Hundreds of millions in losses to sweep across BSE

Marching through: The BSE has shed about five percent this year, lower than other exchanges on the continent
Several companies listed on the Botswana Stock Exchange (BSE) have officially warned their investors to brace for hundreds of millions of pula in losses, as the first indications of COVID-19’s impact on business profitability become clear.

Listed companies, according to the BSE’s rules, are required to publicly notify shareholders whenever their upcoming financial results will reveal profit movements of up to 10% compared to the previous reporting period.

While the pandemic is known to be wreaking havoc on companies, the figures coming from the listed companies provide the first numbers showing the impact COVID-19 has had on business operations, particularly amongst the country’s larger companies.

The Botswana Telecommunications Corporation has told its shareholders to expect pretax profits for the year ended March 30, 2020 to fall by up to 35% or P69 million. The Corporation, which boasts one of the BSE’s highest concentrations of retail (individual) investors, posted pretax profits of P197 million last year.

The telecomms group recently told shareholders that the impact of the pandemic would be “pervasive”.

The country’s largest hotel chain, Cresta Marakanelo, meanwhile, has warned its shareholders to expect pretax income for the half year to June 30, 2020, to reflect a drop of up to 460% when compared to the corresponding period last year.

In the year to June 30, 2019, Cresta recorded pretax profits of P12.1 million and the forthcoming results are due to show as much as P44 million in losses.

“The decline in profitability is as a result of the COVID-19 pandemic which led to reduced demand for accommodation and conferencing in the Company’s hotel properties in March,” Cresta directors said in a notice to investors.

“A national lockdown resulted in the closure of the hotels for normal operations from 2 April 2020 to 4 June 2020.”

Investors in tourism group, Chobe Holdings,

are also set for hard times as research by Stockbrokers Botswana (SBB) indicate that their shares are currently overvalued.

By Wednesday afternoon, Chobe Holdings’ value had dropped by P108 million since the beginning of the year and analysts say the share price still has to fall by 4.5 percent more to reach fair value or target price.

“While the outlook is extremely uncertain given the unknown length of border closures and travel restrictions, we have conservatively assumed that borders will remain closed for the full year to February 2021 and that domestic tourism will be the sole driver of business for the full year 2021 with reopening of borders occurring in full year 2022,” the analysts said.

SBB researchers estimate that Chobe’s pretax income for the year ending February 2021 will indicate a loss of P118.6 million from the profit of P133.3 million for the year ended February 2020.

Chobe MD, Rodney Gerrard, last week bought more than 21, 000 of the group’s shares on the open market, taking advantage of the lower prices and signalling his confidence in the group’s outlook to other shareholders.

Despite its resilience earlier in the year, the BSE is gradually reflecting the damage other global equities’ markets have been suffering as a result of the COVID-19 pandemic.

By Wednesday, the BSE’s main platform, the Domestic Companies Index (DCI), had shed five percent in the year to date.

The DCI rose by about 1.5 percent between January and March, when other global exchanges were in flux, before falling from that period, weighed down by the local lockdown.




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