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Barbican Asset Management

NTS splendid performance expected to continue

Background NATIONAL Tyre Services (NTS) is a company in the transport sector that majors mainly in the retailing of tyres.

rial, Helvetica, sans-serif”>The company is divided into two major components – the manufacturing wing and the retailing side.

The company is also the largest re-distributor of Dunlop Zimbabwe.



The shareholding structure of NTS is mainly made up of the corporate.

This is smart testimony to the confidence that investors have in the company.

The top five shareholders of NTS are corporate which take more than 75% of the total shareholding structure.

Financial performance

For the six months to June 30, the company posted a 377% increase in turnover from $1,8 billion during the same period to $8,8 billion this year.

This was a commendable performance achieved in a difficult environment. Profit after tax rose by 618% to $1,9 billion from $273 million the previous year.

This was well ahead of inflation that hovers around 400%.

Earnings per share went up by 613% to $8,17 this year from $1,15 during the same period last year. Return on equity during the period under review stands at 60,5% compared to 42% the previous year. Gross profit margin rose to 44% up from 35% the previous year.

The company managed to grow its balance sheet by $2,7 billion.

Return on assets was also on the up side from 20% during the same period last year to 34% during the period under review.

Given the current fuel shortages which imply less usage of tyres, the performance by the company should be commended.


The continued unreliability of the National Railways of Zimbabwe (NRZ) puts the group in a better position as this has significantly increased the use of road transport.

In the past few years, NRZ service has been on the decline in terms of reliability as witnessed by a number of accidents and delays.

NTS offers the most reputable brands in the market especially the imported brands of Regal, Yokohama and Firestone.


The current fuel shortages have negatively impacted on the group’s turnover.

Most private vehicles have remained parked at home due to unavailability of fuel. As a result, tyre usage has been on the decline.

The decline of the agricultural and mining sectors has done more harm than good. It is however, worth noting that the company has strived to increase its sales volumes by improving the quality of retreads.

Retreads are generally cheaper and affordable especially under these difficulties economic conditions.


Currently, NTS is trading at a historic P/E of 4,9. The company has been able to grow its earnings at an average growth of 613% in the past year.

Given that the group can even perform better in future, the counter is trading at a forward P/E of 2,2x. This is smart testimony of a cheap counter.

To further consolidate our argument the counter is trading at a historic P/E of 4,9 compared to the peers in the industry that are trading at historic P/Es of 18.


In our books, NTS is rated a buy.

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