BSE trading activity shoots up in Q1
Trading activity in the local bourse has seen an improvement during the quarter first quarter (Q1) of 2017, with turnover of up to 45 percent. According to the Stockbrokers Botswana research report for Q1, the turnover moved to P655.6 million from P452.5 million in Q4 2016. The volumes also went up from 41 percent to 177 million shares from 125.6million in Q4 2016. The DCI market cap was P45.6 billion as at 31 March 2017, while valuations seemed reasonable with weighted per earning ratio of 15.7x and a dividend yield of 4.6 percent.
In this report, research analysts Tshepo Setlhare and Donald Motsomi observed that, the first quarter kicked off earnings season on the domestic bourse, and it was a mixed bag of results, particularly for the blue chips.
The review shows that overall earnings delivery proved quite resilient in the face of unfavourable business conditions. “The Domestic Company Index however, continued to backtrack, down by 1.9 percent to end the quarter at 9225.22 points from 9400.71 points in Q4, a retracement from the lows of 9012 points in February. The index was weighed down by losses on Sechaba (-22.2 percent), Sefalana (-17.7 percent), Furnmart (-7.1 percent), FNBB (-7.1 percent) and Letshego (-5.7 percent),” according to the review by the pair.
The analysts observed that, among the biggest news that moved the market this quarter had to come from Sechaba, following the loss of KBL’s bottlers agreement with The Coca Cola Company. They say these are warning signs that with the ABInbev acquisition of SABMiller, investors can expect extended periods of uncertainty surrounding the beverages giant.
“We anticipate a lot of investors will be in “wait and see” mode, while any further changes from the acquisition could potentially have a material and adverse effect on the group’s business,” reads the research report. Another big loser for the quarter was Sefalana. Although with relatively flat results released during the quarter, the analysts believe that the loss in value was largely due to a general de-rating of the retail stocks, which also hit local competitor, Choppies, in the previous quarter.
Top gainers for the quarter, were BTCL (+30.6 percent), Barclays (+13.1 percent), NAP (+7.1 percent), Choppies (+6.2 percent) and Chobe (+4.3 percent). “We will be closely watching the new-comer BTCL during the second quarter of the year, which is trading under cautionary on anticipation of significantly higher year-end results,” they say.
On the macroeconomic front, the economy saw positive real GDP growth of 4.2 percent in Q4 2016 in comparison to a contraction of 3.5 percent in Q4 2015. Growth was largely driven by the trade, hotels & restaurants and transport & communications sectors. The Monetary Policy Committee (MPC) maintained the Bank Rate at 5.5 percent at the MPC meeting held in February 2017. Headline inflation began to edge up during the quarter, coming in at 3.5percent in March.
