Monthly Highlights: June 2022

•  North African equities closed weaker with Egypt and Morocco leading the markets lower. In Egypt
•  West African equities performance was negative during the month of June
•  East African equities closed mostly in the red led by Mauritius, Kenya and Uganda
•  Southern African equity performance was broadly weaker with Zambia the only exception
 

African markets were largely negative during the month of June, as 15 markets posted weak performance in dollar terms with the biggest laggards being Zimbabwe’s Industrials which shed -30.7%, Egypt -10.1%, Mauritius -7.4%, Kenya -5.0%, Morocco -4.7% and Nigeria -4.5%, whilst the only gainers were Zambia +3.5% and Rwanda +0.4%. Zimbabwe’s negative returns came as inflation rate jumped to 192% in June while the central bank raised key interest rates 200% to try to contain inflation. Zambia recorded positive returns supported by decrease in inflation to 9.7% in June from 10.2% in May.

North African equities closed weaker with Egypt and Morocco leading the markets lower. In Egypt

North African equities closed weaker with Egypt and Morocco leading the markets lower. In Egypt, Intergrated Diagnostics Holdings (IDH) reported mixed 1Q22 results (T/O +4.4% y/y, PAT -8.2% y/y) as marginal topline growth was supported by a sustained expansion in conventional revenues, which recorded EGP640m, standing well above the group’s pre-Covid-19 levels while profitability was driven lower by -13ppts y/y decrease in EBITDA margin to 40% from 57%. Fawry for Banking and electronic payments reported mixed 1Q22 results (T/O + 38.4% y/y, PAT -63.0% y/y), with the drop in earnings coming on the back of a 53% y/y surge in SG&A and a noncash ESOP expense of EGP19.1m. Banking revenue was the fastest growing segment for Fawry, growing by +116.0% y/y to EGP154m mainly attributed to solid growth in the agent banking segment, which recorded EGP95m in 1Q22, growing +120% y/y. Speed Medical released mixed 1Q22 results (T/O +5.1 y/y, Loss NGN 21m) as losses came as a results of a -15.7ppts y/y drop in gross profit margin and a +251% y/y surge in SG&A expenses due to an EGP17.5m one off commission fees related to drive-through operations.

West African equities performance was negative during the month of June

West African equities performance was negative during the month of June. In Nigeria, PZ Cussons Nigeria reported impressive FY22 results (T/O +21.1% y/y, PAT +277.5% y/y) as profitability was lifted by -3.2% decline in operating costs on the back of a -30.1% decline in exchange loss to NGN4.2bn from NGN6.0bn, coupled with +252.0%y/y increase in interest income and a -84.6% y/y decrease in interest cost. In Ghana, Asante Gold Corporation commenced trading at the Ghana Stock Exchange on June 29, 2022.

East African equities closed mostly in the red led by Mauritius, Kenya and Uganda

East African equities closed mostly in the red led by Mauritius, Kenya and Uganda. In Rwanda, Cimerwa Plc released impressive 1H22 results (T/O +45.2% y/y, PAT +414.3% y/y) as profitability was supported by strong topline growth and a 390bp increase in gross profit margin to 27.8% in 1H22 from 23.9% in 1H21. In Kenya, NewGold Issuer released negative FY22 results (G/E -22.5% y/y, PAT -24.5% y/y) as total income was dragged lower by -22.8% drop in revenue from contracts with customers. Williamson Tea released mixed FY22 results (T/O -6.1% y/y, PAT KES529.8m) as profitability was driven by gain from operations of KES362.6m from a loss of KES163.2m in 1H21, a +41.0% y/y increase in fair value of biological assets, +39.4% increase in net finance income and an increase in share of profit of associate company to KES84.7m from KES2.8m in FY21. Olympia Capital released mixed FY22 results (T/O -9.32% y/y, PAT KES17.5m) as strong bottom-line growth was driven by +21.0% y/y increase in other operating income and a -11.1% y/y decrease in operating expenses.

Southern Africa equities were mostly negative led by Zimbabwe and Botswana

Southern Africa equities were mostly negative led by Zimbabwe and Botswana. In Zambia, Zambeef released improved 1H22 results (T/O +44.5% y/y, PAT +439.6% y/y) reporting that revenue grew to USD148.1m due to higher market grain prices, stockfeed market share gain and good farming interventions while profitability was supported by currency transaction gain of USD7 from a loss position of USD2,029. The company also announced a USD100m expansion across its core operating divisions over the next three to five years. In Zimbabwe, Delta recorded growth in its FY22 results (T/O +57.7% y/y, PAT +51.9% y/y) spurred by foreign currency earnings that enabled the group to access imported inputs easily and increased activity post Covid-19 lockdown relaxation which led to increased marketing and distribution sustainability programs. OK Zimbabwe released strong FY22 results (T/O +34.7% y/y, PAT +48.9% y/y) as topline was driven by +22.7% y/y increase in sales volume. Nampark posted impressive 1H22 results (T/O +113.0% y/y, PAT +75.3% y/y) as revenue growth was driven higher volumes in the printing and converting segment(+23% y/y) and growth in plastics and metals segment driven by +7% and +10% volumes growth in Megapak and CarnaudMetalbox respectively. ART Holdings Limited released mixed 1H22 results (T/O +99.9% y/y, PAT +26.5% y/y) as revenue was driven by +6.0% y/y growth in battery volume, +1.0% y/y growth in paper volume on account of second quarter recovery, Eversharp volume grew by +39.0% due to strong demand driven by year-end national examinations while Mutare timber volumes improved by 10.0% y/y on firm demand while profitability was weighed down by increase in operating costs (+98.9 % y/y) with operating margin decreasing to 8.1% from 13.7% in 1H21. Simbisa Brands issued a 3Q22 trading update stating that group revenue grew by +129.5% driven by +95.6% y/y growth in Zimbabwean operations while regional operations grew by +41.0 % y/y on the back of +28.0% increase in regional customer counts . Zimplow Holdings reported strong FY22 results (T/O +55.4% y/y, PAT +25.9% y/y) on account of 48.0% y/y increase in Farmec tractors volume, +56.0% y/y growth in tractor drawn implements, +30.0% y/y rise in parts sale and a +22.0% y/y improvement in service hours.