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BTC on spectacular rebound

The Botswana Telecommunications Corporation Limited (BTC) stock is currently riding high after an impressive start to the year that has put the only listed technology stock ahead of all listed equities.


The stock which is trading at P1.20 is up by 22.44%, reversing losses experienced in 2016 when the stock tumbled on the back of negative investor sentiments which had spread across major sectors on the Botswana Stock Exchange (BSE). While the BSE’s Domestic Company Index (DCI) is in the red, down by 4%, the resurgence of the BTC stock has offset what could have been steep losses in the benchmark index.


The reversal in fortunes follows concerted efforts by the telecommunication giant’s concerted efforts that included appointing the market maker, appointment of a solid Board of Directors, and return to profitability. BTC which listed in April boasts of a large pool of investors who snapped up shares on offer during the oversubscribed Initial Public Offering (IPO). Although the IPO was restricted to citizens, the historic IPO ushered in about 47, 125 new investors, representing 65% of all registered investors.

 

The BTC share price debuted at P1 and quickly reached highs of P1.35 on the first weeks of trading but the share price later retreated following a raft of negative news. The share price started dropping after the company recorded a once off impairment loss which was larger than expected.

 

While investors were trying to wrap their heads around that, the telecommunication giant announced that it will not be renewing the Mr. Paul Taylor’s contract as managing director. The news shocked investors as there had not been an indication that Mr. Taylor’s contract will not be renewed. The share price then tanked to new lows of 0.85t, representing a loss of 15% from the IPO price.


Mr. Garry Juma, Head of Research at Motswedi Securities, says the listing of BTC was met with great excitement from investors. “There was lots of buying especially from those investors who missed out during the IPO.” Mr. Juma went on to say that after BTC released its financials which showed a loss, the market reacted negatively despite prior warning from BTC contained in their IPO prospectus that the corporation will incur a once off impairment charge. Perhaps it was the larger than expected loss that rattled the investors as evidenced by how quickly the share price fell in the usually slow to react stock exchange.


“There was panic selling. Some investors were selling at any price. Unfortunately because of the demand side which was low, we had a market in which there were many sellers but not many buyers, creating a mismatch which pushed the price down to current levels,” Mr. Juma said.


With the current share price at P1.20, this represents a 20% premium on the IPO price. Mr Juma says real investors who know the value of shares saw BTC as a sitting duck as the share price had fallen low therefore creating opportunities. Mr. Juma is one of the analysts who maintained that BTC will quickly return to profitability in its next set of financials hence stabilization in the share price.


“So investors are now seeing value. We are also seeing lots of buying from participants. As a market maker we have not participated much because our role is only to interfere as the last resort to avoid a mismatch between sellers and buyers.” BTC increased its revenue to P774 million, up by 4% from the previous P741 million. This increase was largely driven by a 4.6% increase in sales of goods and services. The highest revenue growth achievements were mainly in the areas of National Telephony which went up by 9%, followed by a 6% increase in mobile services and an 8% surge in data services.


There was also marked improvement in the gross profit which went up by 4.5% to P468 million. However, the gross profit was later eroded by a slight increase in total costs. Total costs in the period under review totalled P400 million, a 3% increase from the previous corresponding period. While the uptick in total costs is in line with the prevailing inflation rate, the company’s board and management says the increase in costs calls for more robust cost management initiatives that will ensure long-term growth in net earnings and company value.


In the end BTC declared a profit of P88 million, an impressive increase of 19% from the previous interim results. BTC further announced that it remains well capitalised to fund its capital expenditures from internal resources. The company has grown its cash reserves by 23% to P502 million, putting it in an enviable position considering that the company has no large borrowings.


The company’s board of directors was bolstered with an addition of experienced administrators, signalling a new dawn for telecommunication titan. The appointment of two independent non-executive directors, Ms Lorato Boakgomo-Ntakhwana and Mr. Maclean Letshwiti, was well received by investors as the duo are highly revered in the business circles following impressive track records in managing and running successful companies.

 

BTC further announced that Ms Boakgomo-Ntakhwana has been appointed the board chairperson, replacing Daphne Matlakala whose tenure had expired. The board has since appointed Mr. Anthony Masunga as managing director after a brief stint as the acting managing director.


While the stock is still yet to hit its all time high record of P1.35, analysts are bullish that it is only a matter of time before that happens. The stock continues to be one of the most traded and it might prove to be a hit with investors considering that it has gained the most in a short period of time after delivering stellar financial performance as well as enticing future prospects.

The company with large cash reserves and zero leverage has so far declared dividends in every reporting period. Just recently, the company announced its new dividend policy which prescribes a dividend payout of 50-65% of earnings subject to the financial position of the company, investment strategy, future capital requirements, availability of cash and other factors the board may consider.

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The Bulb World starts operations in South Africa

8th April 2021

Homegrown LED light manufacturing company, The Bulb World, has kick started operations in South Africa, setting in motion the company’s ambitious continental expansion plans.

The Bulb World, which was partly funded by Citizen Entrepreneurial Development Agency (CEDA) at the tune of P4 million, to manufacture LED lighting bulbs for both commercial and residential use in 2017, announced last year that it will enter the South African market in the Special Economic Zone (SEZ) of North West province under the auspices of North West Development Corporation (NWDC).

The company has already secured a deal with South Africa authorities which entails production factory shells and tax incentives arrangements.

The company founder and Chief Executive Officer, Ketshephaone Jacob has also previously stated that the company is looking for just under P50 million to finance its expansion strategy and is reaching out to institutional investors such as Botswana Public Officers Pensioners Fund (BPOPF) and government investment arm, Botswana Development Corporation (BDC).

However, Jacob told WeekendPost that instead of sitting and waiting for expansion funding the company has started hitting the ground running.

“We have decided to get in the streets of SA, start selling lights from door to door, ” said Jacob who is in currently in Rusternburg to oversee the introduction of The Bulb World products in the market.

Jacob explained more brand activations will be undertaken in South Africa. “The plan is to do it the whole of North West and Limpopo province, through hawkers, we give the hawkers the lights to sell at a factory price and they put a mark up and make a living,” he said.

The Bulb World operates from Selibe Phikwe, it currently employees 65 young people, 80 % of which are Phikwe youth. The company plans to add 100 jobs this year alone as it forges ahead with its regional and continental expansion plans.

In July this year Bulb World products will hit South African Shelves:  Pick n Pay, Checkers and Africa’s largest retailer Shoprite.

The Bulb World has been registered as a company in South Africa; the company will start producing lights from Mogwasa after striking a special economic zones deal with North West Development Corporation in North West Province South Africa.

“Over the next 10 years we are looking to create over 5,000 jobs in Africa. Through our expansion into all of Africa we will be able to create employment for various individuals in different sectors namely; manufacturing, distribution electronics and retail,” Jacob told this publication earlier this year.

Jacob said if all goes well, the plan is to have taken over Africa or rather penetrated, and have prevalent presence in the African market.

“We are gunning to have at least 30 percent market share by then. According to a 2016 Market Survey, the total valuation of sales for LED Lighting was 57BN, a portion of which we plan to have taken over by then,” he said.

 

While the company has set its eyes on Africa, Jacob said, the company has not fully exploited its local growth, indicating that there could be strategic factories built to supply neighbouring countries of Angola and Zimbabwe.

“There is potential for further local expansion as well to other areas of Botswana if things run smoothly as anticipated. Hopefully in the long-term if our fellow Africans and all these markets receive us well we are planning to build another factory,” he said.

“We are looking to build another factory in the Chobe/Ngamiland Area that will give priority to markets in Zimbabwe and Angola,” he said

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‘Oil exploration will have minimal impact’

30th March 2021
Okavango-River-Basin

The Maun based Okavango Research Institute (ORI) has downplayed the impacts of oil and gas exploration in part of Okavango delta arguing that given the distance proposed the likelihoods of negative impacts drilling these exploration wells on the surface water systems is likely to be negligible.

The Institution released a position paper titled ‘Proposed Petroleum (Oil and Gas) Exploration Operations in the Petroleum Exploration License (PEL) No. 73,’ with findings stating that, in the event of discovery of economically viable hydrocarbon deposits, much more careful consideration of the impacts and economic benefits of development of the resource will be needed.

For example, the fracking process for gas and oil extraction is known to require large volumes of underground water.

It further argues that increased extraction of the underground water is likely to affect the water table level and further affect the overall water availability in the river-basin.

“The effect on water availability and use may become worse if surface water is reticulated or sourced by any means from the Kavango River. Should the exploration and fracking for oil and gas expand to Block 1720, 1721 and 1821, the impact on water availability and quality will be significant, especially if the wastewater is not well managed,” said the paper.

The research unit recommends close communication between the relevant Basin State Ministries (Mineral Resources, Environment) and the Permanent Commission on the Okavango River Basin, OKACOM, and other stakeholders must be facilitated.

This will facilitate sharing of the correct information on the desired intentions of the basin states and compromises sought for the sustainability of the ecosystems in the downstream of the Cubango-Okavango river Basin, states the position paper.

ORI as a key stakeholder with scientific information says it is positioned to provide scientific advice and guidance to decision-makers on the potential impacts of both exploration and development and operation activities.

It also recommends that while the impacts might be minimal at the exploration stage, environmental impacts during the development and extraction process are significant.

Findings also state that the SADC Protocol places a mandatory duty to make a notification of planned measures undertaken in any riparian state in cases where such measures hold the potential to cause ‘significant adverse effects.’

It further states that where the planned development is trivial and not expected to cause any significant harm, the development state is not under duty to notify other riparian states.

Given that the drilling in the Kavango Region in Nambia is merely for exploratory purpose and the possibility of harm is minor, it is therefore not surprising that the Namibian government did not inform Botswana.

However, should it be found that the oil can be profitably or economically exploited, the Namibian government would be under a duty to notify both Angola and Botswana.

The institution further states that to ensure sustainable development in the Okavango Delta the following in the context of exploration for and potential development of hydrocarbon deposits within the Cubango-Okavango River Basin, it must be considered that the Okavango Delta is a World Heritage Site listed in 2014 by UNESCO and one of the binding requirements of the listing is the non-permissible commercial mining of any mineral, gas or oil within the World Heritage Site.

It states that the Okavango Delta is also a RAMSAR site in which mining is not allowed.

Should the exploration for minerals, oil and gas be allowed, there is a high chance that a mineral, oil or gas may be found given that the Delta is sitting on karoo sediments and shale rocks which in other parts of the world have been found to be sources of oil and gas deposits. Should oil or gas be discovered, there will be a strong socio-economic pressure to mine oil or gas and create jobs for the masses.

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Pakmaya yeast penetrates local market

30th March 2021
Pakmaya Africa Sales Manager: Cem Perdar

Manufactured in Turkey, Pakmaya Instant Dry Yeast can be used in the production of various fermented products, as it is suited for both traditional and industrial baking processes. All kinds of breads, buns and fermented pastry products are typical examples of applications.

Pakmaya Africa Sales Manager Cem Perdar says Pakmaya has 4 plants in across the world, further indicating that all of the plants have the highest standards of quality certificates and approvals. Regarding raw material, molasses is the main ingredient for yeast. Concerning production activities, yeast manufacturing requires high know-how and capability. Pakmaya has all those capabilities and aspects more than 45 years.

According to Perdar, Pakmaya has been existent in African markets since 30 years. From South to North, Central to East and West, a consumer can find Pakmaya in nearly every part of Africa continent.

“With its high quality, rich product selection and good service, our brand has become the favorite yeast of many Africans. On the other hand, our distributors in African countries are working very hardly and loyally in order to promote our products in their markets. After some time, we are becoming like families with our exclusive distributors in Africa and this enables both parts to work harder and keeps our product sustainable in market,” he said in an interview this week.

The yeast manufacturing giant made its way to Botswana market. The company has been smoothly working with Kamoso Distribution, a local distribution company. Perdar told BusinessPost that two entities have been working hard to earn is market locally.

“At the moment we have a good market share with them in Botswana market. I’m sure during 2021 long, we will be increasing our sales and market position. Soon we are going to start a marketing campaign in Botswana, so that means Batswana will see and recognize Pakmaya more and more. Pakmaya wants to be the best friend of bakers in bakeries and ladies at homes in Botswana.”

As per global COVID-19 regulations to curb the spread of the COVID-19, Botswana just like other country closed borders. Providentially, the restrictions did not affect the company destructively.

Perdar says “Kamoso Africa is a very important and strong partner in Botswana territory. With Kamoso’s hard work and strict measurements, we have done a very good job. So as Pakmaya, we have not suffered any distribution problem. Our partner is doing the needful at the reaching our products to end users.”

He further said “We are doing well in Botswana market and hoping to make much more. Our aim is to enter every single corner in Botswana territory. With our new marketing campaigns, we are planning to be the most preferred yeast in Botswana market.”

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