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Botswana Equity Market

GARRY JUMA AND TLOTLO RAMALEPA
MOTSWEDI SECURITIES ANALYSTS


2014 was a quite an ebullient year as the volumes traded almost exceeded the record set during 2013. We saw numerous developments (Sefalana having a rights issue, Atlas Mara offer to ABCH, Letshego granted provisional banking license, Choppies setting a distribution centre in Zimbabwe,) the list is endless. What would be of substantial value to investors would be how all these evolutions would ultimately come down to aggrandizing earnings.


Despite the hurdle the banks have been operating under, it is also intriguing to note that most of them posted decent financial results during the year. There were 590.8mn shares worth of P2.17bn traded during the year slightly lower than the 669,5mn shares worth of P2.27bn exchanged during 2013, with most of the trades generated during q1 followed by the last quarter of the year.


Letshego traded the largest volumes for a 4th consecutive quarter making it the most liquid stock on the local bourse. During q4 the micro lender exchanged about 39% of the total trades followed by Choppies and Turnstar which traded 17% and 15% in that respective order. Other counters which traded significant volumes were FNBB, Letlole and BIHL among others.


Almost 80% of the domestic counters closed in the black, reflecting how a good year it was for most of the stocks. Also, who would have thought Sechaba would be the largest gainer, given the operating challenges it has had during the year! The banking space was the only industry that suffered during the year as the 2 largest banks by advances; FNBB and Barclays, ended the year in a red territory. Chobe was the second largest gainer following its upbeat results and also the resilience of the US economy which brought positive sentiments about the global outlook despite woes on other developed economies.


TOP MOVERS
ABCH was among the largest gainers following the mandatory offer made by Atlas Mara of which almost 100% was acquired. Sefalana made a right issue and acquired 12 stores in Namibia during the H2 of the year. Despite the high competition on the property space (especially on the retail and office sectors), the counters had a fantastic year, all closing on a positive territory with the exception of NAP (though it advanced by 2.4% during q4).


Letlole, Turnstar Primetime and RDCP had a total return average of about 23%, buoyed by their relatively higher dividend yields. Letshego also had a bull run during the year following the announcement that it was granted a provisional banking license in Namibia.


YEARLY MOVERS
On a q/q basis Wilderness topped the upside as it soared by 8.6% on higher than expected HY results where PAT surged by 69% y/y. Other major gainers during the quarter were Primetime, Sefalana and Chobe among others.


QUATERLY MOVERS
On the negative territory, Discovery Metals was the biggest loser during the quarter losing over 50%.


Meanwhile Lucara also had an incredible year but lost 22% as profit takers took risk off the table. The diamond miner discovered more stones larger than 100 carats and carried out exceptional stone tenders from its Karowe mines, boosting its revenues for the year. Lucara towards the end of the year announced its intentions to divest of its Monthae assets in Lesotho.


Barclays lower than expected FY’13 results, and its interims by mid-year hit hard on the stock as it plummeted by almost 40%, reaching a 12 month low of 340thebe (though there has been some recovery during q4). With the downtrend of our inflation rate, creating room for another potential rate cut on the bank rate, we could see NIMs coming under more pressure on the banking space.


Probably the only thing we could do is; wait and see. Choppies have been quite this year, as markets weighed the growth prospects and its relatively higher P/E. The retail giant has managed to set up 28 stores and 2 distribution stores in SA as well as 13 stores in Zimbabwe and 1 distribution centre. Due to the lower crude prices, we could see a boost in consumer confidence, which will ultimately benefit the retail industry.

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Matsheka seeks raise bond program ceiling to P30 billion

14th September 2020
Dr Matsheka

This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.

“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.

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Lucara sits clutching onto its gigantic stones with bear claws in a dark pit

14th September 2020
Lesedi La Rona

Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.

A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.

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Botswana Diamonds issues 50 000 000 shares to raise capital

14th September 2020
Diamonds

Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.

A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.

Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.

In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.

The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.

In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.

Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.

The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”

In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.

Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.

The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.

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