BSE to list new Exchange Traded Fund
Deputy chief executive officer of the BSE Thapelo Tsheole
The Botswana Stock Exchange, the leading bourse, is all set to float a new Exchange Traded Fund (ETF) to add onto the existing ones in a few months’ time.
Currently there are three ETF’s listed on the local exchange and bringing another one in 2015 will grow the number to four. The ETF’S are Bettabeta ETF, Newgold ETF and Newplat ETF.
“The announcement for the new ETF listing will be made in in the next two to three months,” the deputy chief executive officer of the BSE Thapelo Tsheole said.
ETFs remain among the fastest growing investment funds in major markets across the world. They are attractive because of their low costs, tax efficiency and stock-like features.
He highlighted that the turnover for ETF’s has improved in 2015 relative to 2014 on a comparable basis with significant inflows into the Bettabeta ETF, followed by Newgold and finally Newplat.
“Trades in ETFs since 2010 have exceeded the P1.0 billion mark and BSE is looking to list in the near term,” said Tsheole.
Naturally, exchange-Traded Funds (ETFs) are clearly poised to help the circulation of money on the local market. BettaBeta gives access to top 40 companies on the JSE while new NewGold gives access to gold stocks without having to physically buy gold. This helps in diversifying investor portfolios.
The BSE operates in an attractive environment as Botswana has no exchange controls which have helped improve inflows into the market. “Since we have stabilized, we want to bring people from southern Africa to buy ETF,” he added.
Tsheole called on market players to search Africa for ETFs and also boost BSE liquidity problems. Tsheole observed that ETFs improve liquidity and broaden the choice of investment securities in the market in the sense that they are another asset class or are investment securities to which investments funds can be diverted.
Previously, the exchange has encouraged participants to come up with local ETFs considering that Botswana is a resource country. Tsheole appealed to fund managers to assist in looking for stocks in Africa.
BettaBeta which listed at 32.95 on 11 May 2011 on Thursday it was settling at P41.90 with its turnover currently sitting at P326,5million. NewGold listed on 13 July2010 at P83.00 was trading at 107,20 with its turnover at P26,2million and Newplat which listed last year has 735,000 traded units and its turnover sitting at P82,1million.
THE DOMESTIC MARKET CAP EXCEED P50BN FOR THE 1ST TIME IN HISTORY…
The second quarter marked the highest turnover recorded in the history of the BSE on a quarterly basis and the 2nd highest in terms of volumes. What was also interesting to note was; almost 90% of the domestic counters ended the quarter on a positive footing, reflecting upbeat sentiments towards most of the counters, leading to a market average P/E of almost 15x, the highest in more than 2 years.
During the quarter, 241mn shares worth of P944.8mn exchanged hands, this was significantly higher than the trades in the prior quarter; a 57% increase in volumes and 69% surge in value traded.
The highest volumes were registered during the month of May. The huge quarterly volumes were mainly from Letshego; which has been topping the trades for a 6th straight quarter. The micro lender exchanged 35% of those volumes while property giant Turnstar and FNBB exchanged 10.4% and 8.5% respectively.
Despite the obvious trend of having high liquidity from the large caps, we saw some of the small market capitalization stocks like Cresta and Imara being very active during the quarter under review. Letshego posted daily average of about 1.4mn shares while other counters recorded less than 500,000 of daily shares traded, reflecting the increased liquidity of Letshego relative to other stocks.
Reflected by the strong rallies within the main board, was the positive gains made by the DCI during the quarter under review. All the 3 months recorded modest gains relative to other months during the quarter, with the highest monthly gain of 5% in May.
This was the only quarter where the DCI made positive m/m gains since the beginning of 2014. We have seen the uptrend of the DCI since the beginning of 2012 as it rose from 7,000 to end the quarter above the 10,500 points mark, portraying the vigorous growth achieved from most of the counters such as Sefalana, Sechaba and Chobe among others.
On a q/q basis the DCI leaped up by 10.3% (the 2nd highest in more than 4 years) as compared to the prior quarter where only 2% growth was registered. Wilderness was the largest gainer surging by 43% as investors were taking in their FY results which were characterized by 57% rise in PAT while its topline posted a 12% y/y increase.
However, the company released a cautionary statement, stating that the company has received a notice of intention to make an offer to acquire all the issued ordinary shares by Wine investments Limited though the cautionary was recently withdrawn.
Business
LLR transforms from Company to Group reporting
Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.
The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.
At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.
The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.
“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.
The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.
In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.
“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.
Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.
Business
Botswana’s Electricity Generation Dips 26.4%
The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.
Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.
Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.
Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.
Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.
The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.
The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.
In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.
Business
MMG acquires Khoemacau in a transaction valued at P23Bn
MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.
On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.
Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.
In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).
On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.
MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.
On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.
The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.
On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.
The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.
Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.
Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.