To the inclusion of an array of real estate that Turnstar owns in its portfolio is the newly acquired Mlimani shopping complex in Tanzania.
The group was able to execute this acquisition through acquiring all the shares in Island View Ltd, an IFSC registered company in Botswana, which in turn owns Mlimani City, an investment property comprising of the Mlimani shopping complex, a four-storey office building, conference centre and 50 residential houses to support Turnstar’s expansion scheme.
On the back of a weakening pula against the dollar, we recognize this as a great strategic move, as the rentals taken are in dollar denominations, taking advantage of an ailing local currency against the dollar. This should see revenue margin extend holding all things constant. As a result of this acquisition, the group Net Asset Value (NAV) reached the P1bn mark.
This was conveyed through Turnstar’s HY: 31 July 2012 financials, which were released earlier this week. The property investment company excited the market with good margins achieved by the subsidiary. The Phase 2 building extension made to one of its assets, Gamecity shopping complex, contributed to the group’s topline (revenue) of P87.1mn.
As the norm, retail rental income outpaced its commercial rental income by P18,5mn. In terms of geographical segments of the group’s operations in Botswana, it contributed more to the group Profit before tax (PBT) with P24.5mn, while Tanzania contributed P20.4mn bringing the total PBT to P44.9mn. PBT was up 22 percent for the company to P33.7mn from P27.7mn for the period under review. This saw profit after tax rise 23 percent to P34.0mn, supported by a tax credit of P375,765.
Operating profit was much higher, up 55 percent at P45.7mn from P29.5mn, partly due to the rentals enjoyed as of the result of extension of the Gamecity complex. However, in line with our expectations operating expenses of P10.4mn represented a 19.3 percent increase, alongside higher costs amid the Mlimani acquisition. The groups fundamentals suggest, group earnings per share to be at 12.25 thebe, while a 7.8 thebe distribution per linked unit is advised to be paid out to all registered unit holders with the company on or about mid December. (Motswedi Securities)