Bullish Thoughts: Cancer & Corporate Social Responsibility

Bullish Thoughts is mildly satisfied that Zimbabweans are now taking the cancer scourge seriously. Some corporates that have publicly taken a stance include TM Supermarkets.

If anyone scanned through the Sunday Papers this past week they would have noticed substantial health articles around Cancer.

Of interest was the warning against the use of various herbs either tightening or enlarging which have seen women in particular suffer silently.

As October comes to a close…ask yourself, what is it that you have done to combat this scourge.

You can donate cash or kind to either Cancer Association of Zimbabwe or Island Hospice who concentrate on dignified deaths.

Imagine if we could all donate at least $10 towards this cause…individually it may be a small amount but collectively it can make a difference to society.

It’s time we upped our Corporate Social Investments!

Or if you have no cash or anything else to donate, just wear the pink ribbon for the remaining days and raise as much awareness as possible.

The landmark National Conference on Cancer Prevention and Control organized by the Cancer Association of Zimbabwe held on the 16^th of September 2011 under the theme; ‘Bringing the Cancer Burden on the National Health Agenda’ and attended by over 80 delegates including political leaders, cancer experts, government officials, cancer survivors, civil society organisations, media, Non Governmental Organisations and the private sector noted that cancer is now killing more people than HIV and AIDS, TB and Malaria combined globally.

It also noted that Zimbabwe sees, on average, 7000 cancer cases each year and only a fraction of these – some 700 to 1500 is treated and that the HIV and AIDS pandemic is augmenting the rate of HIV-related cancers, with 60% of new cancers in Zimbabwe being associated with HIV and AIDS.

What is Cancer?

Cancer is a disease of cells. Cells are the smallest building blocks in our bodies, invisible to the naked eye. Groups of cells form the tissues and organs of the body (such as the lungs, brain, liver, kidneys or heart); each of these have a very specific function. Cells normally reproduce themselves by dividing in a regular fashion so that growth and repair of the body tissues can take place. If the normal function is disrupted, there may be an uncontrolled growth of cells causing a swelling or tumors. Tumors maybe benign or malignant (cancerous).

The cells that develop into cancer can be a result of foreign or harmful substances that penetrate the cell and its nucleus, damaging the DNA- deoxyribonucleic acid. Cancer causing factors include the air we breathe, the water we drink, diet, alcohol, tobacco and exercise we get, among other factors. Cancer could be a result of faulty DNA which will be recreated every time a cell divides.

The Warning Signs of cancer...

•  ·         Change in bowel or bladder habits
• ·         A sore that does not heal
• ·         Unusual bleeding or discharge
• ·         Thickening or lump in the breast or elsewhere
• ·         Indigestion or difficulty in swallowing
• ·         Obvious change in a wart or a mole
• ·         Nagging cough or hoarseness

 Consult your doctor or nearest health facility if any of these symptoms present.

Support Fundraising...

The Harare Cancer Centre is a welfare organization that relies on the support of wishers and the public for funding in order to achieve its objectives.

Help by participating in any of the following events:

·         Think Pink Golf Tournament

·         Triathlon

·         Walk/Run

·         Dinner Dances

·         Cuppa for HCC

·         Shavathon

Become A Corporate Partner...

The Harare Cancer Centre is extremely grateful to all the companies that have helped us one way or another. We invite other companies to join us in educating and raising cancer awareness. Invite us to your corporate wellness programs.

Investment Advice

Dear Bullish Thoughts

I am a 39 year old man. I am currently troubled by my relationship with my girlfriend who is 26 years old. Her parents died when she was 8 years then she dropped out of school because no one could afford to pay her fees.

I then met her when she was 14 years and sent her back to school.

I was selling fruit by the street just to pay her fees. I then got a job as a truck driver and sent the girl to university and now she is employed as a Finance Manager.

My problem is that she now feels she can't continue with this relationship because I am not her type.

She says she is grateful that I sent her to school but she can't be in a relationship with me anymore. She wants somebody in her own class not a truck driver.

My financial and emotional feelings are being hurt. I met to a stockbroker who advised me that if I had bought some Delta and BAT shares 12 years ago, not only would I be making Roy Turner green with envy but I would also have been a proud shareholder in African Sun, Pelhams, OK Zimbabwe and perhaps even Dawn.

The stockbroker also said with the shares I could have bought with the money I invested in her fees, I would actually be owning a truck company nearer in size to SABOT, CARS or even Takrose.

Above all, I would have paid for my own further education with dividends from Delta and OK Zim. I am also advised that the recent BAT dividend of 23c would have been adequate to help me retire early. Please help, I am hurting...Truck Driver.

  

Bullish Thoughts replies…

Dear “Could have been trucks owner”

Bullish Thoughts is not sure if he should feel pity for you. In fact he has just recalculated the opportunity cost of your investment…to you personally! It’s really humongous!

Though you did not explicitly say so, Bullish Thoughts is tempted to think you went into this solely for a scrip dividend…or hand in marriage put simply.

From a legal perspective, such contracts are called social contracts and are not easily enforceable at law as you cannot force someone to marry you just like you cannot sue your girlfriend for failing to pitch up at a rendezvous. You cannot approach the courts for performance by your almost “was” fiancé especially regarding the scrip dividend. Unfortunately ignorantia juris non excusat!

Next time when you want to do such investments or other such ventures (which Bullish Thoughts you will), it is recommended that you don’t be fixated solely on scrip dividend. What if it does not come? Or worse still, what if it comes, and the price tanks!

You should continuously evaluate your investments, disinvest when the risk starts to increase or take profit before the price falls or the stock becomes illiquid.

However, also look on the brighter side of things. You helped eradicate poverty and that woman certainly is paying tax (PAYE) that is enough to pay the salary of one or two civil servants so the economy is benefiting from your “social investment”.

If you have a potential investment case of similar nature again, Bullish Thoughts suggests you immediately approach the closest financial advisor.

Who knows, maybe another 10 years from now you will be in the category of Nick Van Hoog, Roy Turner or a real owner of a trucking company or vegetable processing company.

Alternatively, if you are still keen on scrip dividends, you may want to go back to the roadside where tomatoes are sold and evaluate those other stocks which are hidden from the eye of an ordinary marriage investor. They probably are valuable and gems in the rough!

Lastly…

Bullish Thoughts is confused by the current bull run on the ZSE. How big is the bag of cash out there? Are there many buyers or there is just one using multiple stockbrokers? Are the price levels still sustainable? Your little bullish thoughts are welcome so that we educate potential investors fully!

 Delta is at 92.4c, BAT 450c, Econet 491c, Innscor 81c and so forth. Should it be a buyers or sellers market?

Invest Wisely!

Bullish Thoughts:Working Out Doesn’t Just Make You Stronger, It Makes You Smarter…as an investor

We already know the facts: The world is in the midst of an obesity epidemic Zimbabweans included. Take a walk along First Street in Harare on any day and you will shocked at the rate at the number of women who without you being a doctor, can immediately observe to be medically overweight.

Of course men are included too but perhaps what has made women worse is the use of various chemicals for enhancing the physical structures particularly the bottom half.

Few Zimbabwean adults exercise enough, and that poor lifestyle choice is getting handed down to the children, who are also getting fat and overweight at record levels. Unless of course you are part of the uniformed forces!

 

And all that obesity is affecting health, causing heart disease, diabetes, unexplained sudden rise in cancer cases and other untold other health consequences. But what if the effects aren’t only physical?

This new infographic which Bullish Thoughts came across and felt it warranted your attention, points out that exercise has some great benefits for not just how our body works, but how our brains work, too. It’s clearly important for kids, who need all the brain power they can get for school, but it’s equally important for adults: A fit worker is a fast, efficient worker.

First, let’s review the facts. Children--who should be buzzing about with so much energy that we have to ask them not to exercise--aren’t moving around that much anymore.

Ironically, part of the problem is the diminished role of physical education (P.E) in many public schools.

Bullish Thoughts remembers very well how P.E was part of the primary education curricular back then in rural Chivhu. In fact, P.E was so important that there were competitions for various related P.E displays.

Nowadays, stats indicate that only one in four children get 30 minutes of daily exercise, and by the time they’re teenagers, only 12% are getting their daily recommended amount of physical activity.

So what? Bill Gates probably spent more time tinkering with computers than he did on the basketball court, and he turned out fine. But not all of us are Bill Gates. In fact, only one of us is. Most of us could probably use a little brain boost, and it turns out that exercise does just that. In studies of students, vigorous exercise was shown to improve IQ scores by 3.8 points--and test scores, too.

This applies to adults, as well. Exercise improves memory, releases brain-derived neurotrophic factor (a protein that makes your neurons healthier), and has been shown to potentially increase the size of your hippocampus--the part of the brain responsible for memory and spatial recognition. It’s no surprise, then, that college students who work out before class do better on tests, and workers who work out are more efficient.

The lesson? If your employees want to take a longer lunch break to hit the gym, you should let them. You’ll be getting more than enough out of them in the afternoon to make up for the lost time.

See the full infographic below, if you’re not too busy at the gym:

Mr Fund Manager….

After hitting the gym, Bullish Thoughts bets you that Mr Fund Manager would be in the right frame of mind to know that it’s time to take profit after the market rally, offload some ZECO & MedTech shares and appreciate that the more money you have, the harder it becomes or risky rather, to trade penny stocks!

Or perhaps you will understand why you missed the BAT rally and a healthy dividend payout at the same time.

That brain surely needs financial exercise.

Exercise & Invest Wisely!

(Report on fitness by OnlineCollegeCourses.com, Additional editing by Bullish Thoughts)

Diamonds & Dogs: Are stock market analysts scared of making wrong recommendations?

 

Diamond: Meikles Africa (US20c, WTD: +17.60%, YTD:  23.50%, Mkt Cap $49,074,958)

Diamonds & Dogs gotta say that if wishes were horses, he would have preferred the Meikles Africa of pre-demerger period with Kingdom Financial Holdings.

Those days, Tanganda was separately listed and therefore had more financial disclosure when it reported its financials.

Essentially, the information was fairly easy to understand. Now Tanganda is reported on just like TM & the departmental stores implying more difficulty/ less financial info availability.

Back to the parent company: Meikles Africa used to be a blue chip stock, the kind where a fund manager of stockbroker would just paste a buy or recommendation without doing any analysis at all.

It was deemed a defensive stock, the TM Supermarkets taking care of the ever consumptive economy, departmental stores catering for the credit market while the hotel business was the icing on the cake given the Leading Hotels of the World affiliated Meikles has been the best hotel in Zimbabwe even post dollarization. So the assumption was that cash would flow to the business.

The stock even traded at 82c on 29 & 30 June 2009 (note that the entire market was close to an all-time high). The stock fell and seemed to have a support level at 55c, then 32c then 18c before trading as low as 12c.

The movement from an all-time high of 82c post dollarization to a low of 12c represented a capital loss of 85%. Currently the price is around 20c which is still 75% lower for the greater fool which bought at 82c and 64% lower if bought at 55c.

Whilst price is moving up, there has been no resolution to the c$60m debt that the group is saddled with.

That amount of debt is every investor’s worry. Won’t Meikles Africa do another RioZim…Lose shareholder value further while investors suck up the price trend reversal?

Diamonds & Dogs will be watching the space especially on the fundraising issue given that a sum of $200m has already been thrown around.

It is envisaged that the funds will be raised through largely debt and also offshore. It would be interesting to see if Meikles Africa can attain the funders’ confidence the extend of Econet Wireless (Zimbabwe & Global) that has seen it raising a $300m syndicated facility locally and offshore over and above series of finance facilities from regional finance institutions.

Finally, have you noticed that fewer and fewer stockbrokers, fund managers and analysts are rating Meikles Africa?

Should be all scared of making a wrong call especially in the wake of having gotten it wrong on Starafrica, TA, RioZim and Bindura Nickel!

Or may be the majority of stock market research peddlers are sell side analysts? Just wondering aloud! But whatever the reason, the ZSE generally is crying for quality research reports and sound analysis whether buy or sell side.

Meikles’ Weekly Trading Statistics

	Attribute	08-Oct	09-Oct	10-Oct	11-Oct	12-Oct
Meikles	Price	17.02c	17.5c	20c	20c	20c/21c
	Volume	7,181	3,092	3,127	35,380	-
	Value	$1,222.21	$541.10	$625.40	$7,076.00	-

Dog: Afre Corporation (5c, WTD: -33.33%, YTD:  +66.67%, Market Cap $10,856,195)

Diamonds & Dogs will not deliberate much on the capital loss registered by Afre Corporation in the past week given that the volumes and value of trades are just over $800 for the whole week.

Instead he takes a look at the now public rights offer document. Afre Corporation recently published a cautionary/ circular with the details of the rights offer that had been pending for a long time. The rights offer will be deliberated on 26 October at an EGM, the same meeting which will deliberate the outstanding directorship changes as recommended by IPEC.

Approximately US$8,630,675 is expected to be raised by way of offering approximately 162,842,928 Rights Offer ordinary shares of nominal value of US$0.001 at a price of US$0.053 per share to holders of Afre Corporation shares on the basis of three (3) new ordinary shares for four (4) ordinary share already held.

The Rights Offer shares are payable in full upon acceptance and within the Rights Offer period, and will rank pari passu with all existing Afre Corporation ordinary shares including the right to receive all dividends and other distributions thereafter declared, made or paid on the issued ordinary share capital of Afre Corporation with effect from date of issue.

The Board indicated that the Rights Offer is being undertaken to address minimum capital and solvency requirements of Afre Corporation's insurance businesses, namely TristarInsurance, FMRE Life & Health, FMRE Property & Casualty Zimbabwe and FMRE Property & Casualty Botswana.

It is interesting to note that the second biggest life insurer and health funder, First Mutual Life is not part of the capitalization drive.

A scan at the 1HY2012 financial numbers from First Mutual Life shows stable business growth which obviously has had an impact on the balance sheet growth of the same business

First Mutual Life Gross Premium Income Analysis
	June-12	June-11	Growth
	$’000	$’000	%
Life assurance	4,825	4,065	19%
Medical Savings Fund	17,634	14,712	20%
Employee Benefits	5,406	8,278	-35%
Total	27,865	27,055	3%

The business has stabilized significantly post dollarization with the fairly new Medical Savings Entity now accounting for a big chunk of Afre Corp revenues whilst still seated at a health claims ratio of 67% well below regional averages of 90%. Whilst Employee Benefits did witness a downward swing in premiums largely emanating from the loss of investor and policyholder confidence during the tumultuous 2010/2011 period, the unit is still profitable and is certainly going to build upon the leadership renewal that has happened at the holding company.

First Mutual Life Claims Analysis
	30-Jun-12	30-Jun-11	Growth
	$’000	$’000	%
Life assurance	1,575	1,649	-4.5%
Medical Savings Fund	11,732	11,176	5.0%
Employee Benefits	1,613	2,928	-44.9%
Total	14,920	15,753	-5.3%

The Rights offer proceeds are expected to be utilized as follows:-

	Amount
	US$
Recapitalisation of FMRE Life & Health	$1.5m
Recapitalisation of FMRE Property & Casualty (Zimbabwe)	$1.6m
Recapitalisation of FMRE Property & Casualty (Botswana)	$2m
Recapitalisation of TristarInsurance	$1.65m
Settlement of Amounts owed to policyholders	$1.33m
Expenses of the rights offer	$0.55m
Total	$8.63m

The rights offer is being underwritten by NSSA which is the current major shareholder.

The Afre Corp Board of Directors has since recommended that shareholders follow their rights under the proposed rights offer as they believe that the transaction is in the best interests of both the company and its shareholders. Afre Corp’s balance sheet size will be materially enhanced enabling the  insurance businesses to underwrite more business, retire internal debt and purchase investments that meet liquidity and solvency requirements.

Afre Corporation Weekly Trading Statistics

	Attribute	08-Oct	09-Oct	10-Oct	11-Oct	12-Oct
Afre Corporation	Price	5c/7c	5c	5c	5c	5.2c/7.5c
	Volume	-	2,065	13,714	528	-
	Value	-	$103.25	$685.70	$26.40	-

One question on Diamonds & Dogs’ mind is: “What is the intrinsic value of Afre Corporation?” In as much as the market dictates the value through demand and supply, can anyone convinced that Afre Corp should be valued at $10.8m do the maths for us.

Is there a conglomerate discount at play here? A scan of various shareholder registers on the market will reveal that the equity investments alone of the Group exceed $10.8m. Despite the pending rights offer, is this kind of discount warranted?

At least Econet Wireless, another perennially undervalued stock, has recently rallied to $4.80 is now about 40% away from the market consensus price of $6.70.

If Diamonds & Dogs takes the plunge on Afre Corp, wont he be a mini Warren Buffet 5 years down the line?

The Weekly Bulls n Bears

Bulls	Bears

ZSE Round Up

Market Performance:

·   Total market capitalisation rose 1.65% to close the week at $4.5bn. YTD +12.17%.

·   The industrial index closed the week 1.86% higher at 151.8. The mining index closed the week 0.21% higher at 87.3.

·   All heavyweights recorded gains this week, with Innscor, Delta and Econet rising 5.56%, 4.79% and 1.05% respectively.

·   Meikles, TA Holdings and Dairibord were the top gainers of the week, up 17.65%, 17.12% and 17.07% respectively.

·    Afre, ZB Financial Holdings and Phoenix recorded the most significant losses, down 33.33%, 30.43% and 25.00% respectively.

Flows for the week:

·    Volumes traded and turnover totalled 55.1mn shares and $7.4mn respectively.

·    Share volumes averaged 11.0mn shares per day.

·    Average daily value traded was $1.4mn for the week. Trades were dominated by CBZ, Econet and Delta which made up 30%, 18% and 17% of turnover respectively.

·    RioZim was the only mining stock receiving significant interest as it accumulated trades worth US$178 thousand in the week.

 

Week Turnover Contribution

Delta and Econet Contribution to Total Turnover

In a sign of continued liquidity challenges in the market, the turnover trend continues to be depressed. Average daily trades are under US$1 million and from the plot above Delta and Econet have dominated the trades. Econet and Delta have a combined market capitalization of US$1.9 billion which is 42% of the total market capitalization. It is therefore not surprising that these counters drive the Industrial Index.

Invest Wisely!

Notes

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

** Statistical information was sourced from ZSE, IH Securities, BancABC Stockbrokers & Bulls n Bears (www.bulls.co.zw)

Bulls n Bears

Email: bulls@bulls.co.zw

Website: www.bulls.co.zw

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