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So the imf have not been fooled by Zambian Gov hiding of debt. Maybe the government, in buying the palm farm, was trying to bolster the books by buying an asset cheap and putting it on their register at a much higher valuation. Can then be seen both as a win for Zambeef (Focus and cash) and the government (hides excess spending and keeps poor region stable). Blinder by Zambeef if they timed the deal to coincide with pressure from imf. Pure speculation of course and they would have needed hundreds of equivalent deals to get near the dodgy hidden country debts in the billions
Well, a look at the local political blogs ( try Zambian Watchdog) suggests that it is Zambeef that has been getting one ( or 16 million of them) over the Zambian Governement after having squandered around $20 million on the palm project originally. We now seem to be rid of all the Amanita dross which is good news even if shareholders paid a material price ( imo almost certainly Amanita was a major cause of the share price collapse). Perhaps also management can focus on managing the potentially very profitable core buisness as opposed to hubristic deal making. The Irwin family were very close to Sata so perhaps influnetce remains with the PF government. Carl Irwin is also a calming influence on Grogan who has vision but not perhaps application. Unlike with edible oils ( Amanita) where barriers to entry were low for savvy new entrants, they are much higher for the cold store and beef, pork and chicken components. The partnership with Shoprite is going well. Less enthusiastic about the cropping side. processed meats
Huge sales at the moment with occasional big buy. This is abnormal - we should be expecting an rns as the seller must be a major investor. Possibly also the buyer.... could this be the Zambian government raiding the pension piggy bank?
Repaying the debt de-risks the balance sheet and.mitigates against the negative impact.of forex movements. The ZK peaked at around 8.5/$ in mid summer but has since retreated.to.9.7 and.could go lower if IMF talks.are.delayed plus pressure on Bank of.Zambia to reduce interest rates. Against this backcloth not repaying the debt could have led to material negative forex.adjustments. The totally integrated business model does.not.convince me as it seems.rhat management.have to be.competent in managing risk all.along the .cropping,.production, logistics and front end chain, so pleased.to see some.greater focus. Moreover.the marriage with Amanita was a shoe in for divorce. The good news.is that prospects for.cold.storage, meat and chicken production seem excellent.with consumption increasing and.Shoprite supermarket continuing to expand.outlets .:
I don't think it's a long term plan, just a temporary tactic to get through the current political turbulence. I wouldn't expect they are a takeover target, as any acquirer would face similar issues but never say never. I think ZAM will just go quietly about their business expanding their retail footprint, increasingly abroad. Vertical integration is key to their success and riding out any fluctuations. Currently though they are just riding out the political storm, which we all hope will not be longstanding. You never know though, because as they say 'TIA' - This is Africa
Morning all..DD77 you see that doesn't cut it for me investing in a Co that deliberately makes itself unattractive by whatever means to dissuade predators. I take your point regarding Zam but running down debt will require the Co to increase t/o & profits. As a short term measure I can live with but long term for the future of all employees and shareholders Zam must be a strong, profitable concern hopefully with strong free cash flow which would help us should anyone show an interest in acquiring us. I have never read of any take over rumours re: Zam but you may know better.
Well out of the ordinary share trading day, vols of 1.7m & chunky buys and sells. Guess this will simmer down in the run up to the results. Thereafter it's a hold if you have the stamina and Zam keeps Lungu on side. As Zam is the pre-eminent feeder of the nation he knows which side his bread is buttered!
Good news...more sellers...so obvious!....Ignore if your a lth.
The impact of septoria has proved less severe than first thought and yields will be down by c 10% not 20% as first thought. A small profit will be reported for the year. Good news!
Short term the sale of Zampalm for £16m (+£2m) and retaining a 10% stake makes sense as the oil palms were not revenue producing and the future running costs would have been considerable. As Zam received c: half the current markt cap for upfront cash even at a distressed level looks a good deal and near to book. On balance Zampalm most likely didn't really fit within Zambeef's main strategic outlook as new competitors had entered the market supplying high quality soya been oils. Running a sustainable oil palm business exclusively for the domestic market is very expensive and labour intensive not to mention currency and exch rate worries may have been a drag on earnings for quite a few years. So while i was initially dubious about the sale to IDC, Zam looks to have pulled off a really good deal. The focus will be to cont developing the retail & cold storage arms, where there is considerable scope for increasing earnings and overall debt reduction. No doubt the Zambian economy will play a huge part in Zambeef's progress in the years ahead and is forecast to increase its GDP to 4.5% (up from 4.0%) for 2018. I was surprised to learn that Zambias GDP had averaged 6%+ over the last 10 years making it one of the fastest growing world economies. If Lungu (in charge till 2021) can capitalise on this and steer the economy from a dependance on copper (prices improving in '17) then Zambeef is ideally placed to prosper given a fair wind and no external shocks. Cont to hold.
Chunky 853k worth £94k goes through at 11.11 c .28% of outstanding so hardly material unless it's a determined seller off loading on political worries. Don't see a return to 14 anytime soon given the likely loss to be reported in late Nov. Time to move on methinks.
Wow! A United Nations of interested parties. Should be able to keep Zam from imploding in the near future! Noone wants another Zim that would kibosh any future investment in Southern Africa (upheavals in E.Africa don't help). Mind you when Mug goes things could look up if a stable Govt can be formed. Guess it's just another risk one needs to be aware of as certain o...lies will attest.
Crop diseases should be all part of farming. Some years you lose, some years your competitors get the diseases and you win. The added value stream should keep on rolling depending on the Kwachas in the pocket. The dirty politics is ongoing and unless resolved in next year or so, will mean Zambia may go the way of Zimbabwe. Big players manoeuvring with the US putting some muscle in their embassy. China heavily involved and obviously UK as old colonial. With Brazil big in meat, and Indians being accused of state capture, South African opposition showing allegiance to Zambian opposition, the the only missing big player from the West or BRICS appears to be Russia. The Israelis, Emiratis, Nigerians and Saudis are in the mix too for good measure!
The stock had a 'look' at 10 and didn't like what it saw....think we're gonna be range bound for sometime to come. Essentially the shares have fallen on the bad news from the cropping division due to outside factors those of falling prices and fungal disease which has impacted on yields. Retailing and Cold store have both performed above expectations. The market may have over reacted as diseases of one sort or another are an inherent factor in all forms of farming. The geo political stuff I'm not qualified to pass comment on and even if worries on that score are priced in? Look certain to post a smallish loss but paring down debt is a plus. The fungal hopefully will be brought under control and next year will see a better all round performance if prices revert to the normal. F/Y results towards end of Nov....my friends cont to hold.
Evening rev...Yea the other place took up much too much of my time and emotional dependence these last few years. Have to say we were very lucky with the posters who to a man were well reasoned, knowledgeable and polite. We deserved better than what Sphere finally dealt us. I'm a bit disillusioned with shares at the moment and after my recent body blow it's time to call it a day. If I ever had any touch it's deserted me and my confidence and nerve has duly suffered. I'll keep an eye on Zam though probably not post anything of interest or sense, so will leave it to you rev to keep us informed.
I've also had that view rev that they're bunkering down, trying not to be a target and becoming as risk averse as possible - all due to the unstable politics. I maintain they are a solid foundations for the company though and extending the retail footprint to other countries is beneficial
Does anyone know the return on investment for Zampalm?
Maybe you will have to come back here for your nattering about footie? The Zambians love the game and what will you do all day when the other place delists?!
That is the crock of sh. It. Various news reports were suggesting this was a politically linked transaction which is my biggest concern. The minister of finance was about to be fired for being too good??! And this deal takes place day before the action???? Any link to the dirty politics is not good either way. My view is that this is the company bunkering down, get a big load of cash out of the country and possibly become neutral on cash/debts in foreign currency. Keep the foreign debt payments up as they come off operating profits and minimise tax payments to a possibly illegitimate government with their hands in the till. Why keep 10% - another big question. Obviously government are not farmers so Zambeef still managing facility and will also get to know if any onward sale taking place. There is also I believe a big political figure with a neighbouring farm of palms. It's the weaving with politics I don't like as we have seen before with the formaldehyde scare and the zamanita tax demand. Otherwise a great deal for company at current share price. If only they could sell those other farms at list price, we would have recovered the market capitalisation with tiny loss of current business.
I can understand the rationale for disposing of Zampalm, with its capital intensive nature and long lead times but it is disappointing all the same. Perhaps more so is the trading update as to me it doesn't sound like the worst is over with and I think the results might be towards the bottom end of the guidance. Management need to get a grip on things, as things are spiralling rather worryingly
Which was the crock of itsh, the 16 or the 30?
Not me sorry. But $16m against a MC of 30m .
For my 12p shares this morning, a non-core part has just been sold off for 4p cash. Apart from the profit warning that is a bit of a repeat, and the loss of a 'potential' revenue source, this may not be too bad. Can someone insult my maths please?
yes seems a shame , and now with only a £30 mc starting to look under valued. i will be looking to top up , av down around 8p .
Sale of a great longterm asset due to external price falls in the cropping division don't make sense to me. Prices fluctuate all the time and surely they have hedges against this? Oil companies do..... hell most Co's do if trading across currencies! It's a small loss so easily recoverable this year. Have to hold.