Monthly Highlights: March 2022

•  North Africa equities closed in the red, dragged down by Egypt and Tunisia
•  West Africa equities struggled in March, with Ghana (-8.6%) at the bottom of the pile, as the Bank of Ghana increased its policy rate by 250bps to 17.0%, citing inflation and exchange rate stability as major underpinnings for the decision
•  East African equities posted mixed performance as Tanzania and Rwanda closed stronger, whilst Kenya, Mauritius and Uganda were lower
•  Southern Africa markets were mostly positive as weak performance in Zimbabwe was offset by positive performance in Namibia, Zambia and Botswana
 

In March, African markets were weak with twelve markets closing in the red while five posted positive returns in US dollars. The major losers were Egypt (-13.3%), Zimbabwe (-9.3%) and Ghana (-8.6%), while, Namibia (+4.1%) and Zambia (+4.0%) were the biggest gainers. Egypt’s negative performance was attributable to the -15.9% depreciation of the EGP against the USD.

North Africa equities closed in the red, dragged down by Egypt and Tunisia

North Africa equities closed in the red, dragged down by Egypt and Tunisia. Egypt’s Palm Hills Developments released FY21 results (T/O +35.5% y/y, PAT +15.8% y/y) with the growth in revenue supported by the +82.1% y/y growth in number of units sold to 3,350 units and an increase in average selling prices. CI Capital Holdings released strong FY21 results (T/O +55.5% y/y, PAT +43.4% y/y) attributable to growth in lending activity and unprecedented Investment Banking performance despite headwinds related to the omicron variant, global interest rate hike expectations and supply chain bottlenecks. EFG Hermes Holdings released satisfactory FY21 results (T/O 42.3% y/y, PAT+17.5% y/y) with the increase in earnings driven by the consolidation of Arab Investment Bank following the completion of a 51.0% acquisition of the bank’s shares in Q421. Arabian foods Industries released positive 4Q21 results (T/O +33.3% y/y, PAT +17.4% y/y) with top line driven by +25.6% y/y increase in the core cheese segment revenue, +21.2% y/y growth in juice revenue and +67.8% y/y surge in bakery segment on capacity addition as well as +22.0% y/y hike in sandwich retail price to EGP 5 per piece. MM Group for Industry and International Trade reported weak 4Q21 results (T/O -9.6% y/y, PAT -56.2% y/y) as consumer electronics (71.4% of sales) reported weak performance as mobile handset sales (77.0% of consumer electronics sales) remained under pressure, overshadowing the robust home appliances sales. Mobile handset sales declined -17.0% y/y, largely as a result of poor sales of Huawei handset, amid lack of new handset launches from the equipment vendor. Cleopatra Hospitals Group released improved FY21 results (T/O +28.1% y/y, PAT +38.0% y/y) as profitability was driven by a +21.4% y/y increase in interest income, coupled with the group’s impressive top line growth as the two Covid dedicated hospitals posted +49% revenue growth vs, 25% revenue growth from the other hospitals. Cleopatra also signed an agreement to operate Sky Hospital at the end of the year, adding an addition 200 beds. Orascom Development released impressive FY21 results (+41.4% y/y, PAT +130.0% y/y) as profitability was driven by +185.5% y/y increase in investment income coupled with-16.9% y/y decrease in finance costs.

West Africa equities struggled in March, with Ghana (-8.6%) at the bottom of the pile, as the Bank of Ghana increased its policy rate by 250bps to 17.0%, citing inflation and exchange rate stability as major underpinnings for the decision

West Africa equities struggled in March, with Ghana (-8.6%) at the bottom of the pile, as the Bank of Ghana increased its policy rate by 250bps to 17.0%, citing inflation and exchange rate stability as major underpinnings for the decision. In Nigeria, Lafarge Africa released impressive FY21 results (T/O +27.1% y/y, PAT +65.4% y/y) as top line was driven by higher volumes (+6.1% y/y) and higher price per tonne (+18.8% y/y) while profitability was driven by -45.7% decline in finance costs. UBA Nigeria released unexciting FY21 results (G/E +10.8% y/y, PAT +8.7% y/y) with the bottom line driven by a -56.1% y/y decrease in impairment charges for credit losses on loans and -34.0% y/y drop in net impairment charges on other financial assets.

East African equities posted mixed performance as Tanzania and Rwanda closed stronger, whilst Kenya, Mauritius and Uganda were lower

East African equities posted mixed performance as Tanzania and Rwanda closed stronger, whilst Kenya, Mauritius and Uganda were lower. In Kenya, Britam released improved FY21 results ( G/E +11.0% y/y, PAT n/a) with the company returning to profitability from a loss of KES 9.1bn in FY20, driven by +15.7% y/y increase in investment income, -4.3% y/y drop in net claims and benefits and -15.8% y/y decrease in operating and other expenses. I&M Group released mixed FY21 results (G/E +38.8% Y/Y, PAT +2.5% y/y) with the bottom line held back by +69.8% y/y rise in loan loss provisions. DTB released strong FY21 results (G/E +10.6% y/y, PAT +25.1% y/y) as bottom line was driven by -68.7% y/y drop in amortization charges and +166.0% y/y increase in gains on modified assets. NCBA Bank released impressive FY21 results (G/E +6.1% y/y, PAT +123.7% y/y) as profits were driven by -37.8% y/y reduction in loan loss provision expense, +6.1% y/y growth in net interest income and +5.6% y/y rise in total non-funded income. Stanchard Chartered Kenya released mixed FY21 results (G/E -1.6% y/y, PAT +66.2% y/y) as top line was dragged down by -6.1% y/y decline in interest income and profitability was driven by -46.4% y/y decrease in loan loss provisions coupled with a -10.2% y/y decline in operating expenses. In Uganda, MTN Uganda announced improved FY21 results (T/O +9.4% y/y, PAT +5.8% y/y) with the growth buoyed by +21.9% y/y growth in data revenue, +10.2% y/y growth in fintech revenue and +3.6% improvement in voice revenue, but weighed down by +27.5% y/y increase in depreciation and amortization costs.

Southern Africa markets were mostly positive as weak performance in Zimbabwe was offset by positive performance in Namibia, Zambia and Botswana

Southern Africa markets were mostly positive as weak performance in Zimbabwe was offset by positive performance in Namibia, Zambia and Botswana. Zimbabwe’s CAFCA released 1Q22 trading update which showed export volumes grew by +34.5% y/y to 74 tonnes, while local volumes were in line with 1Q20 mainly due to no significant changes in the macroeconomic environment. FBC Holdings released FY21 results (G/E +73.0% y/y, PAT +78.1% y/y) on the back of +30.9% y/y increase in net earned insurance premiums and +112.6% y/y increase in net gains from financial assets at fair value. Masimba Holdings released mixed FY21 results (T/O -12.3% y/y, PAT +87.2% y/y) with the decline in revenue due to the slow start of certain key projects during 4Q21 while the bottom line was driven by -71.5% y/y decline in net monetary losses and +781.2% surge in fair value adjustment.