ZIMSUN Leisure group’s solid run on the market came to a halt on the back of the listing of its demerged company Dawn Properties on the stock exchange on Tuesday. <
Zimsun’s shares retreated a massive $60 to trade at $120 on Tuesday as analysts remained sceptical on the future of the company’s prospects without the assets transferred to Dawn Properties.
The leisure group transferred its 10 hotel properties but retained a 19,99% stake in the new company.
The company would also pay rentals to Dawn Properties on turnover basis.
The fall in the Zimsun share comes in the wake of market concerns that there might be duplication of value.
This according to analysts has led brokers to push Zimsun Leisure’s share price on the market.
“The market had pushed the share to $120 because there was general anticipation in the market that Dawn would list at about $60 a share,” said an analyst with TN Financial Services.
“The logic in the market is that the total value of the two shares would have been at $180 – the value of Zimsun share last week.”
He said brokers were still reluctant to separate the value of the two companies.
The properties company listed at $81, significantly beating market expectations that had valued the share at an average of $68.
The demerger means Zimsun would become a brand management company concentrating on hotel management.
Zimsun would operate in the same mould as Cell-C, a South African telecoms company that does not own network infrastructure but manages brand.
Chief executive officer Shingi Munyeza said he believes the transaction would enhance group value that has been embedded in the hotel buildings that are dotted in strategic resort areas around the country.
He said there was nothing new in the recent move and demerger would not affect the value of Zimsun Leisure.
“We have been preparing for the rentals,” he said.
“There is nothing new because the group is currently paying rentals for Kingdom Hotel and Holiday Inn Bulawayo. We will achieve real growth as a hoteling company.”
Under the lease agreement, Dawn will receive around 10% of Zimsun Leisure’s turnover as rentals.
Dawn chief executive officer Mike Manyika said the company would expand its scope in property development through strategic partnerships with other companies.
He said talks with interested companies were already underway to venture into the property market as a combined force.
Meanwhile, the Zimsun shares are expected to firm in the near future as the market digests the implications on the unbundling of Dawn.
“There is still value in the leisure group. Zimsun could expand through management contracts. The share will recover in the short-term,” said an analyst with Interfin.