In tail of mixed fortunes, Financial analytics Zambia forecasts October 2019 will go on record as the best performing month for the equity market and the worst for the corporate bond market.
With only 4 more trading days remaining in October, Zambian Breweries trades over the last 3 weeks recorded a turnover in excess of K81.6 million from 10.3 million shares being traded.
The bond market, on the other hand, continued on its downward trend with week 3 recording the poorest performance in 2019 thus far. This was largely impacted by investor attraction to Government bonds and treasury bills that are attracting high yields.
Equity Market Update
In the week ended 17th October 2019, a total of 9,556,631 shares were transacted in 56 trades, yielding a market turnover of K66,181,337. Trading activity was recorded in CEC Zambia, LAFARGE, PUMA, STANDARD CHARTERED, ZAMBEEF, ZAMBREW, ZANACO, ZAMSUGAR and CEC AFRICA on quoted tier. The LuSE All Share Index (LASI) closed at 4,355.43 points. The market closed on a capitalization of K56,933,743,685 including Shoprite Holdings and K22,694,537,705 excluding Shoprite Holdings for Week 3.
In the week ended 23rd October 2019, a total of 1,867,100 shares were transacted in 39 trades, yielding a market turnover of K14,594,274. Trading activity was recorded in CEC Zambia, LAFARGE, PUMA, STANDARD CHARTERED, ZAMBEEF, and ZAMBREW. The LuSE All Share Index (LASI) closed at 4,352.11 points. The market closed on a capitalization of K56,919,935,729 including Shoprite Holdings and K22,680,729,749 excluding Shoprite Holdings.
Bond Market Update
During the 3rd week of October, bonds of total face value of K396,000 were transacted in 1 trade, yielding market value sales of K285,000.
In the 4th week, bonds of total face value of K6,806,000 were transacted in 6 trade, yielding market value sales of K5,077,000.
Company Perspective
With Zambian Breweries recording the highest equity trades in 2019, the company’s results for the first half-year relative to the prior year were as follows according to the company’s financials:
- Total volumes fell 20% mainly due to the divesture of the soft drinks business that happened in December 2018.
- Clear beer volumes grew 5.1% supported by strong growth in Carling Black Label and Castle Lite brands which grew 131% and 13% respectively
- Total Revenues fell by 9% mainly due to Coca Cola revenues in the 2018 base
The company’s share price at the time of the notable transactions was K7.91. The security has a price to earnings ratio of 71.91 which is relatively high in comparison to other LuSE securities. The high PE and a price to book value of 3.36 indicates that the stock is on the expensive side and relatively overvalued. Investors place a premium on Zambrew securities hence the relatively higher share price.