Week 15 Stock Market Update (8th to 12th April)

Week 2 of April saw trading turnover plummet by over 70% recording the weakest performance for the exchange since week 1 of March 2019.

Equity Market Activity

In the week ended 12th April 2019, a total of 66,723 shares were transacted in 40 trades, yielding a market turnover of K41,388. A share price loss K0.01 was recorded in REIZ, read the statement in the Lusaka Securities and Exchange Weekly report prepared in Lusaka.

Trading activity was also recorded Airtel, BAT Zambia, CEC Zambia, Lafarge Holcim, PUMA, Pamodzi Hotel, Standard Chartered Bank and CEC Africa on the quoted tier.

The LuSE All Share Index (LASI) closed at 5,497.93 points. The market closed on a capitalization of K61,687,119,121  including Shoprite Holdings and  K27,447,913,141  excluding Shoprite Holdings.

Bond Market Activity

During the week, bonds of total face value of K5,834,000 were transacted in 8 trades, yielding a market value sales of K4,018,000. This was a reduction of 73% in face value compared to the previous week of trading with trading volume also dipping by 70%.

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Weekly Stock Market Diary

Monday 8^th

• The week opened with 26 trades recorded on the day
• 19,950 shares were transacted, resulting in a market turnover of K32,402.
• 15,000 CCAF shares traded on the Quoted tier, generating a total turnover of K3,000.00.
• Share price losses of K0.02 and K0.01 were recorded in CEC Zambia and Standard Chartered respectively.
• Trading activity was also recorded in Airtel, BAT Zambia, Lafarge, PUMA, Zambeef and Zanaco.
• The LuSE All Share Index (LASI) closed at 5,498.07 points down by 0.21% from its previous close of 5,509.89 points.
• The market closed on a capitalization of K61,687,683,723 including Shoprite Holdings and K27,448,477,743 excluding Shoprite Holdings

Tuesday 9^th

No trades recorded on the day

Wednesday 10^th

• 6 trades recorded were recorded on the day
• 740 shares were transacted, resulting in a market turnover of K4,145 of which REIZ and STANCHART contributed 41% each to the total shares traded, both trading 300 shares at share prices of at K5.98 and K2.48, respectively, per share.
• A share price loss of K0.01 was recorded in Real Estate Investments.
• Trading activity was also recorded in Airtel, Lafarge and Standard Chartered Bank.
• The LuSE All Share Index (LASI) closed at 5,497.93 points down by 0.00% from its previous close of 5,498.07 points.
• The market closed on a capitalization of K61,687,119,121 including Shoprite Holdings and K27,447,913,141 excluding Shoprite Holdings.

Thursday 11^th

• 900 shares traded on the LuSE Main Tier on the day, of which CEC contributed 67% each to the total shares traded, both trading 600 shares at share prices of at K1.43 per share.
• A total turnover of K1,455 (USD118) was generated on the LuSE today, of which CEC contributed 59%
• The LuSE ASI maintained the previous close of 5,497.93 points. Year-to-date, the LUSE ALSI is up 4.75% in local currency terms, & up 1.96% in USD currency terms

Friday 12^th

• 8 trades recorded on the last day of trading for week 2
• 7,582 shares were transacted, yielding a market turnover of K9,297.
• Trading activity was recorded in CEC Zambia and PUMA, of which CEC contributed 54% each to the total shares traded, both trading 4,060 shares at share prices of at K1.43 per share.
• The LuSE All Share Index (LASI) maintained its previous close of 5,497.93 points as there were no share price movements.
• The market remained on a capitalization of K61,687,119,121 including Shoprite Holdings and K27,447,913,141 excluding Shoprite Holdings.
• Year-to-date, the LUSE ALSI was up 4.75% in local currency terms, and up 0.45% in USD currency terms

Financial Insight Analysis

April’s opening week showed signs of continued bullishness from March 2019’s performance. However, the first week’s highs were quickly erased as week 2 recorded the lowest performance of the LuSE in turnover and trading volumes since the first week of March 2019. In addition, the second week also saw weaker performance on the bond market as trades reduced by over 50%.

From 10 companies being traded in the first week to 8 in the second, the current week saw depressed performance in both turnover and trading volumes.

CEC Zambia continued to be the preferred security in trades as it led the way in market participants for a second week in a row in April. However, Pamodzi stock was a second favourite albeit turnover coming in at less than half of what the leading stock trades had made due to its low share price of 62 ngwee per share (CEC Zambia Share price is K1.43). Pamodzi’s market cap currently stands at K62 million compared to CEC Zambia which is currently K2.3 billion.

With the price to book ratio of 0.9 and 1.8 for CEC Zambia and Pamodzi respectively, astute investors will understand that they are getting a bargain for the former. This could be one of the reasons why the CEC security continues to rally (among other exogenous reasons).

When compared to the LuSE All Share Index, the Pamdozi security has been immobile for over 12 months with no price changes on record. Furthermore, this security has under-performed in comparison to the index. On the other hand, CEC has out performed the LuSE Index only coming to parity mid-February this year.

Important Announcements

Zambia Sugar: Increased EPS

On 12^th April 2019, the Board of Directors of Zambia Sugar PLC (the “Company”) advised Shareholders of the Company that the Earnings per Share (EPS) for the half year ended 28 February 2019 is expected to be approximately 68% higher than that for the half year ended 28 February 2018.

The increase in earnings is predominantly due to increased sales in the domestic and regional markets which have benefitted from increased production of sugar achieved in the prior season. However significant volumes of world market sugar continue to find its way into the company’s primary regional markets putting pressure on margins. The cost reset project called Project 400 continues to yield significant savings which also contributed positively to earnings.

CEC Africa: Annual Performance

On 12^th April, the group announced its performance in 2018 had been tempered by challenges faced in Nigeria where the operating companies are domiciled. These challenges included:

• Non-cost reflective tariffs perpetuated by the failure of the regulator to adjust tariffs to account for movements in pre-agreed economic and sector indicators;
• Mismatch between cost of energy increases and allowable tariffs by distribution companies resulting in a reduction of profit for distribution companies;
• Only partial implementation of the Power Sector Recovery Program during 2018 affected by focus on the parliamentary and presidential elections in February 2019; and
• Non-payment of electricity bills by government agencies, a significant component of the Abuja Electricity Distribution Company Plc (AEDC) customer profile.

However, revenue compared to the same period in 2017 is up 34% mainly due to higher generation in Nigeria and improvements in collection rates at AEDC. North South Power Company Limited, an associate company contributed a loss of K83 million, as a result of implementation of new accounting standards.

The Group loss for 2018 at K3,072 million showed a 3% decline on 2017 results, in Kwacha terms on account of the depreciation of the Kwacha, and net finance costs saw a saving of 54% mainly due to a payment made for the debt owed to the Market Operator in Nigeria.

All data compiled is harvested from the Lusaka Securities and Exchange.

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