After PW, TBL there comes Africa Barrick Gold!

   After long period of IPOs scarcity since 2008 through 2010, this year 2011 has shown recovery of IPOs and cross-listing. Nation Media Group(NMG) cross listed early this year, Precision Air(PW) IPO and TBL's Mini IPO. However cross-listing on DSE has remained a window for boosting cross-listed companies image rather than for trading(exchange) and raising capital. There are few transactions on cross listed counters and some have seen no single transaction since being cross-listed.
  After TBL's Mini-IPOs there comes Cross listing of African Barrick Gold(ABG) on Dar es salaam Stock Exchange(DSE) which may become the most valued shares following their price of around Tsh14,000 per share. ABG listed its shares on London stock exchange in the beginning of 2011 and expects to cross-list its shares on DSE. This will be an opportunity for local investors to own Africa Barrick Gold which operates four mines in Tanzania being Bulyanhulu, Buzwagi, North Mara and Tulawaka.

          According to the news on Africa Barrick Gold web, Cross-listing will be on 7th Dec. 2011. However, following the structure of ABG only 25% is listed on London Stock Exchange(LSE) and the rest holding is under Barrick Gold. This means a small portion of listed shares in LSE will be traded on the DSE which may end up in a cross-listing trap like most of the Kenyan Cross-listed companies.

Fundamentals as on 31 Dec 2010 shows that ABG is far expensive compare to other Listed companies on The DSE. With PE of 18  and dividend yield of 0.50% the stock is already very expensive with comparison to the just ended Mini-IPO of TBL. Tanzanians were not  allowed to participate in the earlier London IPO in the month of March 2011 at a price of 575pence  therefore they will be having advantage given that ABG share price is trading at discount price of 485.61 pence as on 25/Nov/2011 compare to March 2011 IPO price of 575pence a piece.

    Price of gold has appreciated enormously since 2000. As per the chart above Gold has been on the upper trend since 2000 to-date, from a price of USD300 an ounce to current price of USD 1,680 per ounce(an ounce is approximately 27.1grams). Following current economic crises most rich investors and nations buys gold bullion and gold stocks to hedge against weakening assets and risky currencies.
    We are looking forward to see what more surprises would gold prices bring to us.  With current higher prices we are probalbly at a brink of downward trend would the Eurozone economic crisis challenges be well mitigated.  

Regards,
Emmanuel Akyoo                                          

TBL's Mini-IPO Running!

After Precision's IPO of which results are yet out there comes a brewer TBL for the thirsty investors! It was thirteen years ago when TBL was listed at DSE at Tsh 550 a share. This time mini-IPO comes as a result of East African Breweries Limited's(EABL) pull out of the joint venture for production and distribution agreements. Fair Competition Commission required EABL to offload her 20% ownership in TBL after it acquired a majority shareholding(51%) in Serengeti Breweries Limited(SBL). It could impair fair competition for East African Breweries to own both companies.
    For Investors this is another opportunity to own Tanzania's largest brewer at a fair price of Tsh.2060 per share. Last year's result show that TBL earned Sh297/share which implies 14.41% return on 2060 price. Given the fact that the business is growing tremendously we expect 2011 financial results to be more impressive. At earning of Tsh356.4(20% increase) in 2011 the shares will even be more valued. The Mini-IPO gives a PE of 6.93 which is lower compared to peer companies valuations. At PE of 10 the company would be valued at TSh 2,970 per share.


 Prior to this Mini-IPO, TBL counter at DSE was characterized with lower supply and higher demand which could not be satisfied. Following this IPO there is going to be additional 20% in the supply side if the shares would not go into the hands of institutional investors who are normally long term investors. Individual investors will influence the market to search for a fair market price. Many analysts values TBL shares at Tsh3,000 following its long history, good performance, reputable brands and macro-economic indicators.
  However, this divorce implies fierce competition between the two big brewers in the Tanzanian market. For Consumers we are going to experience a lot of promotions and several PR events. Despite the competition there is steal a big room for both to grow in profits given the fast growing market of boozers and better economic prospects for the East Africans.  
   Its time for boozers to channel part of their resources into this Mini-IPO which comes for a second time. Teetotalers could also invest in this to ensure that they have a stream of income from the beer takers.
   Finally, this article is for public information and its not intended to offend anyone, its judgement and analysis is purely based on business opportunity not otherwise.


Regards,
Emmanuel Akyoo