HARARE: The stock market has endured a miserable year, with its poorest performance since dolllarisation. But in the gloom there has been some shining lights. Here are the top five performing stocks of the year so far and a brief synopsis of their financial performance in latest published results.
1. ART CORPORATION
ART is the top gainer in the year thus far with 200 percent increase year-to-date. ART is the holding company of battery manufacturer Chloride, ballpoint pen maker Eversharp and Softex which manufactures tissue products.
As the group focused on manufacturing ART has seen capacity utilization increase following a government ban on imports. The company reported that its Chloride battery making plant is now working at full capacity. It has even gone on to install a new plant at a cost of $3 million which will increase production capacity by another 50 percent.
Before the investment, the factory was producing 240,000 batteries per annum but the new plant will push production to 360,000 batteries per annum.
The current market size for batteries is estimated at 300,000 and Chloride plans to export the excess to regional markets such as Zambia, Malawi and Mozambique.
Padenga group came in second with a year to date increase of 81.11 percent. Padenga’s operations include Nile Crocodile Farms in Zimbabwe and the US-based Lone Star Alligator Farms.
The group recorded a fair set of results with revenue of $6,1 million in the six months to June 2016 compared to $4,3 million last year. The top line increased as the group, sold 20,978 skins compared to 9,143 skins in the same period last year. Of that total 12,053 were alligator skins. The group opened with 7,944 alligator skins in stock for the foreign operation and harvested 4,109 in the six months to June 2016. Profit before tax for the six months under review amounted to $2,7 million against $3,1 million in the prior period.
The group expect revenue to largely come in the second half since the first half of the year is essentially a cost accumulation period for the company.Advertisement
Cash utilised by the group for operating activities increased from $598,863 for the six months ended 30 June 2015 to $1,5 million in the period under review on the back of a strategic decision to increase the group’s stockholdings of critical inputs in the Zimbabwe operation.
The group has started constructing of a solar plant at one of its farms in a bid to reduce costs and dependency on diesel for power generation.
The group closed the first half with a total of 144,236 grower crocodiles on the ground compared to 140,923 at the end of June 2015 and is seeing better quality in the pens than in previous years and as it anticipates to meet its culling volume targets by the end of November this year.
The fundamentals of the business remain sound with the company endowed with excellent crop of crocodiles on the ground. Also cash and working capital management of the company is good. As such, ongoing initiatives to further enhance animal welfare will contribute towards improved skin quality.
Riozim’s share performance recorded 68.08 percent increase year to date. The Group has continued to make progress and returned to proﬁtability at an operating level during the ﬁrst six months of the year 2016. This was supported by Gold production which went up by 76 percent while production costs decreased by 19 percent
The company’s performance was also buoyed by improvement in commodity prices as average gold prices ﬁrmed by 16 percent. This has resulted in the operating results of the Group improving from an operating loss of $2million, in the comparable period last year, to an operating proﬁt of $2.3million.
Additionally, signiﬁcant investment has been made in the gold businesses including the new Cam & Motor gold project. Empress Nickel Reﬁnery (ENR) has remained under care and maintenance
Finance costs fell by 46 percent to $2.5million in the HY 2016 against $4.7million recorded in the same period last year.
The company also focus on the completion of the Cam & Motor Plant Project which is expected to be commissioned in the fourth quarter which envisaged to result in the current gold production at Cam & Motor increasing twofold. On another positive note, the production costs are decreasing further, thereby continuing to improve the performance of the company.
4. OLD MUTUAL
Integrated financial services giant Old Mutual also landed in the top five gainers in the year thus far, with a 53.38 percent year to date increase.
Old Mutual has the highest market share in terms of GPW and NPW according to the insurance regulator, IPEC, in its Non-Life report for the half year ended 30 June 2016. The company has 18.41 percent market share in terms of GPW and 24.27 percent market share in terms of NPW.
As a result of its competitive edge in the insurance business, Old Mutual Zimbabwe registered 11 percent increase in total revenue to $139,7 million in the six months to June 30, on the back of a 60 percent surge in non-life sales. Gross Premiums Written for the General Insurance unit were up 7 percent to $21 million, while profit before tax at $3, 2 million was up 11 percent.
The most recent results of the half year 2016 showed that Non-life sales continue to boost the group’s performance as they were up 60 percent from $92, 9 million to $148,7 million.
The banking activities also supported the growth as Loans and advances at $532, 9 million are up 8 percent while deposits are also up by 7 percent to $768 million. Nevertheless decline in property values and equity investments as a result of the poor economic fundamentals weighs the performance of the company and as such ,operating profit was flat at $33,1 million while profit after tax declined 4 percent to $12,5 million.
Colcom share price rose by 41.2 percent year to date to 24 cents. Although the Group’s revenue was 7 percent down to $59.90 million as compared to the same period in the previous financial year, production efficiencies improved as the company recorded an operating profit of $9.09 million, a growth of 1 percent on the previous financial year.
The growth in operating income was driven by the performance of Triple C Pigs production and cost containment measures. Triple C Pigs production units yielded improved margins that were partly offset by margin reduction at the Colcom Foods Division resulting from pricing decisions made in the year.
The group continues with its expansion projects, investing $4.45 million in working capital and another $2.73 million was invested in property, plant and equipment. A further $453 199 was invested in long-term biological assets. After settling $456 587 in borrowings and paying a dividend of $4.03 million the Group retained $4.90 million in cash at the end of the financial year.
The group largely benefit from Triple C Pigs which has continued to yield excellent results with pig deliveries increasing by 40 percent over the previous year. Of this, the auxiliary pig unit developed over the past 24 months delivered 27 percent of the growth. As per the phased expansion plan, this unit further increased production from 300 to 450 pigs per week from March 2016.
Business performance continue to be enhanced as the group commissioned a new pie factory in August 2015. Pie production has doubled since the pricing reductions effected in February 2016, and the factory has had to put in on a second shift to meet demand while year-on-year pie production has increased by 38 percent. As such, the Group recorded an overall increase in sales volumes of 4 percent over the previous year.
The group intends to maintain production volumes of pig production at the current levels with focus on efficiencies to reduce costs. As a result of the poor maize harvest achieved in the past season the group has depended on grain imports which have contributed to an increase in production costs.
Colcom also expects to add 5 new outlets to its chain of Texas Meats branded butcheries in the interim.