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