The Sunday Mail
Enacy Mapakame Business Reporter
It is easy to look the other way, but penny stocks led by General Beltings Limited (GB) shone bright on the Zimbabwe Stock Exchange (ZSE) in 2017 following massive gains in the year.
From manufacturing to newspaper production, small stocks had a fine run in a year that by far proved the best for Zimbabwean stocks in seven years. Penny stocks, also known as cent stocks in other countries, are small value stocks whose shares trade at low value per share.
In big markets, these are valued at less than a dollar while others value them below $5, but in the Zimbabwean contest they are valued at 5 cents a share or below and highly speculative. These come with high risks but also have potential for offering extraordinary returns.
On the local bourse, the country’s sole manufacturer of conveyor belts, General Beltings, leapt the highest for both the penny stocks and the entire ZSE in 2017 after gaining 900 percent.
As at Wednesday December 28, the engineering implements firm had the biggest year to date gains. General Beltings has indicated capacity utilisation as at July this year had improved to 40 percent compared to about 15 percent the company was operating at in 2016, thanks to the import restrictions that were introduced that helped push volumes.
Although smuggling has remained a challenge, the firm reported volumes for the six months to June 30, 2017 rose 93 percent to 412 tonnes subsequently pushing revenue up. Revenue for the period at $2 million was 24 percent ahead of same period last year.
This is despite a 38 percent downward price reduction at the rubber division. During the period under review, the business environment was characterised by low local demand, but the firming prices of commodities also helped boost business from the mining sector.
Other major gains by penny stocks were recorded in agriculture concern Ariston, which rose 385 percent to 1,7 cents while hospitality group African Sun jumped 233 percent to 4 cents. The only listed brick making group, Willdale, closed the year 192 percent firmer while medical supplier Medtech rose 150 percent to 0,05 cents.
In the year, the country’s largest media group, Zimpapers, increased by 120 percent to close the year at 1,1 cents. At 2,40 cents by year end, property concern Zimre Property Investments (ZPI) jumped 140 percent. Overall, the local bourse’s top five year to date gains were recorded in General Beltings, followed by financial services group ZB Financial Holdings Limited at 696 percent to 36 cents. ZBFH has had a year filled with boardroom squabbles that resulted in banker Nicholas Vingirai being booted out of the board.
Paper and packaging group Nampak also recorded one of the highest gains in 2017 after adding 650 percent of value to 18 cents. CFI and Hippo followed at 623 percent to 70 cents and 402 percent to $1,72 respectively.
The agri-industrial firm, CFI, also had an eventful year with shareholders in and out of boardrooms in an attempt to resolve alleged corporate governance deficiencies by former directors. While the stock market enjoyed a bull run overall, it was not short of lame ducks.
On the downside was Barclays, which fell 100 percent to 6 cents. The financial services group concluded a transaction with Malawi’s First Merchant Bank (FMB) resulting in its acquisition of an effective 42 percent. Also on the losing side were Edgars and RTG that weakened 16,3 percent to 4 cents and 16,7 percent to 1 cent respectively, while Turnall fell 8,7 percent to 0,95 cents.
Overall, the mainstream Industrials Index jumped 178 percent to 323 while the Minings Index rose 83 percent to 142, becoming the best regional performer in 2017, according to African Financials
