Listed firms struggle

via Listed firms struggle – DailyNews Live by Kudzai Chawafambira  3 DECEMBER 2013  

Only 10 companies out of the 74 listed on the Zimbabwe Stock Exchange (ZSE) are still in “good shape”, says the local bourse’s chairperson Eve Gadzikwa.

This comes as several firms have voluntarily delisted in recent months as the biting liquidity crunch has made public listing expensive while the strict conditions are difficult to maintain.

“The rest are tottering,” Gadzikwa said, adding that “it is an industrial Armageddon.”

Among the best performing listed firms is Zimbabwe’s largest mobile network operator Econet Wireless, beverages maker Delta Corporation and insurance giant Old Mutual.

Since 2012, counters that were either suspended or voluntarily sought suspension from ZSE include embattled snacks manufacturer Cairns, Celsys, Chemco, Gulliver and Interfin.

Early this year, Tractive Power and Lifestyle sought voluntary suspension.

Last week, Interfresh Limited announced plans to delist.

The horticulture concern, intending to relist in the medium-term after “aggressive restructuring”, said after delisting, it planned to raise $6 million capital through convertible debt from private equity and structured finance markets, using valuation methods other than the stock market.

Market analysts said Interfresh had no option but to delist.

“Over the years Interfresh has been facing challenges. The disposal of its head office and loss of its land seriously depleted its balance sheet in a big way,” said one analyst who preferred anonymity.

“This has a significant impact on their share price. The business is hinged on land and they lost a significant and attractive piece of it,” the analyst said, adding that “they should have de-listed way back. It was long overdue.”

A random scrutiny of the ZSE’s volume of shares indicates that only a few blue-chip stocks account for the majority of traded stocks. This is also reflected in the stock market’s total market capitalisation where only three bellwether stocks namely Delta at $1,85 billion, Econet  $1 billion and Innscor $469 million account for more than half of the value.

The distortion is also reflected in that about five of the 70 actively traded stocks on the ZSE account for close to $5 billion of the $5,5 billion market value.

Listed companies are required to adhere to certain rigorous reporting and accounting standards, and maintain certain minimum internal and external audit and disclosure benchmarks.

Other stringent measures include maintaining register of investors, adhering to acceptable corporate governance guidelines, have specialist external financial and legal advisors and adhere to certain board standards.