Zimbabwe’s deteriorating economy and a stock market that’s fallen more than any other in Africa this year are doing nothing to scare off one of South Africa’s biggest money managers.
Allan Gray Ltd, which oversees $43 billion, is boosting stakes in Zimbabwe Stock Exchange (ZSE) listed Delta Corporation -which brews Chibuku sorghum beer – and Econet Wireless, the country’s biggest mobile-phone company.
“They should and can be very high-quality businesses,” Andrew Lapping, who oversees the Cape Town-based money manager’s two Africa-focused funds, said by phone on June 24. T
he companies are able “to generate lots of free cash flow. They don’t need huge amounts of reinvestment the whole time to maintain production,” he said.
Delta, which fell 8 percent this year and reported a 26 percent drop in first-quarter lager sales, is the largest brewer in the country. While revenue slipped, earnings per share doubled to 8 U.S. cents in fiscal 2013 from two years earlier, according to data compiled by Bloomberg.
The company is forecast to declare a final dividend of 4 cents in the 12 months through March, or 25 percent more than a year earlier.
Econet invested $933 million into its mobile-phone networks in the five years through February, according to company statements.
That compares with an enterprise value of $1.3 billion, Lapping said.
The company’s shares gained 22 percent this year, giving Harare-based Econet a market value of $1.2 billion. Bloomberg