ADVISORY firm IH Securities (IH) has projected a 378,39% increase in revenue for the listed diversified concern Axia Corporation during the 2021 financial year, buoyed by anticipated recovery in consumer spending as tobacco auction floors open.
In an analysis of Axia’s financial results for the half year ended December 31 2020, IH said revenue would rise to ZW$17,5 billion (about US$2 billion at official rate) in FY21.
It said statutory instrument 185 of 2020, which allowed the use of free funds in the trading of local goods and services helped the company to earn foreign currency in the local market, easing the strain from foreign creditors.
“The trading environment in the third quarter was significantly impacted by the level 4 Covid-19 lockdown. However, with the grain selling season and tobacco auction floors opening in April 2021, as well as the relaxed lockdown restrictions, we expect a drastic recovery in consumer spend going into the company’s fourth quarter,” IH said.
“We anticipate that inflationary pressures will ease as the interbank market stabilises foreign exchange rates further boosting consumer confidence.
“Management’s strategy to take control of their value chain and focus on local products will aid in containing operating costs, we expect a marginal decrease in earnings before interest, taxes, depreciation and amortisation (EBITDA) margins from 20,26% FY20 (financial year) to 18% for FY21,” it said.
Going into FY22, the advisory firm expects margins to return to historical averages.
IH said they anticipate a 325% growth in EBITDA to ZW$3,1 billion (US$37 million) from ZW$741 million (US$8,8 million).
“Resultantly, we forecast net income attributable to shareholders to rise 133,90% year-on-year to ZW$ 1,2 billion (US1,4 million),” it said.
“The depreciation of local currencies in Zambia and Malawi remains a cause for concern as they negatively impact the net assets of the consolidated business. Given the continued drive to reinvest in the earning capacity of the business, dividend pay-out ratio is forecasted to remain below 20% for FY21 and FY22.”