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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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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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