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TN Bank share highly priced

Staff Writer

TN Bank listed on Wednesday as the second most priced banking counter on the Zimbabwe Stock Exchange (ZSE), at a trading price of 32.08 US cents a share. The most heavily weighted counter in the sector, ABC, has recently been trading around 55 US cents. TN is also the fourth capitalised bank on the exchange, at US$44,45 million, ahead of FBC at US$38 million and ZB Holdings at US$17 million. Telecomms company Econet is the major shareholder in the new group, with a 45% of the bank’s issued share capital after it invested US$20 million.
TN Holdings said the demerger of TN Bank from the holding company would correct the perception that TN Bank had strayed into non-core activities.
TN Bank will continue to exploit the synergies that exist with TN Holdings’ business units, although there will be clear red lines separating the operations of the businesses, CEO George Nyashanu said at the listing ceremony.
The demerger will allow the bank to have a separate specialised head office whose focus will not stretch across a large number of diversified business operations.
TN Bank demerged from the holdings company through the issuance of 76,2 million TN Bank shares at a subscription price of US$0,0000001 per share at an allotment ratio of one TN Bank for every 10 TN Holdings Ltd ordinary shares held. The 30,3 million ordinary shares held by TN Financial Holdings were converted into 3,03% non-cumulative preference shares with a nominal value of US$1 per share.
In terms of operations, Nyashanu said the group would soon open a new branch in Chinhoyi, bringing the branch network to 28.
In a trading update last week, TN Holdings management said revenue in the first half was expected to be 55% of the December year end figure of US$54,52 million and profit was expected to be 51% of December’s $3,2 million.
Nyashanu said the main contributions to revenue would come from the furniture division and TN Bank. The other smaller subsidiaries were profitable while TN Grill, TN Mart and TN Harlequin Luxaire Zambia were expected to break even by year end.
Operating costs were expected to be 62% of US$30,7 million, driven by the continued branch roll-out, the National Employment Council 12% increment for furniture-manufacturing employees and the occupancy costs of the expansive distribution network.
Nyashanu said the launch of retail operations in the Rufaro Marketing shops and the expansion of the product range in the second-half would result in an increase in revenue per square metre.
Lifestyle Holdings CEO Tawanda Nyambirai said several cost-cutting measures had been put in place in a bid to improve the company’s margins.
The company’s debtors’ book declined between January 2012 and March 2012 due to the temporary suspension of the credit sales in order to manage the company’s cash flow position. Credit sales had resumed in April. Nyambirai said the target was to keep the arrears of the debtors’ book below 3%.
Lifestyle Holdings, with a market capitalisation of US$19,05 million, traded at 2,5 US cents at the listing.
Nyambirayi told analysts and shareholders at the AGM and EGM last week that he did not believe the market was attributing the correct valuation to TNH shares.
“We do not believe that the market has been reflecting the true valuation of the company’ s shares.The shares have been trading at close to or below net asset value. As such we expect the demerger to unlock some of that value for our shareholders. In fact we are grateful to have shareholders like Econet who have shared our vision and ascribed a higher value for the bank’s shares,” Nyambirai said.



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