Zimbabwe insight: Imara

Published on March 19, 2010 by in For investors, For listed companies

Imara Asset Management have an excellent monthly newsletter that is getting more and more interesting as Zimbabwe gets worse / better (you work it out). Imara have always had a positive slant to investment in Zimbabwe and it gets more positive as things get worse. I provide an extract below:-

    “Meanwhile back at the coal face where we prefer to reside, we have had some good news coming out of the companies who are taking advantage of the new and improved economic environment. Impala Platinum in SA gave an upbeat presentation on Zimplats and their forthcoming capex plans. Zimplats will be key to Impala going forwards. Angloplats also announced that they would be pressing the button on their further expansion plans suggesting that both companies are satisfied with the soon to be announced Minerals and Mining Act. Also from SA Tongaat Hullet, the sugar group, spoke of their Zim operations which they are currently rejuvenating and working with government to assist indigenous out growers (this also counts as “points” toward the Indigenisation Act). Locally Delta is investing in another new bottling line, ramping up production and expanding margins. Their year end is March and our forecast for March 2011 based on volume and margin growth puts them on 5x, which could be conservative. Innscor also reported upbeat earnings and announced an interim dividend. They too have seen an excellent few months as consumer demand has increased. Truworths, the clothes retailer, reported an excellent set of figures that puts the company on 6x June 2010 earnings. All of these businesses are coming from a low base; only one year ago the formal sector was all but finished.

    Agriculturally, the tobacco floors have opened early with good prices achieved so far. The crop is expected to nearly double this year as more commercial farmers return to utilize the lands. The seed maize crop is expected to triple. With rural farmers now being paid in US dollars for their cotton, maize and tobacco, we suspect that disposable incomes in these areas could be significant, especially as the cost of living is negligible relative to the cities where rents, transport and utilities eats away discretionary spending power.

    We therefore urge investors to talk to company management and the farmers to find out what they are thinking and doing and to downplay the media and the politicians. This makes the market a great buying opportunity in our view and one of the more exciting in Africa, even if the ride can occasionally be a bumpy one.”

Investors need to speak to managements? Good luck trying to get through on the phone. Even if they do they executives are BUSY. Try getting meaningful information from their websites (which have been linked below) and you will fail. Whatever your view on Zimbabwe is, as an investor, listed company directors etc. information should be readily available on websites and its not. Here are the companies mentioned:-

Zimplats - OK website up to date with the basics because its regulated by the Australian Stock Exchange. Zimbabwean’s can’t trade the share locally.

Delta Corporation – no 2008 annual report, two undated media and press release articles, no share price. A subsidiary of SAB whose website has to be one of the best I’ve seen. I believe there is information on the beer market in Zimbabwe in the SAB website

Innscor - website goes to Innscor snacks. There is no Group website. As a leader in earnings and a dividend paying company one would expect more resources applied to looking after the info needs of investors. Their subsidiary Colcom has the 2007 audited financials as the latest and what’s new from  July 2008. Colcom is also dividend paying.

Hippo Valley – has no website. A significant large employer and asset of a South African conglomerate.

Truworths - a basic website whose IR section is out of date BUT they are about to sort this out…………

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