At first glance, it would appear that the Botswana Stock Exchange (BSE) had a lackluster year. Its main index is down 1.0% in USD terms.
If you look closely at the performances of individual stocks, however, you will see that the market was weighed down by just two companies – FNB Botswana and Barclays Botswana.
These two banks are among the BSE’s largest stocks and have dropped 15% and 41% respectively. They’re struggling to grow profits due to Botswana’s record low interest rates.
Most other stocks have enjoyed solid price gains. Here’s a countdown of the top five performers.
Botswana’s Best Stocks of 2014
5. Wilderness Holdings (WIL)
(Year-to-date USD Return: 18.3%)
With more than 60 safari camps spread across nine countries, Wilderness Holdings is an excellent play on Africa’s luxury tourism sector.
The company’s earnings increased 70% during the first half of its 2015 fiscal year thanks to higher occupancy rates and a stronger US dollar. Management succeeded in widening profit margins by packing guests’ itineraries full of company-owned activities and side trips. It also paid down a big chunk of its long-term debt.
Some customers have canceled reservations in the wake of West Africa’s Ebola outbreak, but the company expects this to be a temporary setback. It plans additional expansion in coming years.
4. G4S Botswana (G4S)
(Year-to-date USD Return: 21.3%)
G4S is one of Botswana’s leading security companies. It monitors thousands of alarms, vehicles, fences, and cameras and manages a large team of guards and incident response units.
The security business has been a good one in Botswana. G4S’s revenue grew nearly 7% during the first half of the year. But the main reason investors have been so enthusiastic is an ongoing restructuring exercise that saw the company’s administration expenses slashed by over 15%.
The cost-cutting helped the company post earnings growth of 129% and allowed management to more than double its dividend payout.
3. Sefalana Holding Company (SEFA)
(Year-to-date USD Return: 30.2%)
The first company to ever list on the Botswana Stock Exchange, Sefalana Holding Company is a wholesaler and retailer that operates 37 cash and carry stores and 21 large supermarkets across Botswana and Namibia.
Sefalana bought 12 Namibian cash and carry stores in July of this year. The company funded the deal through a rights offering, and management announced that it would make a significant contribution to both sales and profits. Look for the company to expand further into Namibia in coming years.
2. Chobe Holdings (CHO)
(Year-to-date USD Return: 32.9%)
An eco-tourism company, Chobe Holdings operates 11 lodges and camps in northern Botswana and Namibia.
The firm grew profits 19% during the first half of its 2015 fiscal year thanks to a big increase in occupancy rates. These results, plus an 18% dividend hike announced earlier in the year, sent shares soaring. Going forward, a newly modernized fleet of aircraft, which help ferry guests to and from the company’s lodges, should ease pressure on profit margins.
Like its competitor Wilderness Holdings, Chobe is seeing slackened bookings in response to the Ebola outbreak. In response, both companies are now offering no-penalty cancellations to all prospective customers should a case of Ebola be confirmed in Botswana.
1. Sechaba Brewery Holdings (SECH)
(Year-to-date USD Return: 40.9%)
Botswana’s largest brewer has managed to grow earnings at a modest pace in spite of a 50% levy on alcoholic beverages mandated by the country’s teetotaler president, Ian Khama.
SABMiller owns a 16% stake in the holding company and a 40% stake in the breweries themselves. Thus, when Sechaba released a series of cautionary announcements hinting at potential changes to the ownership structure, rumors abounded that SABMiller was preparing a buyout offer. This speculation, not the company’s meager earnings growth, is what fueled the stock’s price rise.
On November 21, the company withdrew the cautionary, saying the company is no longer pursuing the “corporate changes.” This makes it tough to imagine that the company will appear in this countdown again next year.
What Do You Think?
Did any stocks on this list surprise you? Which shares do you believe will be among Botswana’s top performers in 2015? Let’s hear your thoughts in the comments!
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