What's happening..............

in Sub Saharan Africa at the moment?

I ran into colleagues of mine over the weekend and I discovered that we all think along the same lines regardless of whether we correspond or interact over issues relating to investment. More often than not, we all believe in investing but are many times dumbfounded when the issue of what to invest in comes up. Nevertheless it was quite nice and intuitive to exchange ideas over the various investment opportunities that are on the table at currently.

Safaricom, the hottest potato at the moment is in its last week with the closing date for applications for individual investors being effectively a week from now (23/4/08). Much has been said about this IPO. Issues such as under/oversubscription, who the hell is Mobitelea, Impact on the Nairobi Stock Exchange and Uganda Stock Exchange, First on line application process in East Africa cetera, cetera. I've personally been privy to the prospectus (as is every eligible potential investor out there) and also IPO research reports and investment recommendations from some respected investment advisors out there. All I can say is that they all seem to say is that they all recommend Safaricom as a long term buy. But the simple advice, without going into technobubble is that one can never go wrong with African IPOs (more over East Africa at that). Whatever happens, the share price will take some pummelling to fall significantly below Ksh5.

Unfortunately, in my view, the factors all point to an undersubscription but hey what's to lose?

On a sad note, the Bank Of Tanzania denied Tanzanians the right to participate in the IPO by refusing to ease the capital market and foreign exchange restrictions. The restrictions have always been there. I remember trying to invest in Tanga Breweries sometime back and my broker telling me that if I bought any shares, it would result in the proportion of foreign ownership of the company exceeding the statutory minimum required for foreign ownership. Duhhhh, I only wanted a few shares!!!!!!!!!!!!!!!! So much for the East African Community/cooperation blah blah blah.

Unfortunately, the same thing just happened with respect to the Celtel Zambia IPO for which the prospectus is expected to be issued on 28/4/2008. Naturally and as I have just explained, one can never go wrong with African IPOs so if you ask me, this is a very strong buy. Save the numbers for the shareholders general meeting.

In Kenya, the only marketing company listed on the exchange SCANGROUP scared the hell out of investors by filing financial results before 31 March but they ultimately were published in today's papers. As an investor and ex-auditor, I am always skeptical when companies do not abide by a financial calendar since after all, it is only financial statements whose audit follows a set timetable, with board approval and ratification. Hopefully, we'll ultimately understand the reasons for these delays.

On the lookout for IPOs, generally, we expect Cooperative Bank, Transcentury to list this year.

Tanzania's NICOL, a microfinance/investment company is also programmed to list if they can overcome procedural hurdles.

There is also Crane Bank in Uganda which should list in the 3rd quarter.

The pressure is on for Ugandan listed banks to publish their results. Again, I must point out that DFCU Ltd, Stanbic Bank, Bank of Baroda Limited need to explain why their financial statements take so long. By the time they are published (25 April) for a December year end, they are no longer useful to decision makers. But the only positive is that at the end of the day, the chickens must come home to roost. DFCU's mid year results portrayed a really negative picture which prompted one of my favorite bloggers to opine that it felt like the bank staff just went on a hiatus for a whole 1.5 years and hence forced him to cut his losses and run. Ouch..that hurt! But hey, on the bright sight, so many things have happened to the bank this second half of the year. We would expect the new MD's fingerprints to be all over every decision that the bank has taken.The effects of the disposal of the subsidiaries which were not in line with the bank's business strategy and vision completely effected and the gains utilised to good effect thus creating value. Lo and behold, the loan book must have improved unlike in the prior year and mid year period where these had no change except for increased provisions.

We will expect some good news from Stanbic and Baroda. (No stories from these two) And we will definitely expect some dividend growth. Given that the value of listed companies on the USE has quadrupled, the PE ratios of Baroda and Stanbic, which stand at about 15 and 30 respectively tell a story. The implication is that Baroda has some room to manoeuvre with less than ideal results. (Come on we always considered management very conservative). However, Stanbic does not have any room to manoeuvre. With its PE at a high of 30, you'd expect significant growth to support the faith that the investing public has vested in Stanbic.

Otherwise the bull run that has befallen the Uganda Stock Exchange will have a rude awakening as institutional investors start applying their irrelevant fundamentals to a nascent exchange.

Oh, and I was alerted by a friend that the USE has redesigned its website which is great in so doing, the daily trade summaries appear to have vanished. We'll keep looking.