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BTCL clawing down the bearish Q3 local market

Results for the third quarter of the year, which had a national lockdown, show that 15 counters on the domestic board lost value translating to a 2.2 percent loss on the Domestic Company Index (DCI).

When doing a market study for the third quarter of 2020, Stockbrokers Botswana says the DCI closed the quarter at 7001.22 points (Q2 2020: 7159.66 points). The Q3:2020 was not as much as a bigger contraction compared to Q2:2020 one which was 4.4 percent. On the foreign companies index a loss of 0.2 percent was realized; 1547.33 points (Q2 2020: 1551.16).

A quarter of bearish moves saw market capitalization on the domestic board also dipped by 2.2 percent to BWP36.2 billion from Q2:2020 P37.0 billion and this was because of a tumble of share prices by 15 companies. This was the time when government put up lockdowns (August) and the domestic economy was still reeling from macroeconomic hangover of a reflection of real GDP at 24 percent in the second quarter of this year which is the same quarter Covid-19 broke resulting in disruptions.

Of the 15 counters who lost value, on the top five is Tlou (60.0 percent), Lucara (23.5 percent), BTCL (13.5 percent), Choppies (13.0 percent) and Turnstar (11.1 percent). BTCL has been getting the spotlight from market watchdogs as the most suffered stock this year.

Just recently, beginning of this week, BTCL was the main culprit when the local market shock into a bearish surface. Stockbroker Motswedi Securities researchers this week acknowledged that BTCL was the most traded stock by way of liquidity in the Monday trading session. The researchers said under 35,100 shares went through the market, at the stock’s new price low of P0.68/share (1 thebe lower from the session’s opening price).

The BTCL stock currently pegged at year to date performance of negative 28.4 percent and this widens the gap between itself and the nearest stock, according to Motswedi Securities. Motswedi Securities explains this enigma of BTCL losing value as a result of the Covid-19 pandemic, panic selling and the general dilution of investments to free up cash. And this, according to Motswedi is mirrored on the DCI; the DCI and Domestic Company Total Returns Index (DCTRI) lost 0.03 percent in the trading session- year to date losses of negative 8.09 percent and negative 3.67 percent of the domestic indices respectively.

The Q3:2020 has seen BTCL drowning on the pool of bears, the period under review being September. In the corresponding period which is Q3:2020 or September 2019, BTCL prices were at P1.01 before declining to P0.95 into Q4:2019 or the preceding quarter. In the first quarter of 2020 when coronavirus broke out the price went down by 9 thebe. The quarter before this quarter under review, Q2:2020, the price went up by 3 thebe before plummeting by 12 thebe in Q3:2020. Results of the fourth quarter of 2020 are yet to be released.

The limited demand for the stock continued to lend support to the buyers – allowing them to bid below the market price, as has been happening. The stock’s value loss for the year, currently stands at negative 31.6 percent– leading the domestic equity board, and third largest loser in the overall equity market, said Motswedi Securities.

On Tuesday, BTCL stock was in the spotlight when BSE increased to 955,000 shares trading with a turnover of P635 000 across 7 stocks on the domestic board. This is because, according to Motswedi Securities, BTCL was on the chopping block for the second consecutive day, that time (Tuesday), giving 3 thebe back to the market to close at P0.65/share. Motswedi Securities recommend Buy on BTCL stock which was at P0.68 by press time.

On the Wednesday session, when the sum of 30 000 shares with a turnover of P39 000 was discussed, BTCL was back on the board, crossing some 17,000 shares in the session worth about P11,100 with each share going through the market at the prevailing market price of P0.65/share.

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Grit divests from Letlole La Rona

22nd March 2023

Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.

The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.

Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.

This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.

In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.

Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.

The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.

“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said

In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.

The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.

Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.

Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.

Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.

Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.

“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.

LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.

The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.

An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.

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Stargems Group establishes Training Center in BW

20th March 2023

Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.

The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.

“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.

In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices.  Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.

“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.

Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy,  Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.

“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.

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Food import bill slightly declines

20th March 2023

The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.

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