Business
TBL shares sold out amid hopes of strong earnings
The TBL packaging area; The company’s share sale was oversubscribed, with experts attributing the success to the firm’s financial statement. Picture: Leonard Magomba
Posted Sunday, January 8 2012 at 12:05
Tanzania Breweries share sale was oversubscribed by 145 per cent as investors bought into the offer on expectations that the brewer will continue posting strong earnings.
East African Breweries (EABL) was able to raise the $76.6 million it was looking for from the sale of a 20 per cent stake in TBL through an initial public offering at the Dar es Salaam Stock Exchange. The IPO received applications from 2,081 individuals and institutions for a total of 144.4 million shares against the 58.9 million shares on offer. Each share was selling for $1.30.
Brokers and transaction advisers to the offer said the demand for the shares was from both local and international investors buoyed by TBL’s growth prospects in the Tanzanian market.
The TBL IPO opened on November 6 and closed on November 25. Demand for the shares at the DSE remained high in the first week of trading in 2012 with the counter being the top traded stock with a turnover of $220,000 on January 4 and $670,000 on January 5.
The TBL counter is expected to remain active despite the general market indicating a low level of activity at the bourse due to tight liquidity in the economy and high yields of fixed income securities and money market instruments.
Across the border at the Nairobi Stock Exchange, foreign investors were last week rushing for EABL shares expecting the brewer to post strong earnings growth in the full year to June 2012 following the disposal of an associate stake in Tanzania Breweries, which will generate a one-off gain.
“We expect the brewer to post strong earnings growth for 2011/12 due to the disposal of an associate stake in Tanzania Breweries. Growth volumes are also likely to be good in the near term, with the inclusion of Serengeti Breweries on a full calendar year,” said analysts at Standard Investment Bank
On Friday, EABL’s shares trading at the NSE shot up 1.1 per cent to US cents 2, on the day TBL released the IPO results. EABL, which is majority owned by London-based Diageo, sold its 20 per cent in TBL, which is majority owned by SABMiller the South African brewer, as part of a deal to divest from the Tanzania-based beer maker.
The Kenyan brewer went on to buy a 51 per cent stake in Tanzania’s Serengeti Breweries in order to maintain a presence in the market.
EABL and SABMiller decided to end their eight year deal where they marketed each other’s products in Kenya and Tanzania respectively.
The end of the relationship also saw EABL buy back a 20 per cent stake in Kenya Breweries Ltd (KBL) from SABMiller. EABL secured a $219 million loan from its parent company, Diageo, to fund the buy-back from SABMiller. Both are now set to battle it out for the Tanzanian market, which offers good growth prospects.
TBL recorded a sales revenue growth of $239 million in the six months to September 2011 compared with $181.1 million over the same period the previous year, which represented an overall increase of 32 per cent. The brewer’s net profits in the six months ended September 2011, increased by 77 per cent to $46.2 million compared with $26 million in the same period a year ago.
TBL managing director Robin Goetzsche said the growth had been driven by increased volumes, improved product mix and inflationary price increases over the past year. The company’s overall volumes in Tanzania also grew by 21 per cent for the half year, having been flat in the previous period.
Additional reporting by Emmanuel Were
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