Bulls 'n Bears Zimbabwe: October 2011

Friday, October 28, 2011

Bullish Thoughts: Police Bicycles cause increase in public beer drinking

Bullish Thoughts: Police Bicycles cause increase in public beer drinking

Bullish Thoughts looks at tries that were scored in the closing match of the “IRB World Cup’ …oops... Premiership … in the match between Man City & Man U, says nothing really useful on equity financing, wonders who the government structured finance/ business restructuring adviser is and notes the increased volume of shareholder profile changes.

IRB inspires Man City…

Since high school, Bullish Thoughts has always known that open foot challenge is a straight red card. That it continues to happen in high profile games by high profile players irks.

Bullish Thoughts is a Blues fan. After the noisy neighbours probably inspired by the IRB World Cup final earlier that day handed the red devils a rugby score-line Sunday with “tries” from Balotelli and company, the Blues were surely tipped to go second.

Unfortunately, the blues saw red. And Bullish Thoughts could not recover that Sunday, the Monday an only got better Tuesday night.

Hence the delays in the series publication.

Enough about soccer!

Hair raising capital raising initiatives…

It’s quite interesting to see that Kingdom did make some progress in its capital raising initiatives. There was a 55.6% subscription to the $4.5m rights offer. The institution has now commenced a $7.5m private placement which will close end of November 2011.

On the other hand, there seems to be no adequate trust in Trust Holdings by investors as the FI is reported to be still negotiating with South African investors for the sale of 25% equity in the business.

In insurance, AFRE’s $15m recapitalisation plan for its subsidiaries has been further delayed, owing to the deferment of an EGM set to approve the capital raising.

Hopefully, all these FIs will find the necessary equity support “timeously” lest JM may become the new buzz word especially where there is no tangible progress in raising equity.

Who advises on government transactions…

Government’s plan to reverse an initial agreement to transfer 90% of mineral rights held by Buchwa Iron Mining Company to Essar Africa Holdings threatens to scuttle the $750m Ziscosteel deal.

Bullish Thoughts can only ask: Who was the government adviser here or the political scientist/professor was a know it all and mortgaged Buchwa behind H.E.’s back?

Foot-in-Mouth…

First we take Botswana condemned cattle and slaughter them at CSC. The same meat has been banned in the preferential EU market because of fears about the foot & mouth disease.

After risking our healthy, the Zimbabwe-Botswana Bilateral Investment Promotion and Protection Agreement hangs in balance after Gaborone demanded non-government participation in the disbursement and management of the $70m in lines of credit.

The question Bullish Thoughts has for you is whether this is genuine fear by the Gaborone government that some people in Harare will line their pockets or its politics at plays?

Bullish Thoughts is confused but his gut says it’s the capitalist fearing loss of his money. Never mind return on investment, we are talking return of capital here!

Interesting transactions on ZSE…

Shareholder reshuffle is now dominant phenomena on the ZSE with significant stakes exchanging hands through special bargain trades as shareholders also restructure their own balance sheets. This month alone there were 4 such trades in Natfoods (11.7%), TN (1.22%), ABCH (3.42%) and the latest being Pelhams (35.8%). Word has it that TN probably took Oliver Chidawo’s shareholding in Pelhams. Bullish Thoughts can’t comment as yet until more info comes but if his assumptions are correct, Pelhams or Bradlows, are likely to be the high brands of TN Harlequin.

Just wondering though whose name, the couches will be named after!

Police Bicycle patrols a social scourge...?

A colleague put up this FB post:

‎"I applaud Delta for donating bicycles to the Police. Which means less public drinking; which means less sales for Delta beer; which means low profit for Delta; which means no bicycles for Police next year; which means more public drinking; which means..."

Invest Wisely!

**The author of this report does not hold shares in any of the companies discussed/ mentioned in this report.

Bulls n Bears

04-2927658

0773 441674

bulls@bulls.co.zw/ zse.bulls@gmail.com

If you wish to unsubscribe from this service, please click here.

CONFIDENTIALITY NOTE:

This message is intended for the addressee only, as it contains information that is privileged, private and confidential. If you are not the intended recipient of this message, you are notified that any distribution, use of copying of this communication is strictly prohibited. If you have received this communication in error, please notify the sender immediately. Bullish Thoughts & Bulls n Bears series are products of Faith Capital (Pvt) Ltd. Faith Capital (Pvt) does not and cannot warrant the information sent via electronic mail or results obtained by using this information.This report has been prepared by Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Faith Capital nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other Indices quoted herein are for guideline purposes only and sourced from third parties.

Wednesday, October 19, 2011

Tweet My Mind: 1984

Tweet My Mind: 1984

Chirping bird memories…

English is a dynamic and organic language. Six years ago if you questioned any thirteen year old about the definition of the word 'tweet' you would be reliably informed that this was the sound that a bird made (this information having first been obtained from a nursery book at age 5). Today, however, you are more likely to be educated that this is the term for a 140 letter post originating from the social website Twitter, which, in keeping with the original avian meaning, has a little blue bird as its logo. Think Facebook or Myspace without the frills or having to accept friend requests (people just choose to follow you and their posts appear in your newsfeed). With over a billion tweets being trilled out around the globe a week Twitter has become a major social network voice.

Big Brother was watching you…

The idea of two-way, simultaneous information sharing via the screen preceded social networks by half a century. In 1949, decades before computers became mainstream, George Orwell published Nineteen Eighty-Four, a novel that examined the potential of totalitarianism on society. It was Orwell, and not DSTv, that introduced the idea of Big Brother, the system of control personified by the nation's leader and implemented through two way television like devices that simultaneously feed you propaganda and monitored your every activity; 'Big Brother was watching you'.

Unlike the Big Brother system, social media systems feed you everyone’s' thought patterns, not just the party philosophy. It is for this reason that access to social sites is tightly controlled in some countries. But in some instances Orwell was not wrong.

Orwell included the idea of the 'Two Minute Hate', a daily period of negative expression against the system's enemies. A model citizen was to scream abuse into their television set in response to a series of graphic, hate provoking images or face the ire and censure of the thought police. Compare this to the recent abuse tweeted to Natasha Giggs (the sister-in-law to footballer Ryan who had an affair with him prior to her marriage) following the paparazzi revelation that they had a public argument. People, fans of Ryan I guess, who have never met her spammed rants in her direction. Admittedly with only 140 symbols to use they were very short rants. Or Fuimaono-Sapolu, the Samoan rugby player who was banned from play last week after a rant online against a referee via Twitter. Let us not even talk about Charlie Sheen... Needless to say, hate driven tweets can be powerful, especially if they are about your product.

Power of Social Networking Sites…

Twitter, and other social networks, are in themselves not bad tools (although I can not shake the conspiracy theory driven thought that somewhere, someone is collecting all that information for some nefarious purpose). They can be used wisely as well as negatively to enhance a brand, a business or a personality. Positive tweets that add a degree of value (e.g. advice for solving a problem) are more likely to be re-shared by others. It is common courtesy to follow in turn those who follow you. There are two ways of looking at this reciprocal following as a business-a waste of time or a source of information about potential clients, a lot depends on how willing you are to trawl though a couple of hundred bytes of information a day.

Death by Twitter…

Of course the debate rages as to how many tweets a day are necessary to grow a business before it becomes annoying to your followers? How many times can you stomach 'Buy Crispy Crunch on special, we rock your world' and 'Crispy Crunch funds schools initiative' in your feed before you never want to hear from or see Crispy Crunch again. Three posts seems to be a much touted norm, but the extremes of up to 30 can be found across the net. An interesting point of research if anyone wants to take it up.

Meaty dress by Lady Who?

The important thing to remember about online networks is that your 'followers' and 'friends' are not a substitute for solid relationships built over multiple coffees, dinners and the highs and lows of life. Now if you'll excuse me I need to go find out what Lady Gaga has been up to today.

Tuesday, October 18, 2011

Bullish Thoughts: How Disgusting

Bullish Thoughts: How Disgusting

Bullish Thoughts discusses some ungodly British behavior, money transfer mania and bad mouthing, dump retailers, Chinese and Nigerian c-samples, creative accounting, CPIX anomalies and attempts to raise cancer awareness in this issue.

Bullish Thoughts is disgusted.

Below is an extract from the 15 October 2010 issue of Bullish Thoughts:

“…Of atheists and British political leaders

Ed Miliband, the new British labour leader, has stated in no uncertain terms that he doesn’t believe in God. He did not say whether he believes in Charles Darwin’s Evolution Theory either.

His brother David Miliband (former Foreign Secretary) has also confessed his atheism.

Ed Miliband’s declaration means two of the three leaders of major British political parties are self-proclaimed atheists.

Nick Clegg, the Deputy Prime Minister, also confirmed he does not believe shortly after being named Liberal Democrat leader.

Another “notable” Briton, theoretical physicist and cosmologist, Stephen Hawking recently pronounced that he believes God is not necessary in our lives. No wonder he doesn’t talk!

Bullish Thoughts being a Christian, is just concerned by these developments in the UK.

Maybe that’s why behaviours which are worse than that of pigs and dogs are celebrated.”…

Bullish Thoughts also remembers the noise around the two Malawian “men” who decided God’s wrath on Sodom & Gomorrah was child’s play and wed in public. Never mind the fact they went on to be wed in the joint during their short spell.

Here is what disgusted Bullish Thoughts:

Accept gays or forget UK aid

It is now official: poor African countries including Malawi must abandon their rigidity against same sex marriages as a condition for receiving British aid. Britain’s International Development Secretary Andrew Mitchell is quoted in UK's The Daily Mail through his spokesperson that Britain has resorted to cut aid to African countries that are against gay marriages. The Malawi government has responded by saying homosexuality is unacceptable and no amount of threats can bully Malawi to legalise it, even if means Britain keeping its aid! That is the measure of government's resolve as it insists it will not bow down to pressure from Britain to relax on its stance against same sex marriages. The British government was reported on Sunday that it has frozen aid of about MWK 4.8bn to Malawi because of position on gay rights. The Malawi government has blamed the British government of using Malawi's economic status to impose its beliefs and bemoaned the influence that developed countries put on developing countries which are unrealistic in the sense that they demean the sovereignty of other countries.

Oh man! Oh man! Oh man! Agrhhhhhhhhhhhhhhhhh!

God have mercy please!

No ching ching for Zhing Zhong Condom supplier

A South African court has blocked the government from buying 11 million Chinese condoms, saying they are too small.

The finance ministry had awarded a contract to a firm called Siqamba Medical, which planned to buy the Phoenurse condoms from China.

A rival firm, Sekunjalo Investments Corporation, turned to the High Court in Pretoria after losing the bid, arguing that their condoms were 20 percent larger than the Chinese ones.

Judge Sulet Potterill blocked the deal with Siqamba, ruling that the condoms were too small, made from the wrong material, and were not approved by the World Health Organisation.

South Africa has more HIV infections than any country in the world, with 5.38 million of its 50 million people carrying the virus.

Bullish Thoughts was just left wondering if the Chinese were trying to maximize on material or they used the wrong sample.

But one thing for sure is that this call option on society’s moral decadence will be big business 2 years down the line particularly with more and more governments toying with the idea of condoms in schools and agrhhhhhhh in prisons as well. There certainly are some British elements even in Zimbabwe’s parliament!

iMobile iMoney iTransfer…

Bulls & Bears will be launching its mobile money transfer services in a few hours. The team is still toying with the name for the product but the byline will be something like:

“No Internet Required. No Strawberry (oops Blackberry) Required. Only iPhone 4S and No Sim Card”

Nobody does iMobile iMoney iTransfer better than iBulls n iBears!

Zim imported inflation anomaly…

A Bulls n Bears subscriber sent Bullish Thoughts n email asking why Zimbabwe’s inflation seemed to be continuously rise despite the Rand weakening materially versus the US$.

Ordinarily one would expect that as the Rand weakens, Zimbabwe importers would get more Rands for their US$. The South African CPIX is fairly flat, so the expectation is that Zimbabwean prices should be either fairly steady if not falling.

At least that’s the expectation from any rational person cum consumer!

Bullish Thoughts hasn’t done any comprehensive checks on what he thinks is the reason the country doesn’t benefit from a weakening rand especially on consumer goods (both durable and non-durable) so he will make an assumption:

Importers are DUMB! Yes, he thinks they are dumb.

The price increases the country witnesses on products out of South Africa is purely because importers DO NOT ACTIVELY (adequately/ sufficiently) participate in the currency market. And most likely the bankers are not helping the situation as they would prefer to trade for their own positions.

The issue Bullish Thoughts is putting across here is that if the Rand goes to ZAR7.94 and every importer keeps their US$ in their bank accounts, that means nothing for Zimbabwe.

For the Rand weakness benefit to filter into the shops, there is therefore the need for importers to actively trade in Rands, i.e., buy the currency in its weakness and sell in strength.

That was they will maximise the ZAR in their accounts and then be over time able to pass on the benefit of a weakening Rand to consumers.

Well, it’s just a thought but Bullish Thoughts challenge you to check how many importers have dedicated Treasury teams specializing in currency risk hedging.

Bullish Thoughts is waiting to get the feedback from the OK Zimbabwe, TM, SPAR, Delta, etc about the ZAR strategy vis-à-vis the currency’s sensitivity to investors’ risk aversion bouts on emerging markets and their currencies.

At ZAR7.94, Bullish Thoughts says the Rand is still a worth buy.

Zimbabwe's headline consumer inflation quickened to 4.3% year-on-year in September from 3.5% in August. Zimstats figures showed increases in the prices of food, alcoholic and non-alcoholic beverages, as well as transport and communication were behind the jump in inflation. Utility charges, especially electricity, also drove inflation higher after the state power utility raised prices by 31% in September. On a month-on-month basis, CPI accelerated to 0.8% from 0.1% in August.

Chartered Creation of Accounts…

A colleague brought this particular quote by attributed to Benjamin Graham, Warren Buffet’s mentor:

"Contrary to expectations, no changes will be made in the company's manufacturing or selling policies. Instead, the bookkeeping system is to be entirely revamped. By adopting and further improving a number of modern accounting and financial devices, the company's earnings power will be amazingly transformed"

Bullish Thoughts can only say: Be scared of the financial reports published by these listed companies. Unless there is a reasonable dividend at possibly 3-4x cover, be scared of good results which are cashless. Unless of course you are a Berkshire Hathaway shareholder!

Profits are just opinions of accountants. Dividends and cash are facts so just get the facts not IASB/IFRS reclassifications/ modifications to accounting practices!

Lastly…

Bullish Thoughts is not your typical sungura/cele/museve and genre kind of consumer but he is saddened by the passing on of Tongai Moyo. The first and last time Bullish Thoughts saw the man was at Extra Mile some weeks back where “Muchina Muhombe” was the act ahead of Sulumani Chimbetu. Those who knew the guy (assumed show regulars) couldn’t believe the state of the man. He was not well!

Suffice to say that cancer is increasingly becoming a top killer in the country, the man fought his battle (and very publicly too). Just like Steve Jobs, it was probably for 7 or so years.

Bullish Thoughts has two things to say here:

The first is that October is the Breast Cancer Awareness Month so get a check up from your spouse or doctor to allow for early intervention if you have the disease.

The second is that the whole purpose of Bulls n Bears series is to improve financial intelligence. That’s why the service is for free…to financially educate as many people as we can. Death is the only certainty in life so prepare today for it. Prepare for your family and colleagues. Save money, invest in real estate or such other assets with a resellable characteristics. Or get a life policy that will take care of the family after you the breadwinner is gone. As for the life policies, if you don’t know where to get them, get in touch and we will assist you FOR FREE again.