Business / Economy
Beer, Econet only attractions in Zimbabwe
27 Jun 2014 at 14:37hrs | Views
Zimbabwe's deteriorating economy and a stock market that's fallen more than any other in Africa this year are doing nothing to scare off one of South Africa's biggest money managers.
Allan Gray Ltd, which oversees $43 billion, is boosting stakes in Zimbabwe Stock Exchange (ZSE) listed Delta Corporation -which brews Chibuku sorghum beer - and Econet Wireless, the country's biggest mobile-phone company.
"They should and can be very high-quality businesses," Andrew Lapping, who oversees the Cape Town-based money manager's two Africa-focused funds, said by phone on June 24. The companies are able "to generate lots of free cash flow. They don't need huge amounts of reinvestment the whole time to maintain production," he said.
Delta, which fell 8 percent this year and reported a 26 percent drop in first-quarter lager sales, is the largest brewer in the country. While revenue slipped, earnings per share doubled to 8 U.S. cents in fiscal 2013 from two years earlier, according to data compiled by Bloomberg.
The company is forecast to declare a final dividend of 4 cents in the 12 months through March, or 25 percent more than a year earlier.
Econet invested $933 million into its mobile-phone networks in the five years through February, according to company statements.
That compares with an enterprise value of $1.3 billion, Lapping said.
The company's shares gained 22 percent this year, giving Harare-based Econet a market value of $1.2 billion.
Allan Gray Ltd, which oversees $43 billion, is boosting stakes in Zimbabwe Stock Exchange (ZSE) listed Delta Corporation -which brews Chibuku sorghum beer - and Econet Wireless, the country's biggest mobile-phone company.
"They should and can be very high-quality businesses," Andrew Lapping, who oversees the Cape Town-based money manager's two Africa-focused funds, said by phone on June 24. The companies are able "to generate lots of free cash flow. They don't need huge amounts of reinvestment the whole time to maintain production," he said.
Delta, which fell 8 percent this year and reported a 26 percent drop in first-quarter lager sales, is the largest brewer in the country. While revenue slipped, earnings per share doubled to 8 U.S. cents in fiscal 2013 from two years earlier, according to data compiled by Bloomberg.
The company is forecast to declare a final dividend of 4 cents in the 12 months through March, or 25 percent more than a year earlier.
Econet invested $933 million into its mobile-phone networks in the five years through February, according to company statements.
That compares with an enterprise value of $1.3 billion, Lapping said.
The company's shares gained 22 percent this year, giving Harare-based Econet a market value of $1.2 billion.
Source - Bloomberg
