Some ZSE stocks primed for good performance

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HARARE – Some stocks on the Zimbabwe Stock Exchange (ZSE) are primed for good performance in 2021 despite the adverse impacts of Covid-19 pandemic.

With the country implementing a national lockdown to curtail the spread of the Covid -19 pandemic, the script is almost likely to be the same as 2020 where Covid-19 dominated the narrative across the globe with depressed economic performance. 

Already, the non-essential service providers, for instance clothing retailers like Truworths, Edgars and Axia’s TV Sales and Home have lost out on January sales that will have a knock on effect on their figures for the current quarter and eventually full year performance. 

However, essential service providers allowed to operate have better chances of offsetting the economic volatility in 2021.

The country’s biggest retail group, OK Zimbabwe’s outlets are operating albeit at reduced trading hours. Grocery stores are operating until 3pm in line with lockdown requirements.

As economies all over continue implementing lockdowns and limiting physical interaction, information and communication technology (ICT) becomes crucial which will be an advantage for service providers like Econet. The telecoms giant has already shown that despite the challenges posed by the pandemic, this is also an opportunity to innovate.

“While managing the risks, we are also alive to the opportunities presented by Covid-19, particularly the accelerated need for digitalisation across all business sectors.

“Our past investment in resilient network infrastructure has positioned us to be the digital connectivity partner of choice. We continue to enable our customers to work and learn from home whilst observing social distancing etiquette.

“The next few years will be pivotal to our transformation from a communications service  provider to a digital service provider,” said company secretary Mr Charles Banda in a trading update for the quarter to November 30, 2020.

Government has also indicated plans to invest in broadband infrastructure and other ICT services in order to attain a digitally enabled economy.

Food producers such as National Foods also become attractive and anticipated to record good performance as the country rely on these for food security and production of staples.

NatFoods is the country’s biggest food manufacturer producing a range of basic food stuffs such as maize meal, flour, cooking oil, margarine, rice, salt, pasta, sugar beans as well as some animal feed and soap.

For NatFoods, the lifting of maize import controls by the Government to allow entities with free funds to directly import maize into the country is also a welcome development for the group which remains the largest grain user in the country.

However, there are concerns that countries from which Zimbabwe traditionally imports maize could hold on to some of their stocks in a bid to preserve or enhance their reserves to avert food insecurity.

For seed producers, both listed and non-listed, the normal to above normal rainfall expected this agriculture season will boost their sales volumes. Agriculture sector is an essential service allowed to operate during lockdown.

For a counter like Seed Co, the adoption of new technologies, such as the artificial seed drying plant to be completed during the financial year 2021 will help in reducing maize losses in addition to increased seed demand across the region.

“We expect the Group’s performance to continue on an upward trend on the back of increased seed demand driven by normal to above normal rainfall forecasts.

“We anticipate the Group will continue benefiting from its essential business status in the wake of Covod-19 resurgence. Food security is likely to remain a priority on nations’ agendas during the unprecedented times and consequently seed demand is expected to continue soaring.

“The new Artificial Seed Drying Plant the first of its kind in Zimbabwe and Africa will bring new technology aimed at addressing the problems of high cob/kernel diseases/rots and slow dry down which results in seed maize losses,” said market watchers IH Securities in an earnings review update.

Construction and related stocks such as Willdale, Masimba, Turnall, Proplastics and cement producer Lafarge are also among the companies expected to cash in on the massive construction projects to be carried out in the country. Apart from individual residential developments, Government is pumping billions of dollars for infrastructure development projects ranging from housing, irrigation and transport as part of efforts to enhance the competitiveness of the country.