ZSE | IH Monthly Snapshot Report - August 2021
ZSE | IH Securities Monthly Snapshot Report - August 2021
ZSE | IH Securities Monthly Snapshot Report - August 2021
We remain skewed towards consumer names – we note that these businesses are now experiencing actual volumes growth. This is a departure from 2019 revenues which were driven by hyper-inflation pricing amidst falling volumes.
The Group registered strong revenue growth supported by a surge in sales volumes coupled with price adjustments and a decline in monetary loss. The abundant rains received during the main farming season were a big boost for seed demand. Maize remained the flagship seed crop for the Group contributing 55% of the volume and growing by 61% due to strong government and open market demand, and 3,600mt exports to Malawi, Tanzania and Mozambique. Wheat sales increased by 66% buoyed by a once-off 2000mt export order to Nigeria while Soybeans volume went up 17% driven by strong oilseed local demand. The introduction of the Foreign Currency Auction System by the Reserve Bank of Zimbabwe and the accompanying tight monetary policy stance contributed to exchange rate stability and inflation deceleration which allowed the Company to maintain its selling prices throughout the summer planting season. Resultantly, in historical terms, FY21 revenue ...
ZSE | IH Securities Monthly Snapshot Report - July 2021
The Central Bank continues to maintain a hawkish approach towards money supply as evidenced by the introduction of Zero Percent Non-Negotiable Certificates of Deposit (CDs) in a bid to wipe out excess liquidity in the economy. This comes after month-on-month inflation inched up 0.9% from 1.6% in April to 2.5% in May, followed by another uptick to 3.9% in June. In pursuit of the same goal of reducing money supply, the Monetary Policy Committee reviewed reserve money growth target from 22.5% per quarter to 20% per quarter. The Reserve Bank of Zimbabwe also introduced new ZWL$50 notes to help easy trade among consumers and businesses. This was however viewed as self-contradicting by the general public although the Central Bank emphasizes broad money supply multiplier effect is insignificant.
Looking at the crocodile business; the global high-end leather goods market was not spared from COVID-induced depression in sales volumes for 1H20; albeit a strong recovery in sales in 2H20 driven by Asia as lockdown restrictions eased in that area. Despite achieving good quality (82% of Padenga’s crocodile skins achieved 1st Grade; 2019 82%); increased relative demand from Asia contributed to a shift in consumer dynamics in favour of smaller handbags and therefore smaller skins; an average crocodile skin size of 33.8cm was consistent with customer requirements. Crocodile skins 40cm/+ size were rejected regardless of quality and were/will be sold at reduced prices negatively impacting Padenga. Despite this, crocodile sales volumes ...