Simbisa shares jump 50pc on London listing

20 Aug, 2017 - 00:08 0 Views

The Sunday Mail

SHARES of quick service restaurant provider Simbisa Brands have jumped by 50 percent to US29,75 cents since announcing plans for a secondary listing on the London Stock Exchange (LSE).

On July 25, Simbisa announced it was eyeing listing its ordinary share capital on the LSE’s Alternative Investment Market as part efforts to diversify its revenue streams.

Simbisa, which has been one of the major value and volume drivers on the local bourse, rose from US20,75c to US31c in three weeks on positive investor sentiment, helping the Zimbabwe Stock Exchange (ZSE) rally to a market capitalisation of US$6 billion last week.

Market watchers maintain Simbisa is poised for further growth going forward, with revenue closing the year at US$153,1 million, representing a 4 percent leap year-on-year.

Additionally, EBITDA (Earnings Before Income Tax Depreciation Amortisation) is expected to rise to US$15 million, a 5 percent increase year-on-year while net income attributable to equity holders is projected to increase 11 percent to US$6,2 million in the 2017 financial year.

“We have assumed more store rollout towards the end of FY17 (financial year 2017) will keep EBITDA margin at close to FY16 levels, hence anticipate that EBITDA margin will moderate from 1H17 (first half of 2017) to FY17 as per trend, however, potential upside exists in this regard,” said brokerage firm IH Securities.

Despite the challenging operating environment, management at Simbisa says it will continue to grow the brand’s footprint, as well as constantly review their offerings to match changing tastes and improving customer experience.

This also includes growing regional contribution to at least 60 percent, as they indicated in the 2016 financial year.

The fast food service provider is also pursuing acquisition of an international complementary business, according to a cautionary notice it published to shareholders.

Since it was spun off from parent company Innscor in November 2015, Simbisa has been on a growth trajectory, adding more counters both in Zimbabwe and across the region where it has a presence.

The group now has 193 counters in Zimbabwe after opening four new counters in the half-year to December 2016, while the group has 205 counters outside the country in Zambia, Mauritius, Kenya, Ghana and the Democratic Republic of Congo (DRC).

It has indicated plans to grow store counts, revenue and profits in Kenya, while maintaining optimal performance in countries such as the DRC.

In the Mauritian market, and in Ghana and Zambia, the group will focus on achieving the required scale, as well as seek to turn around fortunes in these markets through marketing efforts, cutting costs, improving efficiencies as well as strategic partnerships where possible.

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