Monthly Highlights: July 2022

•  North African equities were mixed as Egypt and Tunisia closed positive while the Morocco posted negative returns
•  West African equities closed weaker led by Ghana and Nigeria
•  East African equities closed mostly in the red led by Mauritius, Kenya and Uganda
•  Southern African equities were broadly negative led by Zimbabwe
 

In July, Frontier Africa markets were mostly in negative territory, with eleven markets posting weak performance and only five in the positive in US dollar terms led by Malawi which gained +6.6%, Kenya +4.6%, Zambia +3.3% and Egypt +1.9%, whilst the biggest laggard was Zimbabwe’s Industrials -40.1% after inflation rose to over 191.6% in July 2022 and the RBZ raised the benchmark rate from 80% to a record of 200%. . The other countries that closed negative were Namibia -7.0%, Ghana -5.6%, Mauritius -4.9% and Nigeria -4.3%.

North African equities were mixed as Egypt and Tunisia closed positive while the Morocco posted negative returns

North African equities were mixed as Egypt and Tunisia closed positive while the Morocco posted negative returns. In Egypt, Obour Lands for Food released positive 2Q22 results (T/O +36.7% y/y, PAT +26.1% y/y) as top-line was driven by +40.0% y/y growth in core white cheese segment attributed to an +8% y/y increase in white cheese sales volumes and a 29% y/y jump in average selling prices. Commercial International Bank released strong 1H22 results (G/E +20.4% y/y, PAT +27.8% y/y) as +17.4% y/y growth in net interest income and +68.7% y/y increase in non funded income contributed to the strong top-line while profitability was driven by a -92.6% y/y decline in impairment charges as well as improved cost efficiencies and a decrease in tax rate from 29.9% in 1H21 to 26.6%. Orascom Development released results for 2Q22 contracted sales stating that it grew by +39.4% y/y driven by solid growth in O West on both higher prices and volumes, this translated to +16.9% y/y growth in 1H22 contracted sales.

West African equities closed weaker led by Ghana and Nigeria

West African equities closed weaker led by Ghana and Nigeria. In Nigeria, Nigerian Breweries posted strong 1H22 results (T/O +31.0% y/y, PAT +142.8% y/y) as profitability was supported by +79.93% increase in operating profit. Nestle reported strong 1H22 results (T/O +29.8% y/y, PAT +27.7% y/y) as strong topline growth was supported by +30.9% y/y growth in food segment revenue and +28.0% y/y growth in beverage revenue. Guiness Nigeria recorded growth in FY22 results (T/O +28.9% y/y, PAT +1146.8% y/y) as profitability was driven +by a -94.5% y/y decrease in net finance cost from NGN4.1bn to NGN225.9m. FBN Holdings released strong 1H22 results (G/E +22.4% y/y, PAT +48.6% y/y) driven by strong net interest income growth of +40.6% while profitability was due to -18.7% y/y decrease in impairment charge for losses. Seplat released impressive 1H22 results (T/O +82.0% y/y, PAT +151.1% y/y) as EBITDA grew by +142.6% and gross profit margins increased to 52.1% from 28.8% in 1H21.

East African equity performance was mixed as Kenya closed positive while Mauritius and Uganda closed lower

East African equity performance was mixed as Kenya closed positive while Mauritius and Uganda closed lower. In Tanzania, NMB Bank released positive 2Q22 results (G/E +21.4% y/y, PAT +53.4% y/y) as non funded income grew by xxxx y/y driven by +62.4% y/y increase in foreign currency dealings and translation gains and +27.6% y/y increase in fees and commission. CRDB Bank posted strong 2Q22 results (G/E +30.8% y/y, PAT +96.4% y/y) as profitability was driven by strong topline+e supported by improvement in net interest margin. In Kenya, BAT released positive 1H22 results (T/O +12.4% y/y, PAT +8.4% y/y) as revenue was lifted by pricing benefits in the domestic market and growth in export sales following economic recovery in some of the key markets. EABL reported impressive FY22 results (T/O +27.3% y/y, PAT +12.7% y/y) as revenue growth was attributable to net sales growth in Kenya which was up +30.0% y/y, +24.0% y/y growth in Uganda sales and +21.0% growth in Tanzania sales driven by recovery as pandemic related restrictions eased.. Eaagads Limited reported mixed FY22 results (T/O +1.84%, PAT KES163.3) as profitability was dragged lower by decrease in gross profit margin to 35.2% from 41.7% in FY21.

Southern African equities were broadly negative led by Zimbabwe

Southern African equities were broadly negative led by Zimbabwe, Namibia and Botswana while Malawi and Zambia closed positive. In Zimbabwe, Delta Corporation issued a trading update for 1Q22 that showed lager beer sales grew by +19% y/y underpinned by improved supply of brands and packs which benefited from the injection of returnable glass, sorghum beer sales volume grew by +14.0% y/y driven by Chibuku products, sparkling beverages volumes grew by +32.0% for the quarter while wines and spirits grew by +18.0% for the quarter. The group revenue grew by +55.0% during the quarter in inflation adjusted terms. Econet released a set of impressive FY22 results (T/O +50.6% y/y, PAT +1076.4% y/y) as profitability was supported by + a decline in exchange losses and EBITDA margin increase of 52.1% from 51.0% in FY21 due to exchange rate movement. Econet also launched its ultra-fast 5G network in Victoria Falls as it expended its rollout of the latest data network to other cities and towns across Zimbabwe. In other news, the Reserve Bank of Zimbabwe released the first batch of gold coins to provide a store of value to the US dollar and help stabilise the local currency.