Twiga cement registers 10pc pre-tax profit increase
THE Tanzania Portland Cement Plc (Twiga) has posted a pre-tax increase of 10.2 per cent in this year’s first half, thanks to production cost control measures.
The oldest cement manufacturer in the country’s financial statement shows that the pre-tax profit increased to 72.02bn/- in the first six months of the year from 65.3bn/- raked in a similar period last year.
Twiga Chairman, Mr Hakaan Gurdal said in a published statement yesterday that despite the cement demand growing slowly this year, the company will continue delivering strong operation results, aiming higher in the future.
“Despite the cement demand growing slowly this year, we are optimistic about the second half of the year, Twiga will continue to work on improving efficiency and operating performance,” the chairman said.
Additionally, the Dar es Salaam-based cement firm posted a net profit increase of 6.3 per cent to 50bn/- compared to the 47.05bn/- of the first six months last year.
The listed firm on Dar es Salaam Stock Exchange (DSE) also said the profitability was attributed, not only to cost-cutting measures but also increase in revenue. Twiga was trading 4,120/- by yesterday-noon.
The statement showed that the revenue went up by 8.0 per cent to 246.28bn/- from 227.51bn/-, however over half was chewed up by the cost of sales.
“This increase is mainly due to the process improvement and cost control in our production. The company has experienced a rather stable growth of sales volume and revenue compared to the same period in 2022,” Mr Gurdal said.
During the period under the review, Twiga over tripled the net gain from foreign currency translation to 3.97bn/- from 1.05bn/-.
“On top of the operational excellence, the company continued to improve in the area of health and safety, with zero loss of time to injury recorded in 2023,” the chairman said.
Twiga is one of the large cement manufacturers in the country, producing three brands of Portland cement -Twiga Ordinary, Twiga Plus+ and Twiga Extra. The first bag of cement was produced in 1966 and in 2014, the factory expanded and increased its manufacturing capacity to 2,000,000 tonnes per year.
Key Insights – FinScope Tanzania 2023
FinScope Tanzania is a comprehensive financial sector demand-side survey of Tanzanian adults aged 16 years and above. It provides an understanding of the financial services uptake landscape across the country and is a reliable measure for demand and usage of financial services across various population segments. Further, FinScope Tanzania’s insights clearly present barriers and levers to financial inclusion. The survey oversight is a a public-private sector collaboration – spearheaded by the Ministry of Finance and Planning Tanzania and Zanzibar and Bank of Tanzania, the Financial Sector Deepening Tanzania (FSDT), National Bureau of Statistics (NBS) and the Office of Chief Government Statistician Zanzibar (OCGS).
FinScope Tanzania 2023 is the fifth wave in the FinScope Tanzania series with previous waves in 2006, 2009, 2013 and 2017.
BoT issues licence to new payment service firm
By The Citizen Reporter
Dar es Salaam. The Bank of Tanzania (BoT) has permitted an African digital payments provider, DPO Pay, to operate as a Payment Service Provider in Tanzania, the company said in a statement yesterday.
The DPO is registered locally under One Payment Tanzania Limited.
The company has been licensed in line with the National Payment System Act, 2015 which requires all Payment Service Providers (PSPs) to undergo a rigorous license application process to provide payment services in Tanzania.
DPO Pay managing director, Judy Waruiru said the license highlight the firm’s commitment to compliance and regulatory standards.
“This milestone demonstrates our dedication to driving financial inclusion and economic growth in Tanzania, empowering businesses of all sizes to thrive in the digital era.
“We will continue to prioritise the security of transactions, adhering to stringent data protection protocols and industry best practices,” Ms Waruiru said in the statement.
DPO Pay says it has been operating successfully throughout Africa since 2006 and was recently acquired by Network International, a leading enabler of digital commerce across the Middle East and Africa (MEA) region.
Analysts say financial results will drive DSE activities
By Daily News Reporter
THE turnover of the Dar es Salaam Stock Exchange (DSE) is projected to increase in the coming weeks as companies start to release their quarter two financials.
The investors are banking on the firms’ good performance to make their next move to place investments where they will maximise their returns.
Vertex International Securities said in its weekly market review that it projected the turnover and volume to increase in the coming week, pushed by counters with stellar performance.
“We expect an increase in turnover and volume next week as financial counters such as NICO may drive up market activities, following the release of strong financial results,” Vertex said.
Last week trading activity decreased by 30.29 per cent to 550.72m/-, despite some counters to register price appreciations.
DCB Bank, according to Zan Securities market wrap up report, led the way with a remarkable surge of 7.14 per cent, closing at 150/- per share. SWISS followed after recording a 6.67 per cent increase to close last week at 1,600/- per share. NICO experienced a 5.56 per cent increase to 475/- per share. TPCC saw a 3.0 per cent increase to 4,120/-.
“Looking ahead,” Zan report said, “we anticipate heightened market activities in the upcoming weeks, as companies prepare to release their second-quarter financial reports. This is expected to generate increased interest and trading in the market.”
The banking sector saw an increase of 0.07 per cent where the Bank, Finance, and Investment Index closed at 3,932.18 points, while the industry and allied sector showed an increase of 0.30 per cent at 5,122.32 points and commercial services closed at 2,159.53 points which shows an increase of 0.20 per cent.
Both the All Share Index and the Tanzania Share Index (TSI) increased by 0.55 per cent and 0.21 per cent, respectively.
“These changes were primarily driven by an increase in prices of cross-listed shares and domestic counter prices,” Exodus Advisory’s weekly capital market report said.
On a quarterly basis, DSE saw positive developments during the second quarter of this year in terms of increased activities and market value of listed securities.
“The market saw a net positive growth on its domestic listings, while the total capitalization, which includes cross-listings from Nairobi, took a hit as the DSE continues to outperform the region,” Alpha Capital said in its weekly financial market digest.
The Tanzania Share Index (TSI), which exclusively represents domestic listed equities, slightly went up by 0.25 points to 4,091.81 points despite companies closing the quarter deep into ex-dividend periods. The growth is equivalent to 0.09 per cent of the domestic market capitalisation while the major movers of the first quarter saw a drop in prices in the second quarter.
Is it worth putting investments in DSE?
Is it a worthwhile investment to put money into the Dar es Salaam Stock Exchange?
Judging from the performance of different stocks on the exchange and the performance of unit trusts that include equity stocks, one can confidently answer, YES, it is indeed worth it.
Upon reviewing the past six months, we can observe several stocks that have shown exceptional performance.
Leading the pack is Tanga Cement, which has experienced a remarkable increase of 64 per cent. This surge is attributed to investors speculating on the company’s potential acquisition by Scancem International DA, a subsidiary of Heidelberg Cement AG, which already owns Tanzania Portland Cement Plc (Twiga Cement).
Despite Tanga Cement’s recent financial report indicating a significant loss of 22bn/- last year, this hasn’t deterred investors who are eager to acquire its shares in the hope of selling them later at a profit.
It’s important to note that the impressive growth of Tanga Cement is primarily driven by investor sentiment and behaviour, rather than the company’s underlying fundamentals.
NICOL, a closed-ended fund listed on the DSE, has also experienced a remarkable year. In the past six months, its share price has risen by 38 per cent. The main driving force behind this impressive performance is the fund’s strong fundamentals and exceptional portfolio.
Last year, NICOL witnessed a substantial increase in total investment income, soaring by 46 per cent to 8.3bn/-. The primary contributor to this growth was dividend income, accounting for 64 per cent of the total.
Notably, NICOL’s equity holdings in NMB resulted in a significant dividend payment of 5.1bn/-, representing 60 per cent of the company’s total income and an impressive 96 per cent of its dividend income.
Interest income also experienced a notable increase, rising by 36 per cent to 2.99bn/-. The majority of this revenue came from holdings in 20-year government bonds, which contributed 71 per cent of the interest income.
Additional sources of interest income included 25-year bonds, fixed deposits, and interest on normal bank balances.
NICOL’s total assets underwent substantial growth, increasing by a significant 70 per cent to 127.6bn/-. This growth was mainly attributed to an expansion in government bond holdings.
The company recently diversified its portfolio by increasing its government bond investments, resulting in a twofold rise in bond holdings from 15bn/- in 2021 to 35bn/- last year. Despite this growth, equity holdings still make up the majority of NICOL’s portfolio, accounting for 65 per cent of total assets.
A closer examination reveals that NICOL’s equity portfolio is heavily concentrated in its NMB holdings, constituting nearly 93 per cent of the company’s equity investment portfolio.
This implies that investors holding NICOL shares indirectly hold NMB shares at a discounted rate. In fact, when considering both equity and bond holdings, NMB holdings account for 60 per cent of NICOL’s total investment portfolio.
Consequently, NICOL’s share price should ideally trade at a minimum of 60 per cent of NMB’s price, with a range of 1,700/- to 2,000/- per share.
In addition to NMB, NICOL’s equity investment portfolio includes TPCC, Swissport, Tanga Cement, CRDB, DSE, TBL, Vodacom, and TCC. However, the company has recently shifted its focus and diversified into government bonds, with a particular emphasis on 20 and 25-year bonds.
As of now, NICOL’s net asset value stands at 1,687/-, while its share price trades at 475/-, indicating that the stock is trading at a discount.
Among the notable performers in the past six months were the banking stocks CRDB and NMB, which both saw gains of 19 per cent and 15 per cent respectively.
In the service sector, Swissport stood out as the top performer with a 14 per cent increase in its share price. Additionally, Swissport successfully paid dividends for two consecutive years after failing to do so in the previous two years.
The self-listed DSE experienced an 8.2 per cent increase, and Twiga Cement also saw a positive growth of 8.1 per cent in the past six months.
However, it’s important to highlight that not all counters had a successful first half of this year. Maendeleo Bank experienced a decline of 11 per cent, JATU dropped by 9.0 per cent, DCB Bank decreased by 7.0 per cent, TOL declined by 6.0 per cent, and TICL saw a decrease of 3.2 per cent.
Turning to collective investment schemes, JIKIMU emerged as the top-performing fund in the last six months, with a gain of 10.4 per cent. The fund boasts a diversified portfolio consisting of both stocks and bonds. Wekeza followed closely with an 8.8 per cent increase. This fund operates as a life insurance scheme. Other notable performers included Watoto Fund (+7.5 per cent), Umoja (+6.7 per cent), Bond Fund (+6.1 per cent), and Liquid Fund (+5.6 per cent).
DSE turnover down despite improvement in key indices
Dar es Salaam. Turnover at the Dar es Salaam Stock Exchange (DSE) fell by 30 percent during the 47th Dar es Salaam International Trade Fair (DITF) week.
The fall was largely fuelled by the prolonged trend of low foreign investor participation.
The turnover was Sh550.72 million by the end of the trading session on Thursday, July 6, 2023, a decrease from Sh790.06 million of the preceding week.
An analysis by Vertex International Securities Limited show that there was no foreign activities in the market last week.
CRDB Bank Plc was a top market mover last week, accounting for 51.9 percent of total market turnover, followed by Nicol with 13.52 percent and NMB Bank Plc with 12.58 percent.
However, there were positive price movements during the week, pushing the total market capitalisation up by 0.55 percent to Sh15.09 trillion.
DCB was the top gaining counter last week closing at Sh150. That was an improvement of, 7.14 percent compared to the proceeding week. Swissport gained by 6.67 percent to close at Sh1,600 while Nicol gained by 5.56 percent to close at Sh475, up.
TOL lost by 4.62 percent. It closed at Sh620 while Tanga Cement closed at Sh1, 760, which was 2.22 percent down. The self-listed DSE Plc lost by 1.09 percent to close at Sh1,820.
“We expect an increase in turnover and volume next week as financial counters such as NICO may drive up market activities following the release of strong financial results for the FY2022,” said capital markets manager at Vertex International Securities Limited Mr Ahmed Nganya.
Other market performance indicators also closed in the green as All Shares Index (DSEI) increased by 0.55 percent to close at 1,809.88 points as KCB, EABL, and JHL appreciated and Tanzania Shares Index (TSI) increased by 0.21 percent to close at 4,100.49 points.
Banks, Finance, and Investment (BI) closed at 3,932.18 points, 0.07 percent up as NICO and DCB increased. Industrial and allied (IA) closed at 5,122.32 points, 0.3 percent up as TPCC increased and Commercial Service (CS) closed at 2,159.53 points, 0.2 percent up as Swissport saw an uptick.
Why DSE trading fell sharply in first half of 2023
Dar es Salaam. Global economic uncertainties, including trade tensions and geopolitical risks, contributed to more cautious investor sentiment towards frontier markets such as Tanzania in the first half of 2023.
As a result, trading at the local equities market declined, with total turnover falling from Sh75.05 billion recorded in the first half of 2022 to Sh49 billion recorded during the same period in 2023.
That, according to market data from the Dar es Salaam Stock Exchange (DSE), represents a 34.5 percent decline in liquidity.
Analysis by The Citizen also indicates that the ongoing fluctuations in global financial markets have prompted many foreign investors to adopt a risk-averse approach and reassess their investment strategies.
Data shows that during the period under review, the turnover from shares bought by foreign investors also dipped by over 58 percent.
From January to June last year, foreign investors bought shares valued at nearly Sh49.09 billion, while during the same period in 2023, they injected just Sh20.44 billion into the equities market.
Several factors have likely influenced this downward trend, according to analysts, including adjustment of interest rates from developed markets, dollar shortage issues, inflation and trade risks associated with frontier markets like the DSE.
Russia’s invasion of Ukraine, the worldwide energy crisis, on-and-off lockdowns in China and pandemic-era supply bottlenecks have come together to produce an explosive cocktail of spiralling prices.
As a result, central banks across the globe are rushing to raise their key interest rates in a bid to tame high inflation.
“It created an opportunity cost situation because many foreign investors rushed to those developed markets for safe investments and caused a downturn in the level of investments injected to the least developed markets,” said Orbit Securities investment analyst Ammi Julian.
Chief executive of the financial firm Exodus Advisory Ramadhan Kagwandi echoed that the slowdown of the foreigners’ activities had nothing to do with domestic economic performance but rather the financial adjustments globally.
“This year we have seen foreigners offloading investments from the risk markets to more stable and developed markets as they try to balance their portfolio with the global interest rates adjustments,” he said.
Mr Julian added that the issue of shortage of dollars in many African economies also played a factor, as its implications were a pinch to financial markets across the region.
“Foreign investors’ assessment can consider region-wise, and that can have implications for individual markets. Thus issues like the high inflation rates in countries like Ghana and the technical default in foreign debt level can affect how many foreigners review the rest of the region,” he said.
Vertex Capital markets manager Ahmed Nganya said another factor was the decline in performance for the Cross-Listed counters in the first half of 2023, which had a negative impact on the overall performance of the all-share index (DSEI).
“The decline in the DSEI might have made foreign investors lose trust in the Dar Bourse,” he said.
Mr Nganya says fear of currency fluctuation risks for the Tanzania shilling had also played a part.
“If investments were to be made in the Tanzanian market it would have been in Tanzanian shillings such that may impose a currency translation risk as returns on investments might decline if local currency was decline even further,” he said.
However he said there are several initiatives taken that would put the local financial market in the right direction, including the recent adoption of the Interest rate-based monetary policy to further control inflation in the economy, Imposing forex directive to benefit retailers with cheaper access to foreign currency and the use of long term tenure bonds to absorb excess liquidity in the market.
According to the analysts, the drop in total turnover and foreign purchases serves as a wake-up call for market participants and policymakers.
They suggested that the slowdown during the first half highlights the need for proactive measures to stimulate market activity, especially among local retail investors.
