higher than in developing countries in Latin America (8%) and in Asia (5%). However, few of them invest in high-growth sectors, grow to employ more workers or introduce innovations to markets.

The report says adds that, if African economies are to turn their dynamism into an engine of industrialisation, there is need to improve the skills of workers, enhance the efficiency of business clusters – such as industrial parks and special economic zones – and increase access to finance, with more affordable credit and more innovative instruments, for small and young firms.

Divided local contractors set to lose out on Beitbride-Chirundu Highway

Divided local contractors set to lose out on Beitbride-Chirundu Highway

HARARE- Sharp divisions have rocked the construction industry ahead of the much anticipated Beitbridge -Harare-Chirundu highway project as local contractors are reportedly failing to agree on forming a consortium, Finx can report.

Although President Robert Mugabe last week implored local contractors to merge, a battle is brewing in the industry. All local contractors’ associations that include CiFoz ,ZimHighways, CIFoZ members, Zimbabwe Building Contractors Association (ZBCA) are all expected to benefit from the 40 percent share of the project set aside for indigenous construction companies.

ZBCA had refused to join hands with CiFoZ in their bid to approach Austrian firm, Geiger International to discuss the modalities of the project.

“We will approach Geiger by ourselves, we cannot wait for CiFoZ to engage them for us,” said ZBCA vice president Geral Chipumha.

ZBCA says the Ministry of Transport had given them the green light to engage Gieger on 40 percent share in the mega project but there was no consensus on who will lead the process. ZBCA maintains that they are entitled to a share of the project and taking Gieger head on was the solution the deadlock.

“Geiger will engage us as organisation so that we included in 40 percent,” said Said Chipumha  “It s not that the train has left us.”

Chipumha said Geiger had not engaged any of the players in the construction industry.

The ministry has led us to Geiger and we were assured that they had not yet engaged anyone.  Bickering among the contractors would lead to the disqualification of some small contractors with less capacity to work on such major projects. Analysts have cast doubt over a possible joint venture for the billion dollar highway project.

The 40 percent share includes ZimHighways, CIFoZ members, ZBCA members and other suppliers but consensus has not yet been reached on a consortia.

Beitbridge-Harare-Chirundu dualisation highway project was launched by President Robert Mugabe last week. Although ZBCA, like other local construction players was expecting a windfall from the US$1,8 billion project contractors may only rake in US$400 million if engagement with Gieger are successful.

None of the local players have been awarded part of the 40 percent of the project but ZBCA, Chipumha said last week that forming a consortia of construction companies would give local firms a good shot at the deal.

“Let’s form ourselves into a consortium so that we look bigger. We have made it clear that one company will not be able to do it”,  Chipumha said. He earlier stated that, early deliberations with the Ministry of Transport and Gieger indicated that local contractors would get 40 percent stake in the project.

“We have been guaranteed that work is coming our way through serious engagement with the Ministry and Geiger”, said Chipumha.

Local contractors expect to cash in on other minor projects like 37 bridges and 10 tollgates that would be happening during the dualisation programme.

“We can be guaranteed that we are on the right path. I want to give you hope that there is no other project to look forward to than this project”, Chipumha added.

Struggling local contractors have in the past been left out of major construction projects due to lack of capacity to handle mega projects.

Geiger International, which is coming onto the project which China Harbour Engineering, a Chinese parastatal as the contractor has pegged tender documents at US$850 per set, enraging struggling local players. The Ministry of Local Government has however said that the tender documents should not exceed US$80 per set.
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