Monthly Highlights: April 2021

•  West African equity markets were higher amid broad-based strength throughout the region
•  In East Africa, the markets ended the month in the positive territory across the board, led by Uganda (+5.3%) and Mauritius (+4.6%)
•  North African equities were mixed as Morocco (+4.3%) and Tunisia (+2.9%) reported positive returns whilst Egypt was weaker
•  In Southern Africa, equity markets exhibited positive returns amid broad-based gains across the region led by Zimbabwe (+3.4%) and Botswana (+2.2%)
 

African markets were positive in US dollar terms in the month of April, apart from Egypt (-0.6%) which was the only market that recorded negative performance, whilst the biggest gainers were Ghana (+16.0%), BRVM (+9.3%) and Uganda (+5.3%). Ghana’s positive returns came as country's gross domestic product (GDP) grew by +15.4%% in local terms in 2020from GHS 350.8bn in 2019 to GHS 404.9bn, and coming out of a recession in 4Q20 as GDP grew +3.3% y/y, compared with contractions in 2Q20 and 3Q20 of -5.9% and -3.2% respectively, largely driven by the agriculture and services sectors which grew by +8.2% and +4.6% respectively.

West African equity markets were higher amid broad-based strength throughout the region

West African equity markets were higher amid broad-based strength throughout the region. On the earnings front, Dangote Cement’s 1Q21 results were impressive (T/O: +33.5% y/y; PAT: +48.1% y/y) driven by strong revenue growth from both the Nigerian and Pan African operations of +33.7% y/y and +33.1% y/y respectively. Similarly, BUA Cement reported strong growth in 1Q21 (T/O: 13.4% y/y; PAT: +13.0% y/y) as gross profit margin increased to 47.6% from 44.4% coupled with EBITDA margin expansion to 48.5% from 45.6% in 1Q20. Lafarge Africa also released healthy 1Q21 results (T/O: +12.2% y/y; PAT: +13.3% y/y) driven by strong revenue growth and a decrease in operating expenses (-23.6% y/y) and finance costs (-18.2% y/y). MTN Nigeria published sturdy 1Q21 numbers (T/O: +17.1% y/y; PAT: +42.5% y/y) driven by growth across key revenue lines, voice (+7.5% y/y), data (+42.8% y/y) and fintech (+28.5% y/y), and profitability was boosted by an improvement in finance costs of -20.4%. Shifting to the financial sector, Guaranty Trust Bank released disappointing 1Q21 results (GE: -7.8% y/y; PAT: -9.6% y/y) driven by weak topline as net interest income declined by -18.4% y/y, alongside a +51.8% y/y increase in impairment charges. Zenith's Bank’s 1Q21 results were relatively flat (GE: -5.3% y/y; PAT: +5.0% y/y) as the bank did well to defend margins as the massive rate compression played havoc with the sector, net interest income increased by +2.0% , as interest income fell -11.5% y/y but margins were saved by an impressive -45.1% y/y decrease in interest expense. As a result, cost of funds improved to 1.2% vs. 2.8% in 1Q20. United Bank for Africa reported impressive 1Q21 results (GE: +5.2% y/y; PAT: +26.8% y/y) driven by growth in net interest income (+13.7%) and non-funded income (+13.1%) as well as a decrease in loan loss provisions of -23.2% y/y. Access Bank also exhibited strong growth in 1Q21 (GE: +14.7% y/y; PAT: +12.7% y/y) which we attribute to a significant increase in non-funded income by +125.1% y/y. Access Bank also announced its intentions to buy ABC’s 78.15% stake in BancABC Botswana, the deal is for cash consideration representing approximately 1.13x book value, part of which is payable 24 months after closing of the deal and is expected to be concluded in 2Q21. Stanbic IBTC Holdings announced disappointing 1Q21 (GE: -25.6% y/y; PAT: -45.4% y/y) driven by a significant decline in net interest income (-14.3% y/y) and non-funded income (-29.3%), as well as, an increase in loan loss provisions of +107.9% y/y. FBN Holdings’ 1Q21 results were also poor (GE: -14.5% y/y; PAT: -32.5% y/y) as net interest income decreased by -12.4% y/y and provisions for loan loss increased by +35.7% y/y. In the consumer sector, we digested outstanding 1Q21 results from Okomu Oil Palm (T/O: +79.7% y/y; PAT: +159.9% y/y) as strong topline growth was supported by a -87.7% decrease in finance costs. Nigerian Breweries also came out with strong 1Q21 results (T/O: +27.0% y/y; PAT: +38.6% y/y) fuelled by strong revenue growth on the back of seasonal weather conditions and festivities which improved volumes. In Ghana, we digested commendable 1Q21 results from GCB Bank (GE: +28.2% y/y; PAT: +46.4% y/y) driven by impressive growth in net interest income (+33.6%) and non-funded income (+30.7%), despite a +424.7% increase in impairment charges. MTN Ghana posted strong 1Q21 results (T/O: +21.9% y/y; PAT: +31.6% y/y) fuelled by subscriber growth of +4.6% y/y to 25m, with active data subscribers growing by +30.2% y/y to 11.2m and mobile money users increasing by +11.1% y/y to 10.7m.

In East Africa, the markets ended the month in the positive territory across the board, led by Uganda (+5.3%) and Mauritius (+4.6%)

In East Africa, the markets ended the month in the positive territory across the board, led by Uganda (+5.3%) and Mauritius (+4.6%). In Kenya, the inflation rate edged down to 5.76% in April, from 5.9% in the previous month and on a monthly basis, inflation was at 0.82%, from 0.4% in March. In corporate news, Safaricom as part of a consortium including the Vodafone and Vodacom have bid for a telecommunications licence in Ethiopia, as wireless service providers look to tap the last remaining, unprivatised large market in the world in Ethiopia. We understand that Safaricom has a 51% stake in the consortium, and that only two bids were submitted for two licences. On the earnings front, Bamburi Cement posted mixed FY20 results (T/O: -5.2% y/y; PAT: +214.5% y/y) where despite a decline in revenue, profitability was boosted by a decrease in operating expenses (-7.0% y/y) and finance costs (-46.8% y/y). In Mauritius, tourism income plunged to MUR 419m between January and February 2021, from MUR 10.9bn in the first two months of 2020, revenues fell to MUR 176m in February, compared with MUR 4.9bn a year ago. In other corporate news, SBM Holding announced the appointment of Raoul Gufflet as the new Chief Executive Officer to oversee the entire banking operations including SBM Bank (Mauritius), along with the international banking entities in Kenya, India and Madagascar. In Tanzania, we digested stellar 1Q21 results from NMB Bank (GE: +12.9% y/y; PAT: +30.7% y/y) driven by strong growth in net interest income (+18.4% y/y) and relatively flat growth in impairment charges (+4.7% y/y). Tanzania Breweries released poor FY20 results (T/O: -6.3% y/y; PAT: -40.7% y/y) driven by weak topline and gross profit margin contraction of 84bps to 37.9% from 38.8%. In Uganda, the central bank MPC held the key interest rate at 7.0% for fifth consecutive time. In corporate news, Cipla Quality Chemicals Industries’s antiretroviral and malaria medicines exports increased to 24 countries including South Africa, Ghana, Senegal, Benin, Burkina Faso, Cape Verde, Guinea, Mali, Sierra Leone, Togo, Liberia, Namibia, Malawi, Zimbabwe, Botswana, Mozambique and Tanzania

North African equities were mixed as Morocco (+4.3%) and Tunisia (+2.9%) reported positive returns whilst Egypt was weaker

North African equities were mixed as Morocco (+4.3%) and Tunisia (+2.9%) reported positive returns whilst Egypt was weaker. On the earnings front, Cairo for Investment and Real Estate Development, the education provider, posted satisfactory 1H21 earnings (T/O: +13.9% y/y; PAT: +10.0% y/y) driven by the higher education segment which grew +29.0% y/y as tuition revenues increased by +30.0% y/y on the back of a 26.0% y/y increase in number of students enrolled. In other corporate news, Speed Medical signed a purchase contract to acquire 100% of Prime Healthcare, which owns a 70% stake in Prime Speed Medical (Speed) raising Speed’s collective stake in the latter to 100% from 30%. The transaction will be a cashless share swap, whereby the selling parties will move up the shareholding structure to the holding company (Speed) and exclusively subscribe to a capital increase in Speed, which will then be offset against a convertible notes payable. Heliopolis Housing concluded the sale of its 270-feddan land plot in New Heliopolis City, for total consideration of EGP 2.5bn, implying gross value of EGP2.2k/sqm. In Morocco, March 2021 inflation inched +0.2% higher from the previous month as food and non food costs rose by +0.3% and 0.2% respectively. On the earnings Mutandis released a 1Q21 trading update with consolidated revenues -9.9% y/y lower as revenues from detergents and bottles segment declined by -21.4% y/y and -18.9% y/y respectively, whilst the juices (+10.5%y/y) and seafoods (+4.2%y/y) segment revenues grow. Maroc Telecom released unsatisfactory 1Q21 earnings (T/O: -4.2% y/y; PAT: -7.7% y/y) driven by a decline in activities in Morocco by -9.5% y/y. The increase in fixed revenues (+2.2%y/y), driven by data, could not fully offset the decrease in mobile revenues (-16.3% y/y).EBITDA was down -10.1% y/y, with the EBITDA margin down slightly by 0.4 ppt to 54.7%. In Tunisia, SAH Lilas Group published a 1Q21 trading statement with revenues growing by +5.4% y/y mainly driven by an increase in sales of Azur Detergents (+ 23.0% y/y), SAH Côte d'Ivoire (+ 35.0% y/y), Azur Papier (+36.0% y/y), while slower growth was recorded at the level of the parent company SAH Tunisie (+ 4.5% y/y). The Group’s EBITDA margin improved by 0.9ppt to 20.0%.

In Southern Africa, equity markets exhibited positive returns amid broad-based gains across the region led by Zimbabwe (+3.4%) and Botswana (+2.2%)

In Southern Africa, equity markets exhibited positive returns amid broad-based gains across the region led by Zimbabwe (+3.4%) and Botswana (+2.2%). Zimbabwe’s central bank MPC maintained the key interest rate at 40% citing its strong commitment to continue with the conservative monetary stance, as the annual inflation declined to 194.1% in April 2021 from 240.3% in March 2021. On the earnings front, African Sun released mixed FY20 results (T/O: +171.8% y/y; PAT: n/a) as strong topline was offset by contraction in gross profit margin to 74.7% from 78.6%. In Botswana, Peggy Serame was appointed as the new Finance Minister, previously she was Investment, Trade and Industry Minister. Botswana’s MPC held the key interest rate at record low of 3.75% for third straight meeting. In Malawi, the inflation rate accelerated from 8.3% in February to 9.4% in March driven by food prices (11.7% y/y) and non-food prices (6.9% y/y). Namibia’s Central Bank held the interest rate at 3.75% to support economic growth.