Amstel Securities said LonZim, the London-listed investment company with a prime focus on Zimbabwe, is bound to benefit from the many attractive opportunities that the country offers.
The securities firm said the listing of the diversified firm on the local bourse would bring positive results for the patient investor.
“So far the LonZim share price has suffered from a lack of brokerage coverage, a low liquidity with daily volumes of 150 000 shares and one forced seller recently,” added Amstel Securities.
“As a result LonZim share price has underperformed the local ZSE Index by 20% over the past 12 months. We now have the impression that this may change as an increasing amount of new capital is waiting on the sidelines to be invested in Zimbabwe. This makes LonZim a true diamond in the rough still to be discovered by investors willing to look three years out.”
Amstel Securities said it considered Zimbabwe to be “the final frontier market in Africa”.
“A dual listing will strengthen LonZim’s growth prospects as new investments will become easier and result in maximising shareholder’s value and would give LonZim a good opportunity to play an integral role in the strong revival of the Zimbabwean economy,” said Amstel Securities.
“A Harare listing provides LonZim with opportunities to gain access to new funds while also helping it to implement its current investment plans.”
One of LonZim’s conditions for listing on the local bourse would be full fungibility between AIM (the London Stock Exchange’s international market for smaller growing companies) and ZSE.
“The possible secondary listing on the ZSE will be welcomed by the Harare investment community,” said Amstel Securities. “Local pension funds are likely to be interested in investing in LonZim as the 58% discount to tangible net asset value of LonZim is too high a discount for Zimbabwe’s country risk.”
LonZim is currently capitalised at just 9million pounds (US$14,24 million), while the company has an estimated net debt of US$1,1 million.
Amstel Securities added that Stocks were lowly-rated in Zimbabwe, trading on single-digit price to earnings.
“This is too cheap, taking into account Zimbabwe is just in year two of its economic revival,” said Amstel Securities. “Liquidity remains an issue in Harare with weekly volumes averaging US$2-3million. The only way to get meaningful Zimbabwe exposure is participating in initial public offers and secondary offerings.”
LonZim was incorporated in June 2007 with the main purpose to play an integral role in the economic revival of Zimbabwe.
The investment company has made investments in Zimbabwe and the Beira Corridor, which links Zimbabwe to the Mozambican coast.