Investors await the release of 2011 financials

Corporate profits as reported by ZSE listed company could have risen to $500m in December 2011 if the financial results that will be reported in coming weeks are aggregated. This figure will be up by 50% from the year 2010 and must come as a huge surprise to investors who have all but ignored the stock market in recent months. Stock prices have plummeted and valuations plunged to levels not seen since October 2009. Since the dollarization of the Zimbabwean economy early 2009, listed companies have continued to report improved financial results. In 2010 alone listed companies generated a net profit figure of nearly $300m. This figure excludes the profits generated outside Zimbabwe by Old Mutual and PPC, and is fast becoming an important number to watch. Highlighting the importance of Blue Chip counters on the ZSE, nearly 90% of the profits are being generated by 10 companies namely Econet 39%, Delta 12%, Innscor 7%, CBZ 6%, Hippo 6% and Seedco 5%. It will be interesting to see whether financial counters which contributed over 15% of 2010 corporate profits will do any better in 2011. If the half year results released in 2011 are anything to go by and barring huge provisions for bad debts, it is very likely that their contribution will exceed 20% and stop shy of 25%. Will the dominance of Econet be challenged by Delta whose profitability continues to rise following its well timed expansion program. Time will tell! Another point to emerge from the above analysis is the lack of any meaningful contribution from our listed mining companies. Despite double digit growth at industry level, the 4 listed mining houses save for Falgold which has just turned the corner after reporting a $1.5m profit we have not seen anything corporate profits from them in the last 3 years. What is wrong here? None of these companies have been recapitalised over the last 10 years!!!!