The Sunday Mail
Enacy Mapakame
Analysts see consumer-oriented Zimbabwe Stock Exchange listed stocks flourishing on the back of improved economic activity which will spur demand as the country gradually relaxes Covid-19 restrictions.
Zimbabwe implemented levels of lockdowns beginning March 30, 2020 to limit the spread of the pandemic and this had an adverse impact on businesses across sectors.
Not only the Zimbabwean economy was affected, but other economies, world over saw a significant contraction in production, with the travel and tourism sector being among the hardest-hit.
But telecoms firms such as Econet cashed in on data and internet services amid increased demand as businesses adopted remote working.
However, as the country continues to relax lockdown restrictions, experts maintain consumer stocks such as Innscor, National Foods, Delta, Simbisa and Afdis are expected to be resilient. Demand for their products is seen rising on the back of improved disposable incomes.
Recovery of the agricultural sector is also a welcome development as requirement for imported raw materials will decrease significantly cutting costs and simultaneously reducing the burden on the fiscus and improving disposable incomes.
In their third quarter report, the Pulse Meter Quarterly Review, stockbrokers IH Securities sees consumer stocks as a preferred option as they have been experiencing real volume growth as seen from earnings reports released for both half year and full year performances.
They are expected to maintain growth in their trading volumes as consumer spend improves on the back of increased economic activity coupled with relaxation of lockdown conditions during the last quarter of the year.
Already, first quarter report for Natfoods shows growth in volume performance with a 24 percent jump to 143 000 tonnes on the back of positive performance across segments.
“Consumer demand has continued on a positive trajectory and this has translated into volume growth across all categories for the period.
“As expected, maize volumes for the recently concluded 2020-2021 harvest were excellent and the 2021 wheat harvest (which is currently underway) promises to be the best in many years,” said Natfoods company secretary Leigh Caroline Howes.
Additionally, the group’s two major capital development projects are on track, with the Bulawayo
Flour Mill scheduled for commissioning late in 2022 and the Harare Breakfast Cereal plant scheduled to be completed by the second quarter of 2022. These are expected to add to the group’s production efficiency.
For industrial giant, Innscor, performance for the previous financial year -FY21- was underpinned by improved stability in the operating environment, allowing for comprehensive pricing models and consolidation of market share.
IH Securities sees the group maintaining this trajectory for the current year as the group has also signed off on US$70 million worth of short-term investment initiatives covering ongoing business optimisation and expansion within existing business units, to be staggered over the coming financial year.
“All things held equal, we are of the view that sales volumes for Innscor will continue firming despite short term instability in the maize meal segments under National Foods. We expect volumes in other light and manufacturing services unit to continue on a defined recovery path at least through to 1H22,” said IH Securities.
Demand is also expected to spike for other consumer stocks such as Simbisa, Delta and Afdis during the festive season which usually sees an increase in spending.
For Axia, its furniture business, TV Sales and Home as well as Transerv are projected to perform above prior year levels. Already TV Sales and Home’s volumes rose 35 percent in the financial year 2021 (FY21) as the business re-introduced credit sales allowing the company to defend market share and grow volumes while increased store network was an added advantage for the group.
In line with this, the group’s volumes and earnings performance for the current financial year are projected to be on the upside a strong recovery in business activity for TV-Sales and Transerv going into the first half of FY22 as the local lockdown restrictions are eased.
Although cases of Covid-19, both new infections and deaths, are going down on the back of massive vaccination programmes the world over, economies are not backing down on digitalization and Zimbabwe has seen adoption of digitalization especially in the financial services.
The increased adoption of digitalization is seen boosting telecoms services providers such as Econet. According to regulator- the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), demand for internet and data services is expected to continue.
During the second quarter of 2021, there was a general growth in internet and data usage. Mobile Internet and data traffic increased by 7,2 percent to 23,436 Terabytes while used international incoming bandwidth capacity also increased by 3,8 percent and this is expected to continue in the near future.
“Internet and data traffic is expected to continue growing due to the increased adoption of e learning, telecommuting and e-conferencing amongst other services,” said POTRAZ director general Dr Gift Machengete in a quarterly update.
