Monthly Highlights: August 2022

•  The North African stock exchanges were all positive, with Egypt’s EGX30 closing stronger by (+4.1%) the region’s best performer
•  In East Africa, all markets but Rwanda, closed in positive territory
•  All major West African indices closed in the red
•  Southern African markets were broadly bearish with the exception of Zambia’s ASI and Malawi’s DCI which gained by +5.2% and +2.8% respectively
 

Most Frontier African markets closed in the green in August, with nine posting positive performance and seven negative performance in US dollar terms. Mauritius’s Semdex was the best performer gaining (+5.4%) halting a three month losing streak followed by Zambia LUSE (+5.2%) and Egypt’s EGX30 (+4.1%), while the biggest laggards were Ghana GSE (-16.4%), Zimbabwe Industrials (-7.7%), Namibia DSI (-3.0%) and BRVM ICX Composite (-2.8%).In Mauritius, market benefited from the correction in share price of MCBG following fear of credit rating downgrade which did not materialize. MCBG made up 40.9% of total followed by SBMG and CIEL with 5.7% and 5.2% respectively.

The North African stock exchanges were all positive, with Egypt’s EGX30 closing stronger by (+4.1%) the region’s best performer

The North African stock exchanges were all positive, with Egypt’s EGX30 closing stronger by (+4.1%) the region’s best performer. Tunisia’s Tusise closed +3.2% higher and Morocco (+0.2%) was back in the green after six straight months of losses. On the earnings front in Egypt, Cleopatra Hospitals Group released disappointing 1H22 results (T/O: -3.0% y/y; PAT: -17.0% y/y) on the back of a decline in revenue and the contraction in EBIT margin weighed down by El Katib Hospital’s gross loss from transforming the hospital to a conventional non-Covid-19 hospital, and lower margins in Queens Hospital and NBH, which were impacted by ongoing renovations. El Sewedy Electric reported strong 1H22 results (T/O: +49.8% y/y; PAT: +18.7% y/y) attributable to higher revenues across all segments and a +40.8% y/y increase in gross profit. Misr Fertilizers released positive 1H22 results (T/0: +108.3% y/y; PAT +71.6% y/y) as a result of higher selling prices as urea prices skyrocketed +143% y/y in 2Q22 with ME ammonia prices rising by (+130.0% y/y).

In East Africa, all markets but Rwanda, closed in positive territory

In East Africa, all markets but Rwanda, closed in positive territory. Kenya’s NSE20 was +1.9% higher following the presidential elections held on 8 August, where William Ruto narrowly won the fiercely contested race, with the opposition leader, Raila Odinga, amongst others, contesting the result at the supreme court. Tanzania’s TSI was up by +1.4% and Uganda’s USE ASI returned +1.45%. On the earnings front in Kenya, Equity Group released impressive 1H22 results (GE: +27.2% y/y; PAT: +36.1% y/y) as higher net interest income (+27.8% y/y) and a (-40.4% y/y) decrease in impairment charges drove earnings. KCB Group released positive 1H22 results (GE: +19.1% y/y; PAT: +27.6% y/y) driven by a+29.9%y/y growth in non-funded income, an +11.5% y/y growth in net interest income and lower impairment charges ( -34.4% y/y). CO-OP Bank released strong 1H22 results (GE: +15.4% y/y; PAT: +55.7% y/y) attributable to a +28.8% y/y increase in non-funded income and a -19.6% y/y decrease in impairments. In Rwanda, BK Group released positive 1H22 results (GE: +35.9% y/y; PAT: +24.1% y/y) as a result of a +27.2% y/y increase in non-funded income and a (-59.0% y/y) decline in impairment charges. Moving to Uganda, Umeme released 1H22 results (T/O: -3.3% y/y; PAT: +33.3% y/y) with the bottom line benefiting from a +217.4% y/y rise in foreign exchange gains and a -44.1% y/y decrease in repairs and maintenance expenses.

All major West African indices closed in the red

All major West African indices closed in the red, Ghana’s GSE (-16.4% in USD), was the worst performing exchange and closing in the red for the eleventh consecutive month dragged lower by the currency which depreciated -16.9% against the USD in August, BRVM’S ICX Composite fell -2.8% and Nigeria’s ASI ended -1.5% lower. In Nigeria, Honey Well Flour Mills released flat 1Q23 results (T/O: +27.9% y/y; PAT: +0.91% y/y) despite the expansion in revenue the cost of sales and operating expenses increased by +28.2% y/y and +25.8% y/y respectively . FCMB Group released impressive 1H22 results (GE: +34.0% y/y; PAT: +80.8% y/y) as a result of an increase in non-interest income (+31.4% y/y), with the asset management fees (+57.1% y/y) and service fees and commission (+56.1% y/y) the main drivers. Dangote Cement released disappointing1H22 results (T/O: +17.0% y/y; PAT -10.2% y/y) attributed to a +43.2% y/y increase in operating expenses and a +16.8% y/y increase in cost of sales. MTN Nigeria released positive results (T/O: +20.1% y/y; PAT: +28.1% y/y) this is as a result of a +22.1% increase in EBITDA, on the back of lower transmission costs by (-8.3% y/y) and revenue growth of +20.1% y/y. Zenith Bank Nigeria released 1H22 results (GE:+21.7% y/y; PAT: +5.0% y/y) as increase in net interest income (+15.5% y/y) was offset by a +26.8% y/y increase in operating expenses and a +26.9% y/y increase in impairment charges. Shifting to Ghana, MTN Ghana released impressive 1H22 results (T/O: +28.9% y/y; PAT: +54.1% y/y) as a result of a (+28.9% y/y) increase in service revenue and a +36.0% y/y rise in EBITDA which was driven by an IFRS 2 charge linked to the localisation of Scancom PLC.

Southern African markets were broadly bearish with the exception of Zambia’s ASI and Malawi’s DCI which gained by +5.2% and +2.8% respectively

Southern African markets were broadly bearish with the exception of Zambia’s ASI and Malawi’s DCI which gained by +5.2% and +2.8% respectively. Namibia’s DSI closed -3.0% lower at and Botswana’s DCI shed -4.8%. In Zimbabwe, First Capital Bank limited released poor 1H22 results (GE: +291.1% y/y; PAT: -87.6% y/y) this decline is due to a +205.6% y/y rise in operating expenses and a +729.0% y/y increase in loan impairment. Bindura Nickel Corporation’s management expects that nickel price will remain firm in FY23 and the company to produce 10,000 tonnes of nickel per annum by FY25. This will be achieved by exploiting the huge low grade resource, processing 71.4m tonnes of ore at an average grade of 0.59%, thereby containing approximately 420.8 kilo-tonnes of nickel. Lafarage Cement Zimbabwe advised that the parties to the sale and purchase agreement for the sale of 76.45% stake in the company are still working towards consummation of the Sale and Purchase Agreement. The transaction, if successfully concluded, may have a material effect on the company’s securities.