Author: Laurence Sithole

The resilience of the diversified services group was enabled by the company’s widespread portfolio of businesses. Bidvest owns a vast array of businesses that span diversified services like car dealerships, airlines, toilet hire, banks, real estate, food services and information technology. Now the diversified services or conglomerate business model is no longer in vogue. It is outmoded and yet since 1988 Bidvest has grown from being a fledgling pet foods dealer to one of the largest companies listed on the Johannesburg Stock Exchange on the back of the same model. This diversified services model has given it the strength to…

The gold price does seem to mirror the physical attributes of the metal, it does not lose its lustre nor does it tarnish. It retains its shine almost perpetually. Its physical attributes mirror its attributes as an investment as well. The case for investing in gold The problem with most if not all investors who think about adding gold to their portfolio is that it does not directly conform to the most common valuation methodologies used for equities or bonds. Gold patently does not generate a coupon or dividend and therefore, typical models that a based on discounted cash flows,…

The foreign currency bourse located in Zimbabwe hasn’t fared as expected nearly 2 years into its existence. Companies in Zimbabwe are starting to list on the Victoria Falls Stock Exchange but not to raise capital. They are listing on that market for other reasons and not necessarily for what the core purpose of a stock exchange is. Financial market pundits in Zimbabwe have postulated that it is not fair to judge the success of a new securities exchange unless the parameters are over a long-time horizon. This is a fair assertion. However, a close look at the bourse so far…

The Johannesburg Stock Exchange (JSE) building in Sandton. The oldest stock exchange in Africa has experienced a net decline in the number of companies listed on its board. The largest contentions being lack of analyst coverage and poor liquidity among the relatively smaller companies The JSE has experienced a net decline in the listings on its main board as companies leave the bourse looking for alternative markets like private equity as sources of long term capital. Listing activity on the Johannesburg Stock Exchange has been on the decline over the last 3 years. The largest and oldest bourse on the…

Successful turnaround strategies are not new to Zimbabwe’s largest universal banking concern. CBZ has gone the distance from being characterized as a bank for crooks to the largest banking concern in the country. The majority of banks in the southern African country adopt the universal banking model instead of the niche or boutique bank model which was once ubiquitous globally. The universal banking model’s roots can be traced to the promulgation of the Glass Steagall Act on the 1930s which combined the activities of commercial banks and investments banks. Banking houses that adopt this universal banking model aim to be…

The case for investment in Africa is compelling. At no time before in history has the continent formerly and perhaps harshly referred to as the dark continent been so promising in terms of its economic potential. The continent has been home to some of the fastest growing economies in the world. The continent according to research conducted by Standard Bank Group published in a report titled “Infrastructure Financing in Sub Saharan Africa for Institutional Investors”, states that in the last decade there have been 4 notable trends in Africa: 1. A larger, younger, and more affluent population 2. Africa’s transformational…

Emerging markets have become an asset class which investors need to consider to optimize their portfolios. In 2000 investment flows into the 30 markets characterized as emerging markets were at least US$ 250 billion. Institutional investors have been cited by Africa’s largest banking groups as a critical component of the development of these emerging markets especially in terms of infrastructure development and funding. Investment in emerging markets has been driven primarily by the sluggish growth of the US and other advanced economies. These economies characterized as emerging economies have recorded impressive growth rates in their respective GDPs however deploying capital…

The company in 2021 generated profits or EBITDA in the region of US$ 20.6 billion from its specified businesses according to its website. For perspective, this EBITDA figure is about the size of the GDP of Zimbabwe. Shareholders of the company received US$ 6.2 billion in 2021. The strong financial showing according to the company was due to increased production which was up 5% year on year, stronger prices for its products and consequently much higher margins.

Cutifani stressed that the solid numbers produced by his company were not just good for shareholders but were good for all stakeholders and the communities where Anglo operates. The company paid US$ 7.1 billion in taxes in 2021. This number was 89% higher than the figure paid in 2020.

The EBITDA margin achieved in 2021 was 56% which was significantly higher than the 35% achieved the previous year. The high margins had a favourable impact on profitability resulting in earnings per share (EPS) of US$ 7.22. The higher margins achieved in this year were also responsible for the increased return on capital employed (ROCE) of 43% in 2021 against a standard of 15%.

Notwithstanding the high metric for ROCE, the company projects that this metric will grow even more still to anywhere between 45% and 50% from 2023 going forward. This is expected to come on the back of improved costs and prices.

The company made significant headway in terms of deleveraging its balance sheet in 2021. It ended 2020 with US$ 5.5 billion and ended 2021 with US$ 3.8 billion.

The war in Ukraine has had intended and unintended casualties in and around Ukraine and world over. The Russo-Ukrainian has the potential to roll back the gains the world had started to make post COVID through the volatility it has caused in the financial markets. Much of the volatility caused by the war has been the spike in the price of crude oil which has seen non-oil producing countries many of which are not part of the conflict importing inflation into their economies. The Ukraine war will expose sensitive vulnerabilities in countries from the price shock in commodities in general.…

The Ukraine invasion by Russia and the resulting conflict has created an economic vortex for the whole world. Reports state that from the time the Ukraine invasion began at least 10 million people have been displaced from their homes creating a humanitarian crisis. The invasion is a cause for concern for African countries many of which have ties with Russia which lent them military support in their respective struggles for independence. Several of them like Zimbabwe abstained from voting against the Ukraine invasion out of fear of straining relations with Moscow. The adverse effects of the Ukraine invasion stem from…