Weekly Investor Update (April-WeekTwo-2024)

10 min Read April 12, 2024 at 5:00 PM UTC

Monday

Dividend yield hunt lures BRVM investors to Onatel stock

Burgeoning demand for high dividend yields drove an investor frenzy over Onatel shares on Friday with the stock price soaring by 7.24% to 2,445 FCFA ($4.04). This surge comes afterOnateldelivered the highest return on theBRVM marketat 11.69% over the past year, attracting investors with the highest dividend yield despite low valuation and the company’s recent decline in performance.Onatel’s robust performance led the session, withSociété Générale CI(+1.45% to 17,500 FCFA),SIB(+1.05% to 5,760 FCFA), andBOA Niger(+0.75% to 6,045 FCFA) also posting gains.Conversely,Palmci(-7.50% to 7,400 FCFA),Sodeci(-5.51% to 4,205 FCFA), andSOGB(-5.01% to 3,700 FCFA) experienced the most significant declines among the 26 decreases recorded, outnumbering the 7 increases during the trading session.

Onatel concluded the 2023 financial year on a subdued note. Despite a notable increase in the active customer base (+5% to 11.56 billion FCFA) and internet base (+11% to 7.16 billion FCFA), turnover fell by 4% to 139.15 billion FCFA compared to the previous year’s 145.63 billion FCFA. The operating result contracted by 7% to 33.31 billion FCFA, with the result from ordinary activities at 30.27 billion FCFA. Management, faced with the choice of rewarding shareholders or strengthening competitiveness, opted for dividend distribution. Shareholders will receive a net dividend of 266 FCFA per share, offering the highest yield on the market at 11.69% for a price of 2,280 FCFA, payable from June 15, 2024. However, fully distributing profits to shareholders annually poses a significant risk, potentially leaving the company short of funds for future investments, which could be costly.

Globeleq to build Africa’s largest standalone battery project in SA

UK-based Globeleq, a prominent independent power company in Africa, has announced that its Red Sands project in South Africa’s Northern Cape has been granted Preferred Bidder status in the country’s Energy Storage Capacity Independent Power Producer Procurement Programme (ESIPPPP).Located around 100km southeast of Upington, the Red Sands project was initially developed byAfrican Green Ventures, a South African renewable project development company owned by Norwegian-based energy firmMagnora ASA.Globeleq, collaborating with leading global battery and balance-of-plant suppliers, anticipates an investment of around $300 million for the project’s construction. Following financial close, expected in 2024, construction is estimated to take 24 months.

Battery storage plays a pivotal role in enabling renewable energy generation, addressing energy crises, and combating climate change both in South Africa and globally. These systems offer a dependable power supply on demand, particularly during periods of grid instability, effectively managing the intermittency of wind and solar energy sources. By storing surplus energy during periods of excess generation and releasing it during times of high demand, battery storage helps alleviate the need for load shedding. Experts emphasize the importance of widespread adoption of energy storage in expanding renewable energy adoption and accelerating the transition to a carbon-neutral power grid. This transition is critical for reducing South Africa’s dependence on fossil fuels and advancing towards a clean energy future.

Naira posts another weekly gain as Nigeria’s currency woes ease

Nigeria’s battered currency continued to advance last week – its fourth consecutive week of gains this year – and reached its strongest level against the dollar since being devalued in January.Thenairarallied last week on the official market to close at ₦1,251.05 per dollar on Friday, the latest date for which pricing is available, as investors welcomed a series of policy moves implemented by Central Bank Governor Olayemi Cardoso.The apex bank in March raised the benchmark interest rate by atotal of 600 basis pointsto 24.75% acrosstwo meetingsin response to the country’s rapidly rising inflation. Its overall aggressive strategy, which also includes paying off all foreign exchange backlogs and cracking down on the unofficial market and virtual service providers, has brought about somestability.

Despite predictions forecasting further depreciation of the naira, the currency has shown resilience, defying these expectations. The EIU for instance had anticipated the Nigerian naira to stabilize at around N2,000 per US dollar in the current year. However, prevailing market fundamentals and price trends suggest otherwise. The naira is encountering notable resistance, particularly as the US dollar strengthens amidst robust economic data from the United States. Despite the CBN’s hawkish stance, the naira continues to hover close to a critical support level of N1200/$, indicating the challenges it faces in maintaining its value.

Verod-Kepple closes first fund at $60m to support startups in Africa

Verod-Kepple Africa Ventures(VKAV) has secured $60 million for its first fund, paving the way for investments in up to 21 growth-stage companies across the continent. The pan-African VC reached this milestone with fresh backing from prominent investors including Nigeria’sSCM Capital(formerly Sterling Capital Markets Limited),Taiyo Holdings, andC2C Global Education Japan.This recent capital injection follows previous rounds in 2022 and last year, supported by various investors, notably Japanese institutional players likeSBI Holdings,Toyota Tsusho Corporation, andSumitomo Mitsui Trust Bank.These investments highlight growing confidence in Africa’s venture capital landscape despite ongoing challenges, allowing VKAV to fill crucial funding gaps for series A and B startups amidst limited local capital availability for growth-stage companies.

One of the most significant trends in African tech in recent years has been the notable increase in investment from Asian powerhouses, particularly China. This surge in interest has expanded the funding options for African startups, which had traditionally relied on Silicon Valley and European venture capital firms. However, this trend is now diversifying further with growing interest from Japan, where a mix of early-stage and corporate venture capital investors are exploring opportunities on the continent. Kepple Africa Ventures boasts a portfolio of more than 100 African companies and manages the $100 million Verod-Kepple Africa Ventures fund. Uncovered Fund, founded in Tokyo in 2019, has invested in 26 African startup companies. Notably, blue-chip Japanese companies are also showing increasing interest: Auto giant Toyota via Mobility 54—a VC unit dedicated to investing in African mobility startups—backed the now-defunct Sendy in a $20 million Series B round. Manufacturing giant Yamaha also participated in a $7 million funding round for Nigeria’s MAX.ng.

Canal+ makes mandatory buyout offer for South Africa’s MultiChoice

French media conglomerate Vivendi’sCanal+has made an all-cash mandatory offer to acquire all remaining shares of South African broadcaster MultiChoice for 35 billion rand ($1.9 billion).This offer, priced at 125 rand per share, comes after MultiChoicerejected Canal+’s earlier indicative offerof 105 rand per share on February 1, deeming it undervalued.Canal+, MultiChoice’s largest shareholder, raised its stake in the companyabove the 35% threshold, necessitating the mandatory offer. With its increased stake of 36.6%, Canal+’s new offer values MultiChoice at around 55 billion rand. Following the announcement, MultiChoice shares surged by 3.7% to 116 rand by 0759 GMT.

The proposed deal between Canal+ and MultiChoice aims to establish a pan-African broadcasting giant, boasting approximately 31.5 million subscribers spread across over 50 countries. This move positions the combined entity to leverage African content for global audiences and compete on a larger scale internationally. While Canal+ has a significant foothold in French-speaking African nations, MultiChoice’s strength lies in English-speaking countries like South Africa, Nigeria, and Kenya. With Africa’s rapid adoption of broadband and mobile internet, coupled with the increasing prevalence of smartphones, Canal+ anticipates significant shifts in the continent’s media and entertainment landscape, signaling a transformative period ahead.

Zimbabwe’s new ZiG currency gains on second day of trading

Zimbabwe’s new gold-backed currency, the ZiG, showed signs of strength on the day after its debut, despite causing disruptions in commerce as businesses scrambled to adapt to the new unit. It saw a slight improvement, gaining 0.2% to 13.53 per US dollar compared to its initial rate of 13.56 per dollar.Governor John Mushayavanhu announced this exchange rate duringthe currency’s unveiling last Fridayas part of Zimbabwe’s ongoing efforts to establish a stable local currency. Businesses have until April 12 to fully transition their electronic systems to ZiG, Mushayavanhu said at the weekend.TheInternational Monetary Fund(IMF), while urging the liberalization of the exchange rate in February, expressed support for Zimbabwe’s latest measures to restore macroeconomic stability. However, the IMF noted the need for time to assess the design and implications of the new currency arrangement before providing a comprehensive evaluation.

The ZiG, short for Zimbabwe Gold, marks the country’s sixth attempt to revive its national currency. Its predecessor, the Zimbabwe dollar, faced consistent depreciation throughout this year before being officially abandoned on April 5th. Backed by 2,522 kilograms of gold and approximately $100 million in foreign currency reserves, as declared by the central bank, the new currency aims to instill stability. However, the transition from the Zimbabwean dollar to the ZiG has encountered challenges. Many banks and businesses are still in the process of updating their systems to accommodate ZiG transactions. Only a third of the 27 financial institutions connected to the ZimSwitch national payments platform are currently equipped to handle ZiG payments, highlighting the hurdles in adopting the new currency.

WeBuyCars debuts on Johannesburg Stock Exchange after $416m IPO

Transaction Capital’s WeBuyCars saw a successful debut on theJohannesburg Stock Exchange, indicating a potential uptick in market activity.The used-car firm opened above itsinitial public offeringprice, with shares trading at 20.50 rand, signaling investor interest.WeBuyCars, commanding a 10% to 12% market share in South Africa, aims for 23% by 2028 and plans to increase monthly car sales from 14,000 to 22,000.With expansion plans including new branches and buying pods, the company anticipates growth in key regions like Rustenburg, Bloemfontein, and East London.

WeBuyCars’ listing marks the second on the JSE in 2024, with others like Pick n Pay, discount grocer Boxer, and food producer Rainbow Chicken considering listings. WeBuyCars was spun off from Transaction Capital to unlock value, providing investors with direct access to the secondhand car market. Transaction Capital plans to use the proceeds to settle holding company debt, showcasing a strategic move to streamline operations and optimize capital allocation.

Banks, stock exchange make switch as Zimbabwe’s ZiG continues rally

Zimbabwe’sZiG currencycontinued its ascent against the dollar for a third day as more businesses transitioned to using it for transactions.Around 20 out of 27 financial institutions have adjusted their systems to process electronic payments in ZiG, as reported by the national payments platformZimSwitch. In addition, theZimbabwe Electricity Supply Authorityhas shifted its payment processes to ZiG. This marks Zimbabwe’s latest attempt to establish a stable local currency.TheZimbabwe Stock Exchange(ZSE) is also recalibrating all its indices in response to the introduction of the new currency, ZiG. All ZSE indices will be re-based to 100 basis points in light of this change.

The introduction of ZiG, or Zimbabwe Gold, represents the nation’s sixth attempt to revive its currency. Its predecessor, the Zimbabwe dollar, faced consistent depreciation before being abandoned in April. ZiG is backed by substantial gold reserves and foreign currency holdings, signaling stability aspirations. However, the transition faces hurdles as many banks and businesses are still updating systems for ZiG transactions. Only a third of the financial institutions connected to the national payments platform are equipped to handle ZiG payments, underscoring the challenges of adopting the new currency.

Tractafric Motors rebounds from three-day decline to lead BRVM rally

The BRVM stock market sustained its upward trajectory, marking its third consecutive day of gains. Notably,Ecobank CIandOnatelshares led this trend with notable increases.As a result, theBRVM Composite indexclosed with a modest growth of 0.09%, reaching 218.79 points. This positive momentum extended to both the BRVM 30 and BRVM Prestige indices, which also saw slight improvements.Tractafric Motors CIrebounded strongly from previous declines, leading the session with an increase of 7.14%. Conversely,Sicable,Société Générale CI, andBernabéexperienced declines, registering the lowest performances for the day. Overall, the market’s resilience reflects growing investor confidence and optimism in the region’s economic outlook.

At the close of Thursday’s trading session on the BRVM, market activity surged with a total of 95,205 shares exchanged, amounting to a market value of XOF 435,930,990. This represents a substantial improvement compared to the previous trading day on April 9, with a 41% increase in volume and a remarkable 73% increase in turnover. The BRVM Stock Exchange’s current market capitalization stands at XOF 8.14 trillion, reflecting the robustness of the regional market. Of the 41 equities listed on the BRVM, 12 ended the session with gains while 11 registered losses, underlining the dynamic nature of the market. Overall, these figures demonstrate a buoyant trading environment and investor interest in the region’s securities.

This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients. Daba is not engaged in rendering tax, legal or accounting advice. Please consult a qualified professional for this type of service.