Member Info for Rufiji

There has been a major outbreak of Cholera in Lusaka ( 60 dead over 2000 infected) and the Government has had to resort to extreme measure s to control. These have started to impact food retail and restaurants with 3 Hungry Lion outlets closed until further notice on account of infected food having been found, and the possibility of supermarkets being forced to close. One major Pick N Pay store was closed today. The probelm is not so much the hygeine standards of the stores, but staff bringing in the baacterium from infected areas. Hopefully the epidemic will be brouht under control by the measures taken.If not, it is likely that additional Hungry Lions could be closed and such action could sread to Shoprite Supermarkets and stand alone Zambeef sites.

Shareholding of Zambia Airlines confirmed as 55% Zambian Government and 45% Ethiopian. Lots of noise about how foreign airlines have a monopoly on growing pax numbers but pay little to fiscus/ economy, so do not expect any favours for FJET. Initial focus on domestic routes with cross border routes to follow fairly quickly. These will be most likely point to point flights from LUN to adjacent countries similar to Air Malawi, and so to avoid conflict with existing Ethiopia bus stop services via Addis. If FJET can by hook or crook obtain the rights to LUN-Maputo that may be a useful flight given growing Zambian trade via Maputo port owing to problems with Dar and Durban, but not sure in Zambian authorities will be receptive.

Best wishes to all for 2018. Assuming no one off disasters, as has been the case on a regular basis, maybe the half year will see PAT of $5 million - $ 7 million and the base for further upward moment. The rains look like being reasonable and the exchange rate has even retraced some of its recent fall so if it can hold its position to end March, hopefully no significant foreign exchange adjustment. The main brands Zambeef, Zamchick, Master Pork and Novatek ( animal feeds) seem to be doing well with a big push coming from an accelerating and expanding Shoprite expansion.Zamhatch holds potential but Zammilk , which distributes through the retail estate and Shoprite, remains a modest third in market share. I have no idea how Zamflour is performing but I would hazard not well while Zamshu seems to exist only to use the animal hides that otherwise would have no local use and presumably covers some costs. The commodity picture is blurred with wheat prices moving upwards but soya falling back to their lows. Overall, there does seem enough evidence to hope for.some share price recovery, but this is ZAMBEEF .........

I would be wary of any plans that involve CPT. Disappointment has followed the efforts of many airlines to establish flights from Africa to CPT. CPT is not a black african destination and better in my view to grow the JNB hub.

The Zambian Government has announced firm plans to launch the national airline= Zambia Airways,in conjunction with Ethiopian Airways as the strategic partner. The Government will contribute an initial $30 million. Domestic routes are the priority with international routes to follow. It is anticipated that the airline will up and running by the end of the first half of 2018.

Zambia have no love for FJET. They have also just reiterated that the country needs a national airline which no doubt will be prioritised. However, it is a moot point whether the government can fund a new airline given the pressure on its debt service position.

Some of his sells are interesting including CAKE BOO and FEVERTREE.

Two new Shoprite.developments; Chirundu on the ZimZam border to open shortly and the ground cleared for a large store next to Woodlands Stadium in Lusaka on the border of high income Woodlands and middle income,Chilala/ Lubala. Back in the 1990s.we had to trek monthly to Harare to,stock up on essential groceries. Now the shoe is on the other foot and plenty of Zimbos shopping in Zambia.. So I am expecting Chirundu to be a great success.

DD77 Yes, we seem to watching from the same grandstand. Rumours locally that Grogan could also be looking to exit. I do not begrudge him his big bucks and he deserves the accolades for having the vision and drive to get ZAMBEEF up adn running and I think the link with SHOPRITE was inspired. But he did let his ego get captured by the profile of the deal rtger than the reality of the operation, and he was well turned over by Casili over Amanita. By luck or crook we managed to exit that matter at better bucks than I expected, but he the focus is on operational efficieny then a different set of skills are needed at executive level. Dear Old Jacob, the Chairman, is an ex Bank of Zambia Governor from the mid 1990's and one of the local "great and the good". Unfortunately he has no real understanding of business and is not the man to challenge Grogan. He merely adds respectability to the board rather than competence.

SAA,AIRLINK AND.SA EXPRESS are seperately constituted companies under TRANSNET, the RSA transport state owned parastatal . Plenty.of local comment on merging all three into one national carrier as there would be considerable cost savings, although only heaven knows what interesting issues a proper due diligence would throw up. With considerable pressure from the ratings agencies.to bring some.sort of financial order to Transnet there is a push to boost profitability, which means imo a continuation of protectionist attitudes, but we will.see.......

DD77, you have raised several good points My take is that there could be a substantial uptick in profits over the next couple of years. This case rests on the following: 1 Non recurring material items such as the diesease outbreak in the wheat crop. It twould be high odds against a repeat 2 Agricultural commodity prices are hardly booming, but the like of soya and wheat are off their bottom 3 The corproate action to boost chicken production 4 Exiting ZAMPALM and goodbye to the whole AMANITA mess. 5 Growing revenue on high operational gearing leading to increase in revenue falling through to the bottom line while the new focus seems to be on making operational efficiencies rather than on agressive acquisitions. 6 AND most important, contiuing substantial growth in cold strorage and retail driven in part by material outlet expansion by SHOPRITE in Zambia The risks are: A FOreign exchange losses and the ZMW is weakening against the USD while the NAIRA looks in a critical condition also.The ongoing paydown in debt should mitigte to an extent B ANother exceptional operational disaster C A slow down in the Zambian economy. Porbably not for a couple of years but there is empirical and analytical evidence that government borrowing is approaching a tipping point I am pushing for 20p this year , with the possibility of more if operations run more smoothly. Remmeber this share was trading around 60p not that long ago The Board contains a number of well connected local dignataries , especially the Chairman ,but who do not provide a working counter-point to Grogan. Perhaps the heightened role of CDC will improve decision making

Top line growth does need watching as you have highlighted. It was 11% at the interim stage so second half revenue growth may actually have been closer to 9%.Operational gearing would seem to mean a greater proportion of revenue growth falls through to the bottom line, and there may have been some timing differences in the opening of new.stores year on year, but it would have been useful to have a like for like figure. PEG of just over 1 supports the share price on this sort of performance but I would like to see revenue growth back up to 11% even if the net margin is healthy for this type of busines.

Ethiopian Airways are now.flying LUN-DAR .and.return via LLONGWE/BLANTYRE using Air Malawi Dash 8 aircraft. Fares seem to be cheaper than FJET and flight duration not much longer than flying via HRE. Leave LUN around 14:30 and get into DAR at 22:00 or thereabouts. Ethiopian also fly LUN HRE once or twice a day.and.the return leg. The fares are shocking. $600 is cheap and for the dates I checked Emirates.are.seeking.$1000

I have to disagree. The last thing we need is to increase our debt burden to purchase run down agricultural assets with considerable exposure to volatility across commodity markets. Borrowing USD against African.currency income is dangerous as the.history of ZAMBEEF's many significant above the line adjustments has shown while exposure to negative commodity price movements.and.disease is the latest.excuse for the.company's low quality earnings. That having been stated if.Shoprite decide to invest in Zimbabwe I would see an expansion of the in store concessions and.supply contracts for.Hungry Lion as positive. John I agree with your observations and "wote bora" for your new.investment opportunity.

Apart from Mugabe the ZANU PF cast from the past 20 years is still in power and there is no way the army is going to relinquish its privileges including an economic stranglehold on the diamond fields and trophy hunting. Outside agriculture Zimbabwe's prosperity was always artificial. In the 1950s/1960s the white settler population was allocated significant economic privileges under the UK government to stop them formally aligning with the Nationalist government in South Africa and.economic.development in Zambia/ Malawi under the Federation was discouraged ( understandable at the time), and in the 1980s.it captured multinational operations trading into Africa while South Africa wad closed for business. These advantages no longer exist and I would hope merely for a gradual stabilisation of the.economy and perhaps some signs of recovery in agriculture and tourism. Taking a contrary view I am happy with the current state of play whereby FJET expand.gradually as their competitive position strengthens. I do not think we need the restoration of direct flights to.Harare by.the like of BA KLM SWISSAIR QANTAS etc which were a feature of air travel up to the late 1990s and which would terminate the need to use the FJET shuttle.from JNB.

John, thanks. I take your observation as a compliment. I take my moniker from the Rufiji river in Southern Tanzania where the Konigsberg was sunk in the First World War. I have worked in Tanzania and Northern Mozambique and a friend is a friend indeed. I agree totlly with you on Grogan but he does see himself as the local "Big Swinging Dick" when it comes to corporate actions.

John, Zimbabwe is a complete economic mess, but if the new government ( whatever form that takes; the Head of the Army has flown to China !?) seeks rapprochment with the West there is plenty of money waiting to come back in. They seem to have been reduced to using BItcoin. However, let's wait and see. I only hope Grogan doesn't let his ego get ahead of him.and feel he has to do some sort of high profile deal. Hopefully CDC are a calming influence. By the bye the 90% figure is a bit misleading; it means people not employed in the formal sector so excludes domestic workers, casual workers, self employed, informal traders etc. THe figure for Zambia would be around 80%.

It would have been reassuring to get some positive guidance for the current.financial year, but there was just a wish list of improving margins and reducing operational costs. The dire performance of the ZMW since the close of the 2017 ( down 20%)could indicate significant forex losses may also be in the offing. If they could get profit up to $10 million that would trigger a re-rating but there always seem some random negative factor

Some areas of operational concern in the results. Inflation in Zambia is around 6% 8% but revenue only increased 2.5%. If there significant additional outlets then like for like sales must be under pressure. Lowly rated and potential for a significant rerating but they do need to improve operation performance. Would have preferred Grogan ro,have stepped down

I agree the sentiments but would.be wary of taking anything at face value out of the Government mouthpiece that is ZNBC. The challenge is that Zambia since independence has had a food policy that favours cheap grain for the urban masses in order to suppress political protests from volatile sections of the population.The maize price imposed this year was below the cost of production and.export bans come and go. The pastoral sector has been generally ignored with Zambia having around 3 million cattle compared with Kenya's 15 million on the same pastorage. Elsewhere the storage and logistic framework is primitive ::) ::).There have been some promising advances in potatoes, vegetables, soya honey rice and meat particularly pork and chicken but much more is needed to scale up. ZAM is working to drive up meat production particularly chicken but in cooperation with RSA companies.that may not benefit local producers. For the next two years a rising population and higher disposable income will be imo the key drivers.for ZAM and I am positive providing the regular extraordinary corporate disasters are avoided.