Connect with us
Advertisement

Itís a buy for property stock

The Botswana Stock Exchange’s domestic Company Index (DCI) is at a one year low after contradicting by 10% since the beginning of the year. The DCI comprises of 22 listed local companies on the domestic counter and it is a market weighted index. The DCI is dragged down by losses in the financial and retail stocks that make up majority of the domestic listed companies.

However, the six listed property stocks have been resilient in what appears to be a bearish market, delivering capital gains above the DCI. We take a look at the top four property companies that are delighting their shareholders, especially the Botswana Public Pension Fund which has stakes in both companies.

New African Properties

New African Properties(NAP) is not only the best performing property stock  but at 11%  year-to-date(YTD) returns, it is the overall second best performing stock in the DCI, coming second to Botswana Insurance Holding Limited(BIHL).

This is a reversal of fortunes from last year when the group’s ranked third amongst property companies after delivering 22% in share price increase. The company broke records in June in what was the single biggest day trade in the history of the BSE after the company traded 26% of its issued capital worth P457.3 million.

NAP was listed on the BSE in 2011, with a total of 604 397 124 issued units. According to NAP’s 2015 annual report, the majority of the units are owned by body corporate/trusts at 80 percent, followed by insurance companies, pension/equity funds at 13.6 percent while individuals hold 6.4 percent of issued units.

Of all issued units, the public accounts for 20.1 percent and the rest lies solidly with directors’ interests. The largest unit holder is Cash Bazaar Holdings (Pty) Ltd with 79.3 percent stake. In 2015, the company’s traded units were at 1.98 percent of the total issued units, making the June trade the biggest of the company since its existence.

NAP owns properties such as Riverwalk Mall, Riverwalk Plaza and Kagiso Mall in Gaborone, Mafenyatlala Mall in Molepolole, Kasane Mall and Mokoro Centre in Maun. The portfolio comprises primarily of prime retail sites with  a strong tenant base, including Pick ‘n Pay, Spar, Choppies, Mr Price, Woolworths, Pep, Cashbuild, Furnmat, CB Stores, Ackermans, Cape Union Mart, Exclusive Books, FNB, Hi-Fi Corporation, Home Corp, Incredible Connection, Jet, KFC, Nando's, New Capitol Cinema, Mugg & Bean, JB Sports, Truworths and many others.

RDC Properties

The second best performing property stock belongs to RDC properties after its share price appreciated by 6% since the beginning of the year. The Share price is currently trading at P2.65. In the previous year the share price surged by 27%, making it the second best performing property stock.

RDC Properties is the first variable rate loan stock company to list on the Botswana Stock Exchange in 1996. The company selectively develops and invests in modern commercial, industrial and residential buildings in prominent locations in Botswana and Madagascar.

RDCP’s property portfolio value surpassed the P1 billion mark in 2015, and the portfolio includes Masa Centre, Chobe Marina Lodge, Standard Chartered House in main mall, Isalo Rock Lodge in Madagascar and RDC flats. The company plans to expand to Namibia and Mozambique with plans in Namibia progressing well after the group reserved a holding company name that will carry out developments after land has been allocated.

The group’s 2015 annual report lists the top unit holders as Realestate Financiere SA, the controlling shareholder at 31.47%, Botswana Public Officers Pension Fund (BPOPF) at 31.6% (the units are held through various nominees),  while Chobe Financial Corporation, Aspera Holdings Limited and Motor Vehicle Accident Fund (MVA) each hold 16.62%, 3.74% and 3.70% respectively.

TURNSTAR HOLDINGS

The Gulaam Abdoola led property giant continues to impress its shareholders as the market correctly prices the value of the stock which has spiked by 5.5%  in the last 8 months to trade at P3.24. The gains extend the group’s spectacular performance as it ended the previous year as the fourth best performing stock in the domestic board after returning 47% in capital gains.

The group’s property portfolio is valued at P1.7 billion, a portfolio that includes Game City, the largest indoor mall in Botswana and Mlimani City, the largest purpose built indoor shopping centre in Tanzania. The group also owns Nzano Shopping Centre in Francistown, Mogoditshane Supa Save mall, Turnstar House in Mall, Fairgrounds Office Park, Tapologa Estates and other residential and retail properties.

Turnstar Holdings is in the last stages of Game City expansion which when complete will modernise the existing common areas, toilets, entrances and shop fronts of the centre. An additional 9,000 sq.m exhibition hall comprising of restaurants, a food court, multi-function entertainment area, exhibition hall and playground is being constructed on the upper level with a view of the Kgale Hill.

The group is also extending its Mlimani city through additions of two office blocks, a new ticket parking system and refurbishment of the conference centre. The ongoing works are expected to improve the group’s revenue. The Group’s top ten linked unitholders include BPOPF, GH Group, Associated Investment and Development Corporation, Botswana Insurance Fund Management, Debswana Pension Fund and Motor Vehicle Accident Fund.

PRIMETIME HOLDINGS

The group’s property value which is in the north of P750 million and spans the office, retail and industrial sectors with the bulk of revenues coming from the highly competitive and saturated office sector. The group was the fourth best performing property stock in 2015 at 12% share price appreciation. The stock which is now trading at P3.05 is up by 4.8% since the beginning of the year.

The group owns a stellar portfolio comprising of Prime Plaza Buildings in the CBD, Sebele Centre Mall, Letshego Place, South Africa High Commission Building, DHL Building, and G4S headquarters. In Francistown, they own Nswazi Mall and Mantlo House after disposing of Barclays Plaza and Blue Jacket Square Mall to BPOPF. Other properties include Hillside Mall in Lobatse, Boiteko Mall in Serowe, Ramotswa Shopping Centre, Ghanzi Shopping Centre. In the region, the group operates two buildings in Lusaka and Kitwe which houses G4s offices.

Primetime which is set to open its new Pilane Crossing Mall is currently locked in an impasse with the Ministry of Trade and Investment over trade licenses concerning South African companies that are leased as tenants. The Ministry is refusing to grant trade licenses since the Trade act stipulates that such licenses are reserved for citizens. However the silver lining is that the licenses will be approved if the involved retailers cede 51% of shareholding to citizens.  

The top major linked unitholders list is led by Linwood Services Limited with 25.99% shareholding, BPOPF has a stake of 16.88% through its nominee, Tati Company Limited holds 14.23%, Metropolitan Life Botswana has 7.51%, while Debswana Pension Fund and D.P Training both hold 3.41% and 3.34% respectively.

Continue Reading

Business

Moody’s Reaffirms African Trade Insurance’s A3 Rating & Revises Outlook to Positive

13th March 2023

Moody‚Äôs Investors Service (‚ÄúMoody‚Äôs‚ÄĚ) has affirmed the A3 insurance financial strength rating (IFSR) of the African Trade Insurance Agency (ATI) for the fifth consecutive year and changed the outlook from stable to positive.

Moody’s noted that the change in outlook to positive reflects the strong growth in ATI’s membership base Рthat has resulted in improved portfolio diversification, strengthened capital adequacy, and the good profitability despite the challenging operating environment. In addition, ATI benefits from its preferred creditor status (PCS) amongst sovereign member states which protects it from the risk of default by member sovereigns through securing recoveries against claims paid on guarantees.

The strong membership and equity growth are some of the key considerations for the consistent reinstatement of ATI’s A/Stable rating by Standard & Poor’s and Moody’s rating, over the years. Also supporting the rating affirmation are; consistent improvement in financial performance, commitment of its shareholders who continue to uphold the preferred creditor status, its high quality and conservative investment portfolio as well as strong relationships with a number of global reinsurers that provide significant risk-bearing capacity.

With the change in outlook to ‚Äúpositive‚ÄĚ, ATI is now better placed to provide enhanced support to its member countries, attract additional shareholding and grow its portfolio. The positive outlook is an indication that if ATI continues to demonstrate its strong underwriting performance and ability to recover claims under the preferred creditor arrangements, among other factors, an upward pressure towards an upgrade may be generated. The Moody’s press release can be accessed from¬†here

Commenting on the rating, Africa Trade Insurance Chief Executive Officer Manuel Moses said: ‚ÄúThis positive revision is in line with our 2023 – 2027 strategic objectives in which we set to improve our rating outlook to positive in the first year, and achieve an upgrade of at least ‚ÄúAA‚ÄĚ/Stable rating by both Moody‚Äôs and S&P within this Strategic Plan period. We aim to achieve this by doubling our exposures and increasing our capital to more than USD1 billion.‚ÄĚ

ATI’s mandate is to provide trade-credit and political risk insurance, as well as other risk mitigation products to its member countries and related public and private sector actors. These insurance products not only directly encourage and facilitate foreign direct investment as well as local private sector investment in our member countries, but also contribute to intra- and extra-African trade.

About The African Trade Insurance Agency 

ATI was founded in 2001 by African States to cover trade and investment risks of companies doing business in Africa. ATI predominantly provides Political Risk, Credit Insurance and, Surety Insurance. Since inception, ATI has supported US$78 billion worth of investments and trade into Africa. For over a decade, ATI has maintained an ‚ÄėA/Stable‚Äô rating for Financial Strength and Counterparty Credit by Standard & Poor‚Äôs, and in 2019, ATI obtained an A3/Stable rating from Moody‚Äôs, which has now been revised to A3/Positive.

Continue Reading

Business

Moody’s Reaffirms African Trade Insurance’s A3 Rating & Revises Outlook to Positive

13th March 2023

Moody‚Äôs Investors Service (‚ÄúMoody‚Äôs‚ÄĚ) has affirmed the A3 insurance financial strength rating (IFSR) of the African Trade Insurance Agency (ATI) for the fifth consecutive year and changed the outlook from stable to positive.

Moody’s noted that the change in outlook to positive reflects the strong growth in ATI’s membership base Рthat has resulted in improved portfolio diversification, strengthened capital adequacy, and the good profitability despite the challenging operating environment. In addition, ATI benefits from its preferred creditor status (PCS) amongst sovereign member states which protects it from the risk of default by member sovereigns through securing recoveries against claims paid on guarantees.

The strong membership and equity growth are some of the key considerations for the consistent reinstatement of ATI’s A/Stable rating by Standard & Poor’s and Moody’s rating, over the years. Also supporting the rating affirmation are; consistent improvement in financial performance, commitment of its shareholders who continue to uphold the preferred creditor status, its high quality and conservative investment portfolio as well as strong relationships with a number of global reinsurers that provide significant risk-bearing capacity.

With the change in outlook to ‚Äúpositive‚ÄĚ, ATI is now better placed to provide enhanced support to its member countries, attract additional shareholding and grow its portfolio. The positive outlook is an indication that if ATI continues to demonstrate its strong underwriting performance and ability to recover claims under the preferred creditor arrangements, among other factors, an upward pressure towards an upgrade may be generated. The Moody’s press release can be accessed from¬†here

Commenting on the rating, Africa Trade Insurance Chief Executive Officer Manuel Moses said: ‚ÄúThis positive revision is in line with our 2023 – 2027 strategic objectives in which we set to improve our rating outlook to positive in the first year, and achieve an upgrade of at least ‚ÄúAA‚ÄĚ/Stable rating by both Moody‚Äôs and S&P within this Strategic Plan period. We aim to achieve this by doubling our exposures and increasing our capital to more than USD1 billion.‚ÄĚ

ATI’s mandate is to provide trade-credit and political risk insurance, as well as other risk mitigation products to its member countries and related public and private sector actors. These insurance products not only directly encourage and facilitate foreign direct investment as well as local private sector investment in our member countries, but also contribute to intra- and extra-African trade.

About The African Trade Insurance Agency 

ATI was founded in 2001 by African States to cover trade and investment risks of companies doing business in Africa. ATI predominantly provides Political Risk, Credit Insurance and, Surety Insurance. Since inception, ATI has supported US$78 billion worth of investments and trade into Africa. For over a decade, ATI has maintained an ‚ÄėA/Stable‚Äô rating for Financial Strength and Counterparty Credit by Standard & Poor‚Äôs, and in 2019, ATI obtained an A3/Stable rating from Moody‚Äôs, which has now been revised to A3/Positive.

Continue Reading

Business

BoB confident inflation will return to objective range in Q2 2024

2nd March 2023

Bank of Botswana anticipate that inflation will normalise in the second quarter of the year 2024 after staying above the central bank’s objective range for over a year now. Governor Moses Pelaelo said when launching the monetary policy statement for 2023 on Wednesday.

Inflation was above the Bank of Botswana‚Äôs inflation objective range of 3 ‚Äď 6 percent in 2022, against¬†the background of improved domestic demand, upward adjustment in administered¬†prices, as well as higher foreign inflation.

Inflation increased significantly from an average of 6.7 percent in 2021 to an average¬†of 12.2 percent in 2022, thus remaining above the Bank‚Äôs 3 ‚Äď 6 percent objective¬†range since May 2021.

The high inflation in 2022 was mainly due to significant upward adjustment of administered prices, which added 5.2 percentage points to inflation during the year and associated second-round effects.

However, inflation generally trended downwards from September 2022 and was 12.4 percent in December 2022, higher than the 8.7 percent in December 2021. Food price inflation also increased from 7.2 percent in December 2021 to 16.9 percent in December 2022, in the context of significant domestic price increases for bread and cereals, oils and vegetables.

Regarding core inflation measures, the 16 percent trimmed mean inflation increased from 8 percent in December 2021 to 11.2 percent in December 2022, while inflation excluding administered prices increased from 7.1 percent to 8.7 percent in the same period.

Inflation has generally been on a downward trend since September 2022. It is projected¬†that the downward trend will be sustained and that inflation will revert to within the¬†Bank‚Äôs 3 ‚Äď 6 percent medium-term objective range in the second quarter of 2024.

According to Governor Pelaelo this will be mainly on account of the dissipating impact of the earlier increases in administered prices, the recent reduction in domestic fuel prices, the expected decrease in international commodity prices and implementation of a smaller downward annual rate of crawl for the Pula exchange rate.

The projection also considers the anticipated increase in economic activity supported by both fiscal policy and relatively accommodative monetary conditions; the impact of the recent increase in private school fees in January 2023; the impact of the price increase in Kgalagadi Breweries Limited (KBL) products effective February 1, 2022; the expected upward adjustment of Botswana Housing Corporation (BHC) rentals and electricity tariffs in April 2023 and April 202411; as well as the possibility of higher prices due to resumption of the 14 percent VAT following implementation of the Government’s temporary inflation relief measures introduced on August 1, 2022.

Pelaelo said in the overall, risks to the inflation outlook are assessed to be skewed to the upside.These risks include the potential increase in international commodity prices beyond current forecasts; persistence of supply and logistical constraints due to lags in production; the adverse economic and price effects of the protracted Russia-Ukraine war; the uncertain COVID-19 profile; and ongoing tension between China and the United Sates over South China Sea and Taiwan.

On the domestic front, the risks for higher inflation than currently projected relate to possible annual adjustments in administered prices not included in the forecast; short term consequences of import restrictions; prospective fiscal developments, namely implementation of potentially expansionary two-year TNDP.

The possibility of a higher than projected impact of the resumption of the 14 percent VAT (from 12 percent) in the second quarter of 2023; upward pressure on wages across the country emanating from the 5 percent increase in public service salaries effective April 1, 2023; were also highlighted as some of the factors that could lead to higher general price adjustments.

Pelaelo also added that there is also a likelihood of an upward adjustment in domestic fuel prices, in response to any increase in international oil prices.

He said these risks are, however, moderated by the possibility of weaker-than-anticipated domestic and global economic activity due to geo political tensions and possible restrictions in response to any emergence of new COVID-19 variants.

Lower international commodity prices than currently projected could also result in lower inflation, as would capacity constraints in project implementation. Meanwhile, according to the December 2022 Bank’s Business Expectations Survey, the business community expects inflation to remain above the Bank’s objective range in 2023.

Continue Reading