ZSE laggards miss out on bull run
IN A market that broadly shows little respect for fundamentals, some shares on the Zimbabwe Stock Exchange (ZSE) are failing to respond even to the most bizarre panic buying in global markets history. On a year to date basis, the stock market’s mainstream Industrials Index has jumped 195 percent while total market capitalisation soared 200 percent to $11,713 billion by close of Thursday’s trading.
The less active Minings Index is up 92 percent to 108 following a merry mood that sustained a rally in September on speculative buying.
While stocks like General Beltings have jumped over 600 percent year to date, the equities market has its laggards that have remained unchanged year to date while others have actually weakened.
By close of trade Thursday, National Tyre Services (NTS), Getbucks and Border Timbers were flat at their January opening prices of 1,1 cents, 3,7 cents and 20 cents respectively.
Engineering firm Zeco only “decorates” the stocks list with its presence but hardly trades. While other stocks’ prices fluctuate on multiple trades, Zeco trades only a pocket of shares once or twice in a year, apart from becoming a perennial loss maker, which dampens any investor cheer.
Since listing on the ZSE in February 2008, Zeco’s shareholders have lost value dearly and its market capitalisation has whittled down to become the lowest on the bourse at just $90 000 from around US$1,44 million (ZW$101 trillion) in February 2008, using the Old Mutual Implied Rate (OMIR).
At an annual general meeting held in the capital last week, NTS indicated sales volumes for the period between April and August 2017 rose 17 percent on prior year comparable period despite the stiff competition from smuggled products.
The firm, whose business is anchored on imports, bemoaned the challenging business environment characterised by foreign currency shortages and unfair competition from smuggled products which resulted in down trading.
Agricultural concern, Border, had its shares on-boarded on the Central Securities Depository on August 20, 2017; becoming the last listed counter to do so, two years after the ZSE automated.
However, the market has also had a fair share of counters sliding in the negative. Amalgamated Regional Trading (ART), Rainbow Tourism Group, Bindura and Hwange have failed to overturn the year to date losses in the past few weeks when other counters have been enjoying the runway.
ART has retreated 25 percent to 4,56 cents, while RTG and Hwange are 4 percent lower to 1,15 cents and 3 percent lower to 3,74 cents respectively.
In the six months to June 30 2017, hospitality group RTG reported a loss after tax of $0,3 million, down from $2,9 million on cost cutting.
The group’s outstanding borrowings with local banks are at $1,8 million and the National Social Security Authority (NSSA) which is the outstanding principal amount at $13,6 million plus interest arrears, making it a total of about $16 million.
Nickel miner Bindura has since the beginning of the year slipped 25 percent to 4,20 cents. Market watchers anticipate Bindura will remain profitable on recovery in its margins forecasting net income to improve to over $1 million from the $0,6 million reported in financial year 2017.
However, the downside risks to such valuations are global prices of nickel as well as delays to start refining through the smelter.
Market watchers have upgraded the counter to a “speculative” buy recommendation.
On the other hand, analysts contend ART, which until 2016 had been the best performer rising above 400 percent on a year to date basis, has already overheated and might not benefit from the current rally.
Meanwhile, the bourse gained 13 percent in the week to Thursday with total market capitalisation closing at $11,713 billion from $10,319 billion.
The market’s favourites Delta, Econet, BAT and Padenga were among the major value drivers for the week.