HomeLocal NewsCovid-induced demand for food to spur Seed Co

Covid-induced demand for food to spur Seed Co

SHAME MAKOSHORI

VICTORIA Falls and Botswana Stock Exchange-listed Seed Co International Limited (SCIL) is to lift full-year revenues to March 2021 by 23% as regional countries, terrified by potentially dire outcomes of a blazing pandemic, beef up food reserves in preparation for the worst, according to a report by analysts at Inter Horizon Securities (IH).

The Covid-19 scourge has returned with a more dangerous second wave in the past few months, forcing African governments to ground economies, and compromising their abilities to produce food to feed the continent’s estimated 1,3 billion citizens.

IH’s projections fit well into SCIL’s plan to make fresh inroads into Africa’s biggest markets including South Africa, where it is scaling up market share to 10%.

“We forecast a 22,8% year on year growth in revenue to US$87,60 million for FY21 (full year 2021) up from US$71,36 million in FY20,” IH said in an analysis which followed half year financial statements released last week.

“We anticipate food security to remain a priority on nations’ agendas and continue driving seed demand. The second half of fiscal year 2021 is expected to register better performance than the previous comparable period as normal-to-above-normal rainfall forecasts will further enhance seed demand. The company continues to make inroads into new markets in Angola, Mozambique, and Ethiopia as well as several countries in West and Central Africa. In South Africa, the company is targeting 10% share of the market, which will be achieved through its joint venture project with Limagrain and K2. Currency headwinds in regional markets are expected to persist. However, the impact will be offset by the predicted high demand which translates to high revenue growth rate.”

IH expects SCIL’s to push gross margins to 50% in FY21, up from 48,9% in FY20 while earnings before income, taxation, depreciation and amortisation will hit US$19,27 million during the period, compared to the US$15,53 million previously.

SCIL’s footprint can be traced across several African markets, and it reports in the United States dollar.

SCIL has announced intentions to reverse acquire Seed Co Limited (SCL), its Zimbabwe based shareholder, with the consolidated vehicle trading its stock on the Victoria Falls Stock Exchange (VFEX) where the pan-African giant became the first counter to list when the bourse opened on October 26 last year.

Last week, SCL directors scaled up the long cherished plan to consolidate regional and domestic operations following the group’s partial unbundling last year.

The pan-African seed firm operates under two wings — the Zimbabwe Stock Exchange (ZSE)-listed SCL, which serves the domestic market and SCIL, which has been on an aggressive regional incursion since establishment in Botswana 20 years ago.

The foreign operation has a primary listing on the Botswana Stock Exchange and a secondary listing on VFEX.

Until October 26, SCIL had traded its stock on the ZSE. Under the consolidation plan, SCIL offered to take full control of SCL and delist it from the ZSE. The offer closes on February 3.

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