Homegrown pan-African microlender, Letshego Holdings, has seen its share price rise by about 56% on the Botswana Stock Exchange (BSE) this year, with consolidations in executive management and a 20% jump in interim pretax profits driving investor appetite.
Stockbrokers Botswana research analyst, Malebogo Keleapere told BusinessWeek that Letshego still has upside potential. Stockbrokers Botswana’s last analysis of the microlender, conducted in May 2020, indicated a target share price of P2.10 per share.
“Letshego has been trading below its target price mainly due to dampened investor sentiments as it was being punished for its management issues,” she said. “Now with a robust and well-experienced team in management, the company’s prospects are positive and so are investor sentiments, hence the upward trend in the company’s share price.”
After reaching its previous highs in mid-2019, Letshego eventually ended that year down by a mammoth 57% as the market reacted to the sudden exodus of top executives including the group managing director, group financial officer and a chief executive officer (CEO) who only spent six months on the job.
Amidst speculation that the departures were due to disagreements over the group’s strategic direction, Letshego’s board brought in Dumisani Ndebele, a veteran executive who had previously served 17 years in the group, to steady the ship as the interim group CEO.
In January 2020 Andrew Okai, formerly Standard Chartered's global chief operating officer, was brought in as substantive CEO to lead the rebuilding of executive management and guide a new strategy.
Letshego was able to shrug off the effects of COVID-19 and in the six months to June 2021, grew its balance sheet grew by 25% to P13.34 billion and pretax profits by 20% to P544.1 million. Much of Letshego’s performance has been linked to an aggressive digitisation strategy, with the Letsgo App rolled out in 10 of the 11 countries the microlender is present in. The Letsgo App enables existing and new customers to register online, access new deductions at source lending solutions and update account information via their mobile phones.
“Transactional volumes are expected to rise due to the ease of transacting owing to their LetsGo Mall App,” Keleapere said.
For his part, Okai told a recent briefing on the interim results that while the share price movement was dependent on investor appetite, the group had some insights into why Letshego was on the rise.
“As we speak to our investors on why they are showing that interest, the two things are performance and confidence in the strategy,” he said. “The feedback is that they support the digitisation agenda and our strategy. “They continue to see that while we are building and working on the strategy, the idea of not dropping the ball in the performance of the company is something they appreciate. “The return on shares in the last year to 18 months has been phenomenal and quite ahead of the benchmark peers.”
The group declared a dividend of seven thebe for the six months to June 2021, compared to about four thebe over the corresponding period last year.