Connect with us
Advertisement

Two titans drag down the BSE

Sechaba Brewery Holdings limited stock price has plunged the most since the beginning of this year. The fall in Sechaba share price, is an occurrence repeated across the wholesaling and retail sector in the Botswana Stock Exchange, marked by falling share prices amid tough operating conditions.


 The wholesaling and retail sector has dragged the BSE’s domestic company index (DCI) down by 3.61% since the beginning of the year. The sector’s drag spills over from last year when the DCI declined by 11.3% after the wholesaling and retail sector lost 7.1% to become the worst performing sector in the local stock market. This was a reversal of fortunes from 2015 when the DCI finished the year 11.6% up with the wholesale and retail sector being the second best performing sector at 4.2%.


The performance of the sector this year reflects a broader trend that started earlier last year when African states battled with the fall in commodity prices due to waning demand across major markets. Furthermore wholesaling and retail stocks were under pressure from the El Nino phenomenon that affected many farmers, particularly in Southern Africa. By nature of their business, wholesaling and retail companies’ revenue is directly affected by the spending power of consumers and any negative shocks to the economy that affects government and consumer spending power rattles investors.


Sechaba’s shock share price drop was rapid but not totally unexpected. The group has so far lost 22% of its share value amid a challenging environment that investors have no appetite for. The woes of Sechaba dates back to the introduction of the alcohol levy in 2008. The levy has had an impact on the volumes shipped thus reducing the bottom line margins. However, the brewery giant was able to remain resistant, delivering profits and investors cheering them on the stock market.

 

A spanner was once more thrown in the works when the government introduced the traditional beer regulation that affected some of the group’s operations. The combination of the levies and regulations are now weighing heavily on Sechaba’s operations. To compound the matter further, investors are weary now considering the future of the group under new owners: in 2015, Anheuser-Busch InBev finally offered SABMiller PLC £68 billion in a  takeover bid, creating a brewing giant making about a third of the world’s beer.


In Botswana, SABMiller Plc has a stake in Sechaba Brewery Holdings which trades in the domestic exchange market. According to Botswana Stock Exchange, Sechaba Brewery Holdings limited is an investment holding company with interest in Kgalagadi Breweries (Pty) Limited (KBL).Sechaba holds 60% of the shares of KBL while SABMiller Botswana B.V. holds 40%. SABMiller Plc has management control in the operating company. Their involvement brings management, technical and brand building expertise of the three largest brewing companies in the world to KBL.


The question in the minds of Sechaba’s existing shareholders  is will the new owners put up with the government’s hard stance  on alcohol and if they do what measures will be put on place to system against the swelling pressure. On the other hand some investors have made their minds to exist their positions sooner than wait to find out what’s in store from the new owners.

 

Moreover, the drop in share price follows the shocking financial performance from Kgalagadi Breweries Limited (KBL), the sole associate of Sechaba, in the interim results ended September 2016. Sechaba’s share of results from KBL fell by 39.6%, operating profit went down by 40.1%, profit after tax decreased by 40.7% while basic and diluted earnings per share declined by 40.8%.


Sechaba said the decline in the financial performance of the company is mainly attributable to the current regulatory challenging environment in which the company operates. The other losing stock in the past month is Sefalana Holding Company, also a key player in the wholesaling and retail sector. Sefalana’s stock price took a huge hit in the last three weeks of January.  Shares of Sefalana have plummeted by 15.46% to trade at P10.99.

 

The precipitous drop in the group’s stock price makes it the second worst performing stock under the local counter on the BSE. Combined with 5.8% losses in the previous year, the stock is under pressure from investors who are used to the stock’s good returns last seen in 2015 when it grew by almost 50%.


Through the four decades of operating, Sefalana Group has grown into a large and diverse business, operating in a number of sectors including 67 stores in the Fast Moving Consumer Goods (FMCG) sector within Botswana and Namibia. Whilst its core business is in the FMCG sector, the Group remains well diversified with a solid property portfolio in Botswana, Zambia and Namibia, 3 motor dealerships (MAN, TATA and Honda), agencies for the sale of industrial and agricultural equipment, a well-established grain mill in Serowe, providing nutritious meals for the country’s population and a UHT milk plant, which commenced operations this year. Group remains the only listed company without a controlling shareholder. The single largest shareholder is Botswana Public Officers Pension Fund at 42.85%. Citizens hold a total of 91.87% of all issued shares.


Late last year, Sefalana undertook a Rights Issue program when the board issued an additional 27,858,523 new shares thus increasing stated capital comprising of ordinary shares from 222,868,186 shares to 250,726,709 shares. The additional shares were offered to existing shareholders in a ratio of 1 Offer Share for every 8 shares held by shareholders at a price of P12.60 per offer share, representing a 10% discount to the Sefalana share price at the time.

 

The rights issue was able to raise P351 million. The trailblazing group said the capital will be used to finance the acquisition of the Lesotho Business (TFS), to make an investment in a South Africa Consortium, to assist with future acquisition opportunities, to fund property acquisitions relating to these Transactions, and for other working capital requirements of the Sefalana Group.


In the latest interim financial results released a week ago, Chandra Chauhan, the group Managing Director, says in the face of continued strain on the economic climate in Botswana, following the closure of a number of institutions that has led to an increase in unemployment across the country, Sefalana has had to remain competitive and weather the storm of lower consumer spending.


“Some of our business units in Botswana have generated a lower level of profitability than in the previous year as a result of increased pressure on margins as we attempt to provide our customers with the best possible price in these difficult times. Government spending in some areas has also declined and this has adversely impacted those businesses that are reliant on recurring tenders.” He added that fortunately for the group as a whole, the Namibian business has grown sufficiently to offset the decline experienced locally.


The Group’s overall profit before tax for the 6 months ended 31 October 2016 of P81.1 million was marginally up on the comparative period ended 31 October 2015 at P80.4 million. The group managed to reach the P2 billion threshold in terms of turnover for the current six month period – a long standing target for the group. The overall total comprehensive income for the period is significantly up on the comparative period at P60.1 million compared to P18.5 million at October 2015.

 

Other financial highlights for the 6 months to 31 October 2016, show that the group’s revenue was P2.0 billion – up 9% on prior period; Gross profit was P152 million – up 4% on prior period; Earnings before interest, tax and amortization (EBITA) was P82.2 million, up 4% on prior period; and Profit before tax was P81.1m – marginally up on the prior period.

Continue Reading

Business

Food prices continue to rise, but at a slower rate

28th November 2022

Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.

This content is locked

Login To Unlock The Content!

Continue Reading

Business

Still doing business the old way?

18th November 2022

It’s time to get business done better with MTN Business Botswana’s ICT Solutions.

Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.

More and more, clients are looking for ways to keep their staff productive in a dynamically changing business environment. Whether your people are working from home, the office or abroad, there is a growing recognition that digitising your operations can offer unprecedented commercial value in flexibility, productivity and growth. This new, digital reality means that it is more important than ever to stay agile – if there is anything that can slow a business down, it is being burdened by othatld technology.

Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.

A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.

Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
MTN’s evolution

For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.

As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.

Continue Reading

Business

BIE to vitalize the Dignity of Engineers

9th November 2022

Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in  which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.

The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.

Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.

“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.

He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.

Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.

“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.

He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.

He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc

“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran

Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.

“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.

Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that  the BIE provides a fertile environment where they can meet, share ideas and grow professionally.

“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.

He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.

“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams

He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .

Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution  said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.

“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.

Continue Reading