Market watchers have said that the shares could have been bought mainly for speculation and there was scope for the investment fund to buy more. The trading price has moved to US$1,25, with volumes of 4,5 million shares traded as at close of day on Tuesday.
ZHL is the investment and co-ordinating company of a number of synergistically linked subsidiaries operating in Zimbabwe and Africa. Insurance is the group’s core business.
The group is responsible for the overall strategic guidance, direction and support as well as co-ordinating the resource requirements for its operations. ZHL is one of the most undervalued counters on the Zimbabwe Stock Exchange (ZSE), especially considering its stakes in insurance giants Fidelity Life and NicozDiamond, plus the stake in ZimRe Property Holdings.
Trends on the ZSE show that there has been a resurgence in the volume of shares traded in the last two months compared to total volumes traded in the first quarter of this year.
Latest ZSE figures show that a total 964 million shares worth US$74 million changed hands in April and May 2012, while total volumes traded in the first quarter were 799 million shares worth US$119 million.
The increase in volumes is seen as an indicator that investors in general and foreigners in particular have rekindled their keenness to buy into the ZSE, which, according to players in the market, seems to have bottomed out and is now placed for an upward trend.
The ZSE figures show that there was heavy buying into cheaper shares, which may be indicative of investors taking short-term trading bets on share weakness and offloading at firmer prices.
… as work on US$5m housing project set to resume
ZIMRE Property Holdings (ZPI) will soon start work on its US$5 million Adylinn cluster house development project in Harare’s Ashdown Park as the group moves to convert its land banks into trading stock and extract value.
The project is expected to earn US$6,5 million upon completion of the 80 units to be sold at an average price of US$80 000. MD Edson Muvingi said the company was in the process of finalising the necessary statutory processes for the project while also negotiating for the funding.
Muvingi told shareholders at an annual general meeting last week that the group would focus on disposal of its projects as well as grow its portfolio through partnerships for land and finance.
In the first quarter, there had been a dilution of the contribution of rental income to the group’s turnover at 57%, down from 76%, which was in line with the target of 50%. Rental income in the period was at US$887 031, which was 30% above the same period last year.
Muvingi said the contribution of the group’s various projects had moved up to 38% from 21%. Dilution would diversify business risk, the MD said. Construction of houses had started at ZimRe Park Masvingo where a total of 100 stands had been sold to date while 238 stands remained, of which 198 were available for sale.
Muvingi projected total revenue for the current trading year at US$4,9 million, with the rental yield at 41%. The ZPI group had borrowed less than 25% of its borrowing requirements and hoped to liquidate outstanding debts.
The group said it was facing challenges in screening tenants since there wasn’t a credit rating bureau in the country that rated individuals. This meant that property owners had no way of assessing the creditworthiness of new tenants. Although some of the property companies had put together different screening methods, default rates were still high.
The group had evicted 137 tenants through the court process since 2009 as certain tenants failed to make the transition to US dollars. ZPI rental arrears were US$1,5 million.
“Recovery or cash collection is a major issue and high provisions and possible write-offs will remain a challenge in the current environment,” Muvingi said. The group was keeping space vacant for the time being with the vacancy rate at 11%.
Muvingi lamented that while a tenant was contracted to lease space for a defined period, rent was typically not easily adjusted upwards during the lease period. It was therefore difficult to craft lease agreements which would ensure real return for investors, especially in an environment which seemed to favour the tenants more than the landlord, Muvingi said.
Muvingi believed that liquidity constraints in the Zimbabwean market, particularly in the real estate sector, would affect performance of property companies through slower growth in yields and a higher-than-anticipated non-cash adjustments going through the income statement.
— Staff Writer.
— Staff Writer.