Africa expansion buoys Letshego on BSE
Isaac Pinielo | Wednesday March 9, 2016 17:41
A market analyst at Motswedi Securities, Tlotlo Ramalepa said despite a wave of profit taking that had weighed on the counter lately, Letshego has been the most liquid counter since last year.
“This could reflect investor confidence towards the stock, led by the growth outside Botswana to other southern African countries and beyond,” he said.
He noted that the microlender has registered fantastic growth as indicated by attractive (return on equity) ROE measures, huge net interest margins well above its cost of borrowings and capping its cost to income ratio among others.
According to the analyst, in a mission to curb cost of borrowings and also to widen its funding profile, Letshego has been on a mission to seek deposits within its countries of operations, having successfully acquired licences in four countries.
“However, we have seen a tumble in the share price since the beginning of the year which could be a sign of some profit taking and speculations around the expected share buyback. Letshego has shed almost 14 percent on a year to date,” said Ramalepa.
In the course of the profit taking phase, the domestic companies index (DCI) has been on the downside for a seventh straight consecutive week.
During the week ending on Friday 4 March 2016, Letshego traded about 15.7 million volumes which is 92 percent of the total volumes of 17 million worth of P50 million that exchanged hands in that week.
The DCI continued on its downtrend during the week ending 19 February and the volumes thus far reflected an uptrend as appetite on the domestic board increases.
During the week, about 11 million shares worth of P37.3 million exchanged hands with Letshego trading about 6.8 million or 61 percent of those volumes.
Also, in the previous week ending 26 February 2016, Letshego, which just released its year-end results, was the major traded counter, exchanging about 30 million shares or 85 percent of the total volumes.
The DCI closed the week on the downside, with local equities trading about 35.7 million shares worth of P103.7 million, which market watchers say it was one of the highest weekly turnover achieved for the year thus far.
Letshego is now the most liquid company on the BSE, and it is the largest indigenous business.
The group has recently exceeded P1 billion in profit before tax, a two percent increase from the P970 million recorded in the prior year, according to the group’s financial results for the year ended December 31, 2015.
The group’s managing director, Chris Low was quoted as saying that it is the first time that the group’s profit before tax exceeded the billion mark with underlying profitability up five percent excluding foreign exchange differences.
As part of a “transformation phase” the group will rename some of its foreign-based businesses during the year 2016. Apart from Botswana, Swaziland and Namibia, Letshego Holdings has businesses in Tanzania, Mozambique, Uganda and Nigeria.
The BSE-quoted microlender says some of its businesses which include banks in eastern and western Africa that have been operating under different names will be renamed “Letshego”.