Sunday, April 21, 2024

Big companies enter reporting period

The big companies on the Botswana Stock Exchange (BSE) are this week lining themselves for a spectacular reporting period that is expected to change the look of the local board for the better.
Botswana Insurance Holding Limited (BIHL), which releases its results on Monday under a profit warning and First National Bank of Botswana are the first ones to announce their results this week.
Though BIHL is under profit warning the forecast is that it will make tremendous profits from its local operations thanks to the coming in of the Private Public Partnership programmes, which are expected to run for another 15 years.

“With FNBB, one can expect a good set of profits which are largely boosted by its retails sector,” head of Capital Asset Management, Leutwetse Tumelo, said Friday.

FNBB, which is the second largest bank on the exchange by capitalization, is also the lending bank in terms of technological adoption in the local market and its fortunes are largely to be helped by the government’s salary adjustment which was effected in April this year.

“I believe that all the banks got leverage from the civil service salary adjustment,” he added.
Despite its jaded share price on the market FNBB is reputed to be very good at maintaining a low costÔÇôincomeÔÇôration which in the end powers its earning rations. The current set of results is also expected to mark a new chapter in the history of the BSE since mid last year when the market started to loose steam. Of late, the market has been on an upwards gain trend which was supported by the blue chip companies and some of the mid caps.
At the beginning of August 1, BSE stood at 7411.9 points, up 3.1 percent or netting P 28.9 million on the day, however, it was lower than the same period last year when shares valued at P 37.9 million were noted.

“These signs are good, domestic prices are moving up, more stocks are trading regularly,” Tumelo said.

He said what gave the market steam was the net gain made by the four biggest companies on the exchange which are all the banks. That has seen Barclays Bank of Botswana moving up 12.5 percent while Standard Chartered, which is the third biggest on the exchange, was 3.9 while Botswana Insurance Holding Limited added 4.8 percent during the month.

The financial services sector is the backbone of the local bourse, accounting for over 70 percent of the market capitalisation.
However, First National Bank of Botswana was down 2.1 percent on the month while Sechaba Holdings, which is being troubled by planned alcohol price increase, closed the month flat.

But five of the mid cap companies aided the market although the overall sector contributed only 0.1 percent over the period under consideration. African Banking CorporationÔÇöwhich is due to have its Special AGM sometime this monthÔÇöwhich will put it on the African ivy league, Chobe Holdings , Prime Time, Sefcash and Turnstar Holdings. The counter was negatively affected by the performance of Imara, which slouched ÔÇôdown by 3.8 percentÔÇöliterally wiping its gains ÔÇö- and followed by Engen, FurnMart and G4S and their boards were trading at price earning ratio of 13.1 times.

Given the situation, trade during the period represented about 8.7 million shares or 0.42 percent of the total float, representing 37 percent of the total shares of the total capitalization of shares on issue.

The foreign company indexÔÇöa measure of dually listed companies index the picture was totally different owning to the global stock turmoil that started last year with three problems; the global crude oil prices, the mortgage crisis in the United States of America and the softening of the USA dollar against its major trading partners. The move has painted ugly situation across the globe as the USA has been long regarded as the safest investment place and the US dollar as the international currency while it consumes a lot more fuel than any other nation.

Meanwhile, BIHL said in an advert carried by the local newspapers last week, under the headline “Trading update” that profits for the year will be lower that investors’ expectation largely blamed on the unstable international markets
“The board has reviewed the group results for the 6 months to June 30, 2008. Operating surplus and core earnings from the main actives of the group, life insurance and asset management, remain sound and are in line with the board’s expectations. However, due to the global downturn on equity markets, the group has experienced unreleased investment losses,” the company said in a statement on Friday.

The global downturn on equities started last year with the United States of America’s mortgage crisis, which has since spread across the world. The USA, which holds up to 50 percent of the global money seeking investment opportunities, was affected by the softening of the dollarÔÇöprompting some of the international prominent people clamouring for a new international currency of exchange that would replace the dollar as it was pushing companies into the red.


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