Bullish Thoughts hears that things are so bad in the tourism sector to the extent that hospital occupancies are much better than the hotel occupancies these days.
Given the experiences he had last December 2010 at Small World Lodges in Bvumba in the beautiful Eastern border of the country where the proprietor presented an additional fee of $600+ on the day of checking out, Bullish Thoughts is hoping the Victoria Falls area won’t screw him up this time around.
While making bookings for the December 2011 holiday for self and a couple of family friends, Bullish Thoughts however had nightmarish experiences but is still keeping fingers crossed.
Just how on earth do Zimbabwe’s tourism sector players expect to be globally competitive when the head offices in Harare are not online with the hotels dotted around the country?
Put bluntly, the systems don’t talk to each other! Reminds me of the apparel retailers Truworths&Edgars as well!
The reservations person had to phone the hotels to enquire about room availability and if specs needed change, they had to phone again.
ICT is not only critical in financial services; it is NEEDED across the entire economy moreso in the tourism sector which deals with global travellers with access to sophisticated ICT systems.
In this world of superfast internet speeds, how does a company expect a tourist (domestic/ foreign) to go through central reservations whose numbers take ages to be answered (on the day they are working)?
This pathetic experience happened at the two listed players.
Bullish Thoughts is not even sure that the online booking facilities on some of these entities websites work because when he tried the reports generated indicated there were no more rooms available in the categories required yet a phone call to the central reservations showed that there was plenty plus rooms!
To make it worse, taking along the kids and the childminders proved to be even more expensive because there “are no family rooms available except in a 3 star facility).
Anyway, Bullish Thoughts is guarding the loins for the December experience. Hope it will be worth sharing with you.
So far arrrrgggghhhhhhhhhhhhh!
The Econet Wireless Share Price Theory
Bullish Thoughts is not sure how to describe the thought process or feelings that went through his mind while reading an article where an analyst was literally blaming Econet Wireless’ buyback programme for the rout on the share price.
The indigenisation fears & foreign investor sell off notwithstanding, one would have thought that a much detailed analysis on the business fundamentals would have sufficed. Obviously the Econet Wireless buyback programme is an open secret and has at times provided the support for the share price.
What confuses Bullish Thoughts is the extent to which the market then expects that programme to be a component of the share price’s upside potential.
One would have expected business fundamentals to account for more than 75% of the share price movement, speculators and the buyback programme to account for the difference. It somewhat seems, it’s the other way round, “at least in the minds of the analysts” for now.
If it is true that the price has to be solely supported by the intervention of the company itself, then IS IT A GOOD STOCK?
If Econet Wireless’ cash flows come under strain, the holders of the share suffer. Surely, that should change the dynamics of stock picking across the entire ZSE.
As to what the fair price of Econet is Bullish Thoughts agrees with intrinsic valuations that place the price of Econet Wireless between $6-$7. As to when the market price will reach that range is anyone’s guess.
Bullish Thought likes the confidence of Tom Brown& the entire Innscor management. They have consistently declared a dividend and maintained it in the range of 3x-4x cover including Colcom&Natfoods.
And mind you, dividends represent an actual cash outflow. Consistently paying out at least 25% of earnings is a fireproof sign that the business model is cranking up money.
Bullish Thoughts will be waiting to see the results of Padenga to see if the ching ching is flowing across all business segments. Otherwise the market cannot afford another SPAR(KLESSS).
Still on SPAR business, Bullish Thoughts just can’t wrap his head around why this segment continues to be loss making. It is the same business that almost bled Innscor to death in Zambia in 2009.
The restructuring in that segment has been ongoing in as much as the losses have been on going.
Bullish Thoughts says, the market should give the SPAR portfolio one more year. If losses continue coming through, then the business should just be sold off because shareholders are currently subsidizing the segment’s survival.
A $5.7m loss for a retailer is extreme whatever the reason. Even OK Zim did better than that during its difficult times.
What we need here perhaps is more disclosure on the SPAR operations and the mechanics of it.
All that said Bullish Thoughts however likes the audacious revenue target of $645m and a potential bottomline of $36m-$38m and dividend of $9m.
Note
Bullish Thoughts does not hold shares in any of the companies discussed in this article.
