Saturday, October 24, 2020

Taylor’s resignation will likely affect investors’ confidence

Since listing on the local bourse on April 8th, 2016, BTCL’s share price reached an all-time high of P1.25, an increase of 25 percent from the initial buying price of P1.00. On the other hand, the lowest price it reached was P1.10. In its research note, Motswedi Securities previously estimated that the highest price the company’s share will reach is P1.80. Share price movements are, in large, determined by investors’ confidence in the company, which waivers with developments that take place within and around the company and its operating environment. In the case of BTCL, it is the majority of individual investors (Batswana) that carry the company’s share price movement, with a limited participation by the institutional investors.

The nature of investors that purchased the company’s stock cannot be determined but it could range from individuals with very limited understanding of the stock market, those with basic understanding, those with above average understanding to those with keen and adept understanding. This is because the company’s stock was enticed to every Motswana from almost all the corners of the country through various educational road shows leading to the Initial Public Offering (IPO). Based on this varied categorisation of investors, it is possible that a sizeable number of investors are not active participants in the market. An increase of 25 percent to the highest ever reached price since the listing two months ago does not suggest active participation by investors in the company’s stock. Based on the highest priceMotswedi Securities anticipates the company’s stock will reach, it might take time until such a price is reached.

In attracting Batswana to BTCL stock, a management profile was presented in the IPO prospectus which detailed the expertise and competencies of the management team that promised to deliver on the company’sfuture growth strategy. It is possible that certain investors considered the management team, which includes Taylor, as a significant factor for buying the company’s stock. With the exit of Taylor around the corner it may affect the confidence of such investors. It remains to be seen how the individual investors will react to the news. According to the prospectus Taylor’s tenure in the company has resulted in significant revenue and profit jumps, “in that time the business has seen considerable revenue and profit growth whilst re-positioning itself for privatisation and subsequently, Listing. Contemporaneously the organisation has begun the transformation journey re-aligning its assets and resources to better deliver against the FMC strategy.” This suggests that Taylor’s successor will have to run with the growth baton as well as he did, and better.

According to the announcement regarding the ending of Taylor’s contract from BTCL Chairperson Daphne Matlakala, “Mr. Anthony Masunga will succeed Taylor, in an acting capacity, as Managing Director until further notice. Masunga is currently the Chief Operating Officer at BTCL.”  The prospectus details that Masunga contributed to “spearheading the transformation of BTCL’s wholesale organisation (development and delivery of the 3 year wholesale strategy); laying the foundation for BTCL’s internal readiness for privatisation and development and implementation of BTCL’s marketing strategy.” This indicates that Masunga is abreast with the company’s operations. It remains to be seen how well Masunga will steer the company towards its growth deliverables.

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