Portfolio Manager’s Digest Q2 2013 · judicial management. The table below shows the key performers and non-performers during Q3 2016 and the last 12 months ... [email protected]

RESEARCH NOTE│ZIMBABWE

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th Floor, CABS First Street, Harare, Zimbabwe

Tel: +263-4-252-006, Box HR 1206, Email: [email protected]

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PORTFOLIO MANAGER’S DIGEST

THIRD QUARTER 2016





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OUTLINE Page

Market Summary .................................... 3

Trade Statistics .................................... 4

Economic Review ..................................... 5

Equity Return Analysis ..................................... 6

Market Valuation Overview ..................................... 7

Sector PER Graphs ………………………………….. 8 - 11

Top 5 Picks .................................. 12 - 13





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“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is

popular and do well.” – Warren Buffet.

Q3 2016 Zimbabwe Stock Exchange Review

Market Summary The Zimbabwe Stock Exchange’s (ZSE) main Industrial Index lost 2.06% during the third quarter of the year and remains in negative return territory over the last 12 months having declined by 24.99%. The decline during the quarter was largely as a result of INNSCOR, one of the blue chip shares on the bourse, easing 37.8% during the period under review. The slow-down in INNSCOR is tied to the unbundling of two of its subsidiary businesses from its group operations. The Mining Index added 7.73% during the quarter and is up 9.24% in the last 12 months. Underpinning the positive return during Q3 2016 was Rio Zim’s share price growth in supported by the mining company ramping up production through the opening of another mine site; renegotiating expensive borrowings; and narrowing its loses significantly. The operating environment has remained difficult with most sectors on the ZSE experiencing shrinking revenue, thinner margins and poorer profitability. This has arisen from tight liquidity and lower aggregate demand. According to the 2016 national budget speech and subsequent monetary policy statement, Zimbabwe is facing tight liquidity conditions arising from lower capacity utilisation brought on by company closures and job retrenchments. The Confederation of Zimbabwe Industries surveyed industries indicating that business confidence was -37.2%. This is against a context of 0% being a neutral sentiment and anything above 0% being a positive outlook. Of the surveyed companies, 56.4% sighted poor access to finance; policy instability and restrictive labour practices as reasons for the negative sentiment and outlook within industry. The total value of shares traded on the ZSE in Q3 2016 was significantly lower at just under $32m when compared to the value of trades in Q2 2016 of $46m. On a like for like comparison the $32m traded in Q3 2016 compares more unfavourably with the $53.7m traded in Q3 2015. Foreign investors have been largely net sellers on the ZSE during the quarter as they disinvested a total of $15.8m. This is a marked increase from the $7m disinvestment in Q2 2016. It should be noted that foreign investors were last recorded as quarterly net buyers in Q1 2015 (+$3m) and since then have been quarterly net sellers of listed shares to date.

The economic environment’s challenges which relate to low aggregate demand; tight liquidity conditions; an over regulated business environment; policy uncertainty and inconsistency; poor export competitiveness; high production and borrowing costs; corruption and poor institutional integrity have resulted in a trying business environment and resultantly lack lustre listed company performance. Some significant events that happened during the quarter relate to Ariston converting $4m worth of shareholder loans into equity; Hwange postponing their scheme of arrangement; Subsidiaries of

CFI, Victoria Foods and Crest Poultry, have been placed under judicial management. The table below shows the key performers and non-performers during Q3 2016 and the last 12 months since Q3 2015. The graphs show the trend for the Industrial and Mining Indices as well as the value of trades.

Top Movers

Q3 2016 % Change

12 Months % Change

INDUSTRIAL (2.06%)

INDUSTRIAL (24.99%)

MINING 7.73%

MINING 9.24%

STARAFRICA 66.67%

ART 445.45%

ZIMRE 40.63%

ARISTON 125.0%

ECONET 15.84%

ZECO 100.0%

TURNALL 10.0%

ZIMRE 50.0%

OLD MUTUAL 8.28%

RIO ZIM 45.67%

Losers % Change Losers % Change

CAFCA (55.0%)

BINDURA (75.0%)

AXIA (52.0%)

ZIMPLOW (74.36%)

MEDTECH (50.0%)

OK (70.83%)

INNSCOR (37.48%)

MASIMBA (69.57%)

BINDURA (34.64%)

INNSCOR (65.95%)

Industrial and Mining Index Q3 2016 Trend

Industrial and Mining Index 12 Month Trend

Source: ZSE & OMSEC Research Data base





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Zimbabwe Stock Exchange Trade Statistics

Total Value

Traded Volume Traded

Industrial Index

Mining Index

vol of shares (foreign)

val. of shares (foreign) $

Net Foreign Inflows

$ market capitalisation

ZSE Liquidity

foreign participation

%

Oct-15 $ 12,863,973 63,758,858 130.83 23.57 56,824,324 $ 13,888,447 $ 1,096,871 $ 3,416,105,219 4.5% 54.0%

Nov-15 $ 8,947,073 91,421,651 117.55 22.33 76,803,378 $ 12,548,332 $ 544,929 $ 3,141,684,791 3.4% 70.1%

Dec-15 $ 16,360,453 183,792,940 114.85 23.72 91,032,720 $ 19,646,554 $ 4,562,969 $ 3,073,408,931 6.4% 60.0%

Jan-16 $ 11,345,452 61,882,757 103.04 19.53 57,593,984 $ 14,661,852 $ 4,288,882 $ 2,790,443,132 4.9% 64.6%

Feb-16 $ 15,556,982 95,020,938 99.50 19.14 108,094,947 $ 18,794,061 $ 8,226,345 $ 2,694,927,768 6.9% 60.4%

Mar-16 $ 16,428,570 97,601,725 97.61 19.53 102,754,224 $ 22,638,728 $ 4,205,264 $ 2,645,057,408 7.5% 68.9%

Apr-16 $ 14,026,916 188,294,392 105.79 20.16 100,050,049 $ 15,489,906 $ 1,070,552 $ 2,862,611,862 5.9% 55.2%

May-16 $ 13,868,487 99,055,230 104.70 25.54 68,389,611 $ 14,349,863 $ 1,270,845 $ 2,881,344,798 5.8% 51.7%

Jun-16 $ 18,064,621 88,525,472 101.04 24.7 127,508,600 $ 26,703,514 $ 4,537,801 $ 2,780,939,970 7.8% 73.9%

Jul-16 $ 11,838,625 57,222,624 98.84 25.72 71,201,211 $ 13,499,671 $ 5,151,276 $ 2,722,044,639 5.2% 57.0%

Aug-16 $ 7,075,762 41,264,438 99.26 26.32 28,633,955 $ 6,522,372 $ 4,328,463 $ 2,734,327,076 3.1% 46.1%

Sep-16 $ 13,049,389 69,049,535 98.96 26.61 44,704,941 $ 12,674,651 $ 6,370,229 $ 2,725,133,069 5.7% 48.6%

12 Month Total $ 159,426,302 1,136,890,560 98.96 26.61 933,591,944 $ 191,417,952 $ 44,564,569 $ 2,872,335,722 5.6% 60.0%

Q3 2016 $ 31,963,776 167,536,597 98.96 26.61 144,540,107 $ 32,696,694 $ 15,849,969 $ 2,872,335,722 1.1% 51.1%

Average*

(ZSE and OMSEC Research Data base September 2016)





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Economic Review According to the IMF World Economic Outlook of September 2016, the Global economy is predicted to slow down to 3.2% in 2016 from an earlier forecast figure of 3.4% as advanced economies’ respective GDP’s slow down. The Sub-Saharan region is expected to grow by a nascent 1.4% due to regional currency weaknesses, a poor agricultural season and political uncertainty. Unfortunately these developments do not auger well for Zimbabwe which relies on the export of unprocessed mineral products and tobacco as its main sources of foreign currency earnings. Zimbabwe has been experiencing successive trade deficits on account of the country exporting significantly less than it imports. In 2016, Zimbabwe is expected to close the year with a negative balance of payments of $397.6m and at half year had a current account deficit of $2.5bn. This is notwithstanding policies to restrict imports and promote local production which were recently implemented. It is believed that the Import restriction policy SI 64 of 2016 Gazetted on 17 June 2016 will be instrumental in reducing imports and promoting the local manufacturing sector. On the production side, the Government has been increasing its efforts in reducing red tape through relaxing regulatory requirements for operating and or registering a business. The import restriction policy however successful for manufacturers’ current increased demand in the short term is not a sustainable position going forward. This is because trade partners could potentially retaliate by refuting Zimbabwean produced goods and thus negatively impact export earnings not forgetting the issue of smuggling which has already increased as most locally manufactured products remain uncompetitive to regional peers. The relaxation of regulatory requirements’ success will be measured by how the business conditions compare with regional peers. Zimbabwe dropped two places on the World Bank Ease of doing Business survey from 153 in 2015 to 155 in 2016 due to lost ground in areas of starting a business, paying taxes, getting electricity and trading across borders. Foreign Direct Investment is competed for globally as investment capital is attracted to countries’ whose business environment promotes growth and there is reasonable guarantee over the safety of the investment. This is where Zimbabwe has been faltering given Zimbabwe’s history when it comes to the preservation of property rights which in more recent times has been perpetuated by uncertainties surrounding the Indigenisation and Economic Empowerment regulations. Whilst the policy seeks to correct economic imbalances, Government should focus on ensuring that the policy does not perpetually get revised and is simple. This will at least ensure that it is not abused through the exploitation of different interpretations of the policy which tends to scare investment capital away. The Reserve Bank of Zimbabwe plans to release the much

emphasised bond notes as an export incentive to trade alongside

the multi-currency basket of currencies in early November 2016.

Exporters are to be awarded a reward of between 2.5% to 5% of

gross export proceeds as bond notes. The proposed exchange rate

for the notes will be 1:1 with the USD. The introduction of the bond

notes has received mixed reactions from stakeholders. Some are

concerned with the possibility of the facility being abused through

an excessive supply of bond notes being exchanged with USD

balances in banks. Other stakeholders are welcoming their

introduction as the growing currency crisis and low nostro account

deficits have had a negative effect on business. If the framework for

their issuance is maintained, the two aforementioned views are

unlikely to come to fruition. This is because their issuance being a

direct response to exports mean export receipts of $6bn are

required for the facility to be exhausted. The facility is unlikely to

solve the currency shortage crisis as US$200 million is insufficient

to meet the currency requirements for the country for one month.

The lack of confidence or acceptability of the bond notes however

threatens to scuttle the effectiveness of the bond notes as an

export incentive. As such the RBZ may have to do more in terms of

reassuring the public over non-abuse of the facility as a first step

and secondly clarify how the bond notes can be redeemed in

exchange for USD by the underwriter of the bond note facility.

Initial policy announcements were that AFREXIMBANK was the

underwriter but the market has since cast doubt over this given the

inability to access term sheet information related to the facility.

In August 2016, Zimbabwe recorded negative monthly inflation of

0.13% and negative YOY inflation of 1.43%. Deflationary pressures

persisted underpinned by a combination of low aggregate demand;

price wars intended to stimulate demand; and the importation of

negative inflation from South Africa where their currency has

weakened 11% against the USD. We anticipate that negative inflation

is likely to persist given depressed aggregate demand and continued

importation of more competitively priced products. Below is a table

highlighting Zimbabwe’s inflation in the last 12 months which has

largely been negative.

Outlook We expect intensified efforts by the government for reforms

intended to improve the ease of doing business. However in the

short-term, economic activity will remain constrained in the

presence of underemployment; low aggregate demand and poor

external sector performance.





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Equity Return Analysis

Q2 2016 Q3 2016 Capital Gain/(Loss) Dividend past 12 months Quarter YOY Total

Total Return Analysis (usc) (usc) (usc) (usc) Return Return 12 Month

Return

DELTA 67 60 (7.0) 4.70 (10.45%) (27.71%) (22.05%)

ECONET 21 19.6 (1.4) 0.90 (6.67%) (26.59%) (23.22%)

BAT 1220 1220 0.0 62.00 0.0% 5.17% 10.52%

OLD MUTUAL 228.50 290.00 61.5 12.36 26.91% 16.47% 21.43%

NATFOOD 209.9 212.25 2.35 10.44 1.12% (29.21%) (25.73%)

SEEDCO 56.85 59.75 2.9 2.00 5.1% (40.23%) (38.23%)

INNSCOR 17.3 23.05 5.75 0.90 33.24% (60.93%) (59.41%)

CBZH 10.9 9.96 (0.94) 0.45 (8.62%) 18.57% 23.87%

SIMBISA 13 12 (1.0) 0.24 (7.69%) (16.2%) (14.53%)

PADENGA 8.66 11.4 2.74 0.41 31.64% 34.12% 38.94%

TSL 14.55 14.59 0.04 0.33 0.27% (16.63%) (14.74%)

AFDIS 45 44 (1.0) 0.45 (2.22%) (12.0%) (11.1%)

BARCLAYS 1.5 2 0.5 - 33.33% (53.7%) (53.7%)

FBCH 6.4 6.4 0.0 0.37 0.0% (8.57%) (3.25%)

GETBUCKS 4 3.7 (0.3) 0.07 (7.5%) 8.19% 10.2%

OK 3 3.4 0.4 - 13.33% (43.33%) (43.33%)

DAWN 1.6 1.6 0.0 - 0.0% (7.51%) (7.51%)

HIPPO 20 19.9 (0.1) - (0.5%) (48.97%) (48.97%)

MASH 1.65 1.64 (0.01) - (0.61%) (18.0%) (18.0%)

COLCOM 18.25 18.5 0.25 1.05 1.37% (22.92%) (18.54%)

Mid Cap Listed Companies

ZIMRE 1.79 1.65 (0.14) - (7.82%) 50.0% 50.0%

PEARL 2 1.98 (0.02) 0.06 (1.0%) (10.0%) (7.32%)

RIO ZIM 17 17.48 0.48 - 2.82% 45.67% 45.67%

AXIA 7.5 3.6 (3.9) 0.372 (52.0%) (52.0%) (47.04%)

RTG 1.2 1 (0.2) - (16.67%) 0.0% 0.0%

MEIKLES 7 7.4 0.4 - 5.71% (26.0%) (26.0%)

LAFARGE 27 20 (7.0) - (25.93%) (42.86%) (42.86%)

BINDURA 1 1.2 0.2 - 20.0% (14.29%) (14.29%)

NMB 3.8 3.8 0.0 - 0.0% 18.75% 18.75%

NAMPAK 1.9 1.9 0.0 - 0.0% (20.83%) (20.83%)

EDGARS 4.8 4.8 0.0 - 0.0% (36.0%) (36.0%)

ART 2.88 3 0.12 - 4.17% 445.45% 445.45%

DZL 5 3.6 (1.4) - (28.0%) (56.73%) (56.73%)

FIDELITY 10.3 11 0.7 0.51 6.8% 22.22% 27.88%

ZPI 0.72 0.65 (0.07) 0.01 (9.72%) (18.75%) (17.25%)

Currency Appreciation Q2 2016 Q3 2016

Quarter Return

YTD Return

usd/zar 14.8605 13.8439

(6.84%)

(11.33%)

usd/gbp 0.77495 0.77067

(0.55%)

14.23%

usd/eur 0.90442 0.89501

(1.04%)

(2.42%)

usd/yen 100.913 101.154

0.24%

(15.95%)

*Source: OMSEC Research Data Base





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Market Sector Valuation Overview

30-Sep-16

MKT CAP

SECTOR (usd m)

SECTOR

SECTOR

SECTOR INDEX

Sector

usd(m)

R. Earnings

R. P/E

P.NAV

YTD RETURN

Commodities

241.7

(1.5)

-

0.5

3.3%

Bank

215.1

97.5

2.21

0.0

0.3%

Insurance

213.4

1.6

133.78

0.02

17.8%

Beverages

1,061.8

96.8

10.97

1.9

(8.1%)

Diversified

28.5

(56.6)

-

0.1

13.0%

Food

241.4

15.7

15.37

1.7

1.2%

Hotel

28.7

(12.8)

-

1.8

(17.9%)

Retail

201.3

27.7

7.26

0.5

24.5%

Consumer

64.6

8.9

7.30

1.2

29.8%

Communication

321.4

39.4

8.16

0.5

(6.7%)

Manufacturing

89.6

33.8

2.65

0.2

(11.6%)

Property

105.5

54.6

1.93

0.3

(1.5%)

Mining

43.4

(114.2)

-

- 0.9

7.8%

Source: OMSEC Research Data Base





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ZSE Sector Price Earnings Relative Comparisons

Banking Sector P/E Graph

Bank Value Quarter Change

Sector Index 205.8 0.34%

Best Performer

BARCLAYS 2 33.33%

Worst Performer

CBZH 9.96 (8.62%)

CBZH, ZBFH and FBCH are the most attractive companies on a P/E scale. GETBUCKS reduced earnings saw its P/E balloon to 13.4. The banking sector earnings remain quite subjective given potential impairment write offs and possible NPLs.

Beverages Sector P/E Graph

Sector Index 436.3 (8.07%)

Best Performer

BAT 1220 0.00%

Worst Performer

DZL 3.6 (28.0%)

BAT and DELTA P/E’s are now attractive given the lower earnings generated and subsequent decline in their respective share prices from the beginning of the year. DZL and AFDIS are over-priced on a P/E scale, however BAT remains attractive on a dividend yield return perspective.

Commodity Sector P/E Graph

Commodities Value Quarter Change


Best Performer SEEDCO 59.75 5.10%

Worst Performer STARAFRICA 0.84 (1.18%)

The best performer in the commodities sector was SEEDCO with a 5.1% return. During the current year, commodity prices have been improving, locally however utility costs and production delays will work against this sector’s performance. SEEDCO and ARISTON are attractive on a P/E scale, however the quality of both company’s earnings is not desirable.





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Specialised Goods Sector P/E Graph

Specialised Value Quarter Change


Best Performer

PADENGA 11.4 31.64%

Worst Performer

ZIMPAPERS 0.5 0.00%

PADENGA rebounded with a return of just under 32% during the quarter and was the best performer in this sector. ZIMPAPERS operations have begun to turn a profit following its restructuring however we are concerned by the size of receivables on the company’s balance sheet.

Diversified Sector P/NAV Graph

Diversified Value Quarter Change


Best Performer

CFI 9.5 29.43%

Worst Performer

MEIKLES 7.4 5.71%

CFI’s recovery was underpinned by potential recapitalisation of the group and income streams from their land disposals. Meikles is gaining market share through its retail outlets, however the prospects of these companies are heavily dependent on aggregate demand picking up given their consumer goods focus.

Food Sector P/E Graph

Food Value Quarter Change


Best Performer

COLCOM 18.5 1.37%

Worst Performer

NATFOOD 212.25 1.12%

COLCOM remains the most attractive company on a P/E basis however the company’s shares have limited liquidity. Simbisa with a P/E of 16X is trading at a premium to the sector average.





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Hotel Sector P/NAV Graph

Hotel Value Quarter Change


Best Performer

RTG 1 (16.67%)

Worst Performer

AFSUN 1.2 (20.0%)

The sector continues to lack the necessary critical mass to breakeven but requiring continual investment for hotel refurbishments. On a 12 month rolling basis both listed hotels had negative earnings and cannot be ranked on a P/E scale.

Insurance Sector P/E Graph

Insurance Value Quarter Change


Best Performer

OLDMUTUAL 290 26.91%

Worst Performer

ZIMRE 1.65 (7.82%)

FIDELITY and FIRST MUTUAL remain attractive on a P/E basis. OLD MUTUAL’S share price recovery was underpinned by its fungibility status in light of domestic currency concerns and the impending managed separation.

Manufacturing Sector P/E Graph

Manufacturing Value Quarter Change


Best Performer ART 3 4.17%

Worst Performer PPC 40 (38.65%)

Manufacturing sector companies have been increasingly trading in the black however quite a few remain in loss territory. Investment in this sector should involve a further analysis of the respective company’s cash-flow and gearing level given the limited liquidity in the market.





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Mining Sector P/CF Graph

Mining Value Quarter Change


Best Performer

BINDURA 1.2 20.0%

Worst Performer

FALGOLD 0.5 (9.09%)

Given limited profits from the sector comparison has been made on a P/CF scale. The mining sector has of late been a mixed bag, this time around RIOZIM is on a recovery path whilst FALGOLD has going concern issues, BNC is casting doubt on their Smelter project and HWANGE has been ordered by a court ruling to undergo a scheme of arrangement for its creditors.

Property Sector P/E Graphs

Property Value Quarter Change


Best Performer

DAWN 1.6 0.00%

Worst Performer

ZPI 0.65 (9.72%)

On a relative P/E basis PEARL and DAWN are attractive. However the sector has come under increasing pressure due to lower economic activity resulting in higher voids, downward rental negotiations and arrears. All companies managed a positive bottom line however ZPI and MASH’s profitability have been particularly low.

Retail Sector P/E Graphs

Retail Value Quarter Change


Best Performer

INNSCOR 23.05 33.24%

Worst Performer

AXIA 3.6 (52.0%)

The retail index was bolstered by gains in INNSCOR. AXIA is the most attractive on a relative P/E scale as well as EDGARS however we have concern over the quality of those earnings as their receivables continue to dampen the quality of their profits.





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Top Five Picks

AXIA Latest Fundamentals Company recently unbundled from the INNSCOR group of companies and listed on the ZSE on the 17th of May 2016. The company has three main business interests namely 50.01% in Distribution Group Africa their highest revenue earner, 66.67% in TV Sales and Home and 26% of Transerv, a vehicle sundries, spares and parts company. Key Technicals AXIA is showing conformance on both the Movng Average Convergenve Divergence (MACD) and Relative Strength Index (RSI) scales. Our recommendation is to ACCUMULATE the share for a higher upside potential in the short to medium term. Sensetivity View Best-case Scenario: Recovery in disposable incomes which would improve demand for its products. Growth in market share and a weaker USD against the ZAR to improve competitiveness for its regional markets. Worst Scenario: Increased liquidity drain, limited aggregate demand, dwindling employment and general decline in disposable incomes which would result in poor uptake of the company’s product as well as continued firming of the USD against regional currencies which would result in exchange rate losses.

Long Term Buy

Target Price

Usc6.75

Current Price

Usc4.9

Potential Upside

38%

NATFOODS Latest Fundamentals The company’s investment in its plant and equipment as well as their wide distribution network is paying off through better compatitiveness and access to not only urban centres but mineral rich remote areas where liquidity is still fairly accessible. They have adequate stocks for the forthcoming year and notwithstanding the economic environment, managed to grow their revenue and reduce their costs. Key Technicals The company is on an upward trend on the MACD scale but is in overbought territory on the RSI scale. We recommend NATFOOD as a defensive stock and ACCUMULATE the stock taking advantage of any weaknesses in the share price. Sensetivity View Best-case Scenario: Continued demand for the company’s products, improved disposable incomes and regional export market growth. Worst Scenario: Continued decline in disposable incomes, tight liquidity and increased difficulty in securing raw material inputs that are not available locally due to nostro account funding challenges.

Medium Term Buy

Target Price

Usc232

Current Price

Usc220.5

Potential Upside

6%

NICOZ Latest Fundamentals Increased product innovation has mitigated against the general decline in GPW and assisted in defending the company’s market share. Consistent cost containement has allowed the company to retain a profitable business despite the harsh economic environment. Operationally whilst most regional businesses are performing well, the translation losses arising from weaker regional currencies are negatively affecting the business. Key Technicals The RSI shows that the company is in buy territory however the MACD shows a downward trend. We recommend accumulating the share and taking advantage of any weaknesses arising from the share price for long term gains. Sensetivity View Best-case Scenario: Recovery in disposable incomes, liquidity improvement and greater access to the informal sector as the agenda for the promotion of plastic money grows. Worst Scenario: Depressed demand arising from poor liquidity and lower disposable incomes. Increased regulatory for prescribed asset investments that have unpredictable maturity profiles and uncertain coupon payments and settlements.

Medium Term Buy

Target Price

Usc1.8

Current Price

Usc1.5

Potential Upside

20%





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INNSCOR Latest Fundamentals The company has completed its disposals and is now a focused light maunfacturing company servicing the consumer sector. Currnetly we believe the company’s value is not matched by its sum of parts valuation and a medium to long term investor can take advantage of the current and future mismatched valuations as the company grows and acquires new businesses. Key Technicals The RSI and MACD graphs show the company is in conformance for an uptrend in its share price. We recommend ACCUMULATING in the short-term for continued capital appreciation and value mismatch opportunities that may arise in the medium to long term. Sensetivity View Best-case Scenario: Recovery in local aggregate demand and acquisition of market leading companies at discounted prices given the company’s strong cash holdings. Worst Scenario: Increased political noise, softening aggregate demand, nascent recovery in the consumer sector and complications and excessive red tape from regulators as the company embarks on achieving the company’s medium term strategic goals.

Medium to Long-term Buy

Target Price

Usc35

Current Price

Usc27.25

Potential Upside

28%

TSL Latest Fundamentals We believe that the company’s diverse revenue streams will defend the company given the current economic challenges being experienced in Zimbabwe. There are advantages arising from the company’s auction floors, tobacco affiliated businesses and freight businesses that reduce liquidity constraint risks for the company. Key Technicals The company’s technicals indicate that the company is on an upward trend as both the MACD and RSI show that the company’s share price is expected to trend up. We recommend ACCUMULATING the share for short to medium term gains. Sensetivity View Best-case Scenario: Imrpoved economic activity increasing demand for property particularlly for industrial space. Growth in agricultural support programs and tourism sector recovery. Worst Scenario: Waning aggregate demand and tight liduidity as well as exchange control tightening negatively affecting auction floor business and logistics company operations.

Long Term Buy

Target Price

Usc18.3

Current Price

Usc14.75

Potential Upside

24%





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The information contained in this document is derived from carefully selected sources. No representation is given about, and no

responsibility is accepted for the accuracy or completeness of this document. Any views expressed reflect the current views of

the author and do not necessarily represent the views of the OLD MUTUAL GROUP or any subsidiary or affiliate of the OLD

MUTUAL Group. The views reflected herein may change without notice. OLD MUTUAL SECURITIES, its affiliates and their

respective officers, directors, partners and employees, including persons involved in the preparation of this document, may from

time to time deal in, hold, or act as market-makers, advisers, brokers, and commercial and or investment bankers in relation to

equities, securities, or derivatives thereof. Members of staff of Old Mutual Securities may or may not hold interests in the subject

matter of analysis and or commentary contained in this document. This document is provided to you for informational purposes

only and should not be construed as and shall not form part of an offer or solicitation to buy or sell any equities, securities or

derivatives thereof. It may not be reproduced, distributed or published by any recipient for any purpose. In connection with its

distribution, this document has been approved by OLD MUTUAL SECURITIES.

Documents

Portfolio Manager’s Digest Q2 2013 · judicial management. The table below shows the key performers and non-performers during Q3 2016 and the last 12 months ... [email protected]