Monthly Highlights: February 2022

•  North African equities closed in the negative territory led by Morocco and Egypt
•  The West African equities were mixed, Nigeria posted negative performance, whilst Ghana and the BRVM closed in the green
•  All Southern African stock exchanges performed well in February, led by Zimbabwe and Zambia
•  East African equities posted mixed performance with stronger performance from Tanzania, Mauritius and Rwanda closing positive while Kenya and Uganda were negative
 

In February, Frontier Africa markets closed largely in positive territory, with 10 markets posting strong performance and only six closing in the red. The top performers were Zimbabwe’s Industrials (+19.0%), Zambia (+9.6%), BRVM (+7.4%) and Tanzania (+4.0%), whilst the biggest losers were Uganda (-11.5%), Morocco (-7.3%) and Egypt (-3.1%). Zambia’s positive performance came as the Ministry of Finance released the 2022-24 medium term budget, projecting that the country’s GDP will grow by +3.5% in 2022, rising to about +4.4% in 2024.

North African equities closed in the negative territory led by Morocco and Egypt

North African equities closed in the negative territory led by Morocco and Egypt. In Egypt, Oriental Weavers released mixed 4Q21 results (T/O +7.0% y/y; PAT -54.0% y/y) as the surge in polypropylene prices of 47% y/y and a -97.5% y/y decline in collected export rebates in 4Q21 significantly impacted profitability. Rameda posted impressive 4Q21 results (T/O +37.1% y/y; PAT +69.0%y/y) with the revenue growth driven by +27.0% y/y jump in the average unit price along with a +9.0% y/y growth in units sold. GB Auto released strong 4Q21 results (T/O +26.6% y/y; PAT +64.2% y/y) driven by impressive growth in the Auto segment which grew net profit 2.72x coupled by a decrease in the finance cost -20.4% y/y. In Morocco, Central Danone returned to the Casablanca stock exchange following an attempt to delist the company. Mutandis released mixed FY21 results (+20.7% y/y; PAT -3.6% y/y) as strong topline growth was offset by rising material costs, higher amortisation expenses from the development projects that started in 2019 and higher interest expenses linked to the Season brand acquisition, which was initially financed by debt, ahead of the company’s capital raise in January 2022.

The West African equities were mixed, Nigeria posted negative performance, whilst Ghana and the BRVM closed in the green

The West African equities were mixed, Nigeria posted negative performance, whilst Ghana and the BRVM closed in the green. Nigeria’s Seplat Energy released stellar FY21 results (T/O +38.2% y/y; n/a), as the company returned to profitability driven by higher oil revenues (+48.0% y/y) due to the higher realised oil price which increased to USD70.54/bbl from USD39.95/bbl in FY20. Profitability was also driven by the reversal of a USD74.7m impairment charge under IAS 36. Zenith Bank reported satisfactory FY21 results (G/E +9.9% y/y; PAT +6.1% y/y) as growth in net interest income (+7.0% y/y) and non-funded income (+22.8% y/y) was offset by +13.1 y/y rise in operating expenses and a +51.6% y/y increase in impairment charges. Wema Bank released FY21 results (G/E +12.2% y/y; PAT +93.7% y/y) as impairments declined by -76.9% y/y. GlaxoSmithKline Consumer Plc released mixed FY21 Results (T/O +5.4% y/y, PAT -16.1% y/y) with profitability dragged lower by an increase in administrative expenses of +19.3% y/y. The BRVM’s, Sonatel released improved FY21 results (T/O +10.7% y/y, PAT +17.4% y/y) with turnover attributed to +27.0% y/y growth in data revenue, +44.8% y/y growth in voice revenue, as well as +17.4% y/y growth in fixed broadband.

All Southern African stock exchanges performed well in February, led by Zimbabwe and Zambia

All Southern African stock exchanges performed well in February, led by Zimbabwe and Zambia. In Zimbabwe, SeedCo issued 3Q21 trading update showing revenue growth of +14.0% y/y after IAS 29 inflation-adjusted restatements. CFI Holdings Limited issued FY21 trading update reporting that sales volume for the retail division improved by +17.0% y/y attributed to improved agricultural output in 2021. CAFCA released 1Q22 trading update indicating +3.1% y/y growth in revenue mainly driven by +34.5% y/y growth in export volumes. Meikles Limited issued a trading update for 3Q22 results showing that revenue grew by +131.0% and +33.0% in historical cost and inflation adjusted terms respectively with sales growth being mainly driven by +29.0% y/y increase in supermarket volumes. Amalgamated Regional Trading issued 1Q22 results that group overall volumes increased by +9.0% y/y driven by +78.0% increase in export volumes. Willdale Limited issued 1Q22 trading update showing that sales volumes decreased by -20.0% y/y due to a lower offtake from cluster home developments and lower activity from institutional buyers impacting performance.

East African equities posted mixed performance with stronger performance from Tanzania, Mauritius and Rwanda closing positive while Kenya and Uganda were negative

East African equities posted mixed performance with stronger performance from Tanzania, Mauritius and Rwanda closing positive while Kenya and Uganda were negative. In Tanzania, the World Bank expects the economy to expand between 4.5% to 5.5% in 2022 compared to 4.3% in 2021 driven by growth in tourism and trade. Kenya’s Longhorn Publishers reported impressive 1H22 results (T/O +233.1% y/y, PAT n/a ) as the company returned to profitability from a loss position in FY20, driven by an improved trading environment and coupled by the physical resumption in schools by pupils and teachers. East Africa Portland Cement released weak 1H22 results (T/O -30.4% y/y, PAT n/a ) as the loss narrowed due to lower operating costs (-22.3% y/y ) and lower financing costs (-5.4% y/y).. BAT Kenya posted sturdy FY21 results (T/O +3.1% y/y; PAT +17.5% y/y) driven by lower operating costs (-10.2% y/y).