Monthly Highlights: September 2022

•  The North African stock exchanges were mostly in the red with the exception of Tunisia (+0.5) which was in the green for a third straight month
•  In East Africa, most bourses ended in the negative territory. Mauritius’s Semdex was down -3.0%
•  All major West African indices closed in the red, Ghana’s GSE Composite (-5.4%)
•  Southern Africa exchanges posted mixed performances, with the Zimbabwe Industrial Index closing (+7.7%) higher
 

Most Frontier markets were mostly in negative territory in the month of September on the back of a strong US dollar which gained +3.1% in the month. Thirteen markets posted weak performance and only three were in the positive in US dollar terms led by Zimbabwe’s Industrials (+7.7%), Zambia (+5.2%), LUSE Index was driven by Airtel (+23.3%) after approving an interim dividend of ZMK3.00 per share reflecting a yield of 3% and Copperbelt which also approved the payment of an interim dividend of ZMK0.4995 per share and Tunisia (+0.5%), whilst the biggest laggards were Morocco (-7.8%), Ghana (-5.4%), Nigeria (-3.6%) and Namibia (-3.3%).

The North African stock exchanges were mostly in the red with the exception of Tunisia (+0.5) which was in the green for a third straight month

The North African stock exchanges were mostly in the red with the exception of Tunisia (+0.5) which was in the green for a third straight month, the index was pushed up mainly by gains in Societe des Industries Pharmaceutiques de Tunisie (+19.5%), Soc Nouvelle Maison (11.7%) and Banque de L’Habitata (+9.7%). Egypt’s EGX30 (-3.3%), was dragged lower by Palm Hills Developments (-14.2%), EFG Hermes Holding (-11.5%) and Misr Fertilizers (-10.2%). Morocco closed (-7.8%), which was the major loser in our universe dragged lower by losses in Disty Technologies (-19.5%), Oulmes (-17.5%) and Residences Dar Saada (-16.6%). In Egypt, Speed medical released disappointing 2Q22 results (T/O: -85% y/y; PAT -141% y/y). The y-o-y drop in the revenue was due to last year’s high base from Covid-19 revenue, to continued price discounts and weaker conventional testing volumes, likely on rising competition and probability of a reduction in the number of operating labs due to the company’s reassessment of its laboratories. The low PAT was due to lower revenue coming below the company’s fixed cost base. Ezz Steel reported positive 2Q22 results (T/O: +17.4% y/y; PAT +4.6% y/y) on the back of a +33.0% y/y increase in blended selling prices reaching EGP17,760/ton despite a +33.0% y/y increase in SG&A. Integrated Diagnostic Holdings released negative 2Q22 results (T/O: -34% y/y; PAT -61% y/y) the drop in core earnings was due to a -34% y/y decline in revenue and a significant drop in EBIT margin by -23.0% impacted by decreasing Covid-19 test prices along with a spike in raw materials and wage costs..

In East Africa, most bourses ended in the negative territory. Mauritius’s Semdex was down -3.0%

In East Africa, most bourses ended in the negative territory. Mauritius’s Semdex was down -3.0% driven mainly by losses in National Investment Trust (-13.8%), Alteo (-12.9%) and Caudan Development (-9.9%). Kenya’s NSE20 closed -2.6% lower, with the Telco Heavyweight Safaricom being the major loser (-11.2%). In Tanzania the TSI closed -1.3% lower dragged down by losses in Tanga Cement (-13.6%) fell after releasing 1H22 results with loss after tax falling to TZS1.9bn from TZS774.3m followed by TCCIA Investments (-9.6%). In Kenya, KCB shareholders gave the green light for the acquisition of 85% of DRC lender Trust Merchant Bank which is expected to close before the end of 2022 subject to regulatory approvals. Longhorn Publishers released impressive FY22 results (T/O +39.3% y/y; PAT +434% y/y) the increase was primarily driven by expansion into new geographical markets and increased sales following the resumption of learning in schools with finance costs reducing by -27% y/y from the prior year on account of the reduction in borrowings (-17.9% y/y). Unga Group released FY22 results (T/O: +1.2% y/y; PAT +8.09% y/y) volumes declined by 18% compared to previous financial year, this was caused by price increase in finished goods driven by a rise in cost of raw materials. The escalation in raw material costs was attributable to global shortages, upsurge in freight cost and a weakened shilling. In Uganda Umeme Limited released 1H22 results (T/O: -3.3% y/y; PAT +33.4% y/y) downward revision in tariffs reduced top line revenue but a -27.6% y/y decline in OPEX and a -22.0% y/y decline in finance costs boost PAT.

All major West African indices closed in the red, Ghana’s GSE Composite (-5.4%)

All major West African indices closed in the red, Ghana’s GSE Composite (-5.4%) which was dragged down by Aluworks Ghana (-17.9%), Societe General Ghana (-11.5%) and Guinness Ghana (-9.9%). Nigeria’s ASI ended -3.6% lower and BRVM’s ICX Composite fell -3.3%. In Nigeria, United Bank of Africa released positive 1H22 results (GE: +17.8% y/y; PAT +16.1% y/y) on the back of a +19.9% y/y increase in non-interest income and a +23.1% increase in non-interest revenue. Unilever released impressive 1H22 results (T/0: +35.1% y/y; PAT +335.9% y/y) revenue expanded due to price increases and volume growth across each segment, especially revenue from Food and Home & Personal care expanded by +39.5% y/y and +31.6% y/y respectively. Despite higher operating expenses (+36.4% y/y), operating profit and EBITDA jumped by 120.4x y/y and 3x y/y.

Southern Africa exchanges posted mixed performances, with the Zimbabwe Industrial Index closing (+7.7%) higher

Southern Africa exchanges posted mixed performances, with the Zimbabwe Industrial Index closing (+7.7%) higher bolstered by gains in Ariston (60.7%), Ecocash (+56.2%) and Seedco (+54.4%). Zambia’s Luse gained (+5.2%) closing higher for the fourth consecutive month, helped by performance in Airtel Networks Zambia (+23.3%), Copperbelt Energy (+14.9%) and Zambia National Commercial Bank (+13.8%). Namibia’s DSI was (-3.3%) weaker with losses in Mobile Telecommunications (-11.7%), Namibian Asset Management (-9.4%) and Paratus (-5.4%) after the CEO Harmse sells NAD6.1m of shares and FY22 EPS fell -13.3% y/y. In Zimbabwe, Dairibord Holdings Limited released impressive 1H22 results (T/O: +192.8% y/y; PAT +478.1% y/y) revenue was supported by an +11.0% y/y growth in sales volume to 47.0m litres and price adjustments, approximately 40.0% of sales volume was sold in foreign currency up from 20.0% for the prior period, with 8.0% going into export markets and 32.0% through domestic market. Mashonaland Holdings Limited released positive 1H22 results (T/O: +252.3% y/y; PAT +793.8% y/y) revenue growth reflects the positive impact of frequent rent reviews and improvement in occupancies to +83.0% from 79.0%. An interim dividend of ZWL8.404 cents per share was declared implying a cover of 130.3x and yield of 2.3%.