Bullish Thoughts thinks
something is wrong at ZESA after he spent the weekend with electricity even
amidst thunder and lightning, thinks due diligence is already underway for the
“joint” businessand looks at this n that.
Let’s list the damn joint…
Bullish Thoughts spend the
week wondering how it is like for a CA major in Corporate Financial Strategy
& Restructuring to spend the night in the joint.
Bullish Thoughts bets you
the damn joint is going to be listed on the Alternative Exchange in the not so
distant future.
After all, the joint has
some seriously vibrant agro division and a vibrant band which would make Tuku
and Dudu green with envy.
Bullish Thoughts supposes
the ZPS would probably list at two prisoners per share!
Gotta say though, it’s not
really a good time to be sitting on any board of directors right now!
Governance or licence discount?..
Econet Wireless was deemed a
blue chip counter (was because Bullish Thoughts is not sure anymore) and at one
point eclipsed Delta Beverages as the most valuable counter on the Zimbabwe
bourse.
Right now it has lost more
than $169m since January 2011. The loss of value is unbelievable and the stock
hasn’t shown sign of reversing the trend.
The buzz word in the market
circles has been the governance discount but Bullish Thoughts says with a YTD
market loss of $169m, the current management shouldn’t even be setting their
feet anywhere near Econet Park.
In Bullish Thoughts’ view
Econet is suffering from the liquidity crunch faced by various market players.
You want to raise money
quickly? Sell Econet. If anyone is observant enough, one would notice that
almost daily, Econet accounts for +50% of market value of trades.
The counter is the easiest
to sell in a falling market and that has obviously created a serious scrip
overhang.
Bullish Thoughts wishes, he
had a lot of cash right now! At a P/E of 4.2x, the company is trading at a huge
discount of 80% to the consensus intrinsic value of $6.70. A screaming buy by
any standards.
Perhaps the investors are
worried that the licence renewal fee would be ridiculous, Indian style $bn
plus! Right now POTRAZ has $100m listed as the MNO licence fee.
The most likely scenario
however is that this is not being factored in Econet Wireless valuations.
However, the big question is
if the government is going to demand all this bucket load of cash at once or it
will give a 10 year amortisation scheme?
Bullish Thoughts doesn’t
have an answer but bets if the fee is anything other than $100m, the stock is
going to tank!
Eco service…
In his conservations with
many of the subscribers to the Inspired Network, one common aspect that almost
always comes up is the creaming off aspect.
Econet’s products are always
initially ridiculously priced and the customer service equally horrible. The
111 line is never answered (if it still exists) and there are scary queues at
First Street &Joina City service centres.
There is serious need for
improvement of the customer service culture at Econet.
The market would surely
welcome some EcoService launch.
If you have 7 in 10
subscribers on your network, service delivery is critical for future success.
Motivational … Are You Guarding A
Concrete Slab?
There
was an army barracks that had on its duty roster 4 soldiers to guard at all
times a concrete slab in front of the barracks. The soldiers changed shifts
guarding the slabs for many years. Different commanders came and went and the
tradition continued.
After
many years, a new commander was assigned to the barracks. Amongst the things he
did was asking why things were done the way they were. When he asked why
soldiers were guarding the slab, he was told, "We've always done it this
way. It's our tradition. Our former commanders instructed us to do that."
The
commander was adamant on finding out why. He went to the archives to look for
answers and he came across a document that had the explanation. The document
was very old. It had instructions written by one of the retired
commanders who had even passed away.
The
new commander learnt that over 80 years ago, the barracks wanted to build a
platform where events could be performed. When the concrete slab was laid, wild
animals walked over it at night before the slab would dry. The soldiers would
fix it the next morning but when evening came the same thing would happen. So
the commander ordered that 4 soldiers should guard the concrete slab for 3
weeks to allow it to dry. The following week the commander was transferred to
another post and a new commander was brought in. The new commander found the
routine and enforced it and every commander that came did the same. Eighty
years later the barracks continued guarding a concrete slab.
What
beliefs, attitudes, traditions have you carried on that were relevant to
certain people or a certain time and they are still being carried out by you?
Is your opinion about yourself, people of a different race, the opposite sex,
certain business opportunities, new products etc obsolete? Question the
status quo.
Invest Wisely!
**The author of this report does not hold
shares in any of the companies discussed/ mentioned in this report.
Bulls n Bears
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