The stock market in Africa’s second largest copper producer Zambia has seen a fair share of activity this year with significant rallies across energy, mining, banking and agribusiness stocks. Over the last 3-years the local bourse only has one corporate with a market capitalization of circa K5 billion, ZCCM-IH the state mining investment vehicle. Today the securities exchange has a total of 4 stocks above the K5 billion benchmark reflecting growth both in shares outstanding and price sprints.
On Monday September 25, Zambia National Commercial Bank Plc (Zanaco) became the fourth mega cap stock to feature of the LuSE score board with a market valuation of K5.2 billion, sending the All Share Index (ALSI) to a new high of 9,427.26 a 26.02% year to date movement.
Zanaco being Zambia’s largest bank by asset size has defied odds by setting new earning watermark levels from FY21. This coupled with record dividend payments and a forecast ferocious growth has made the ISIN0000000250 stock attractive to investors. Zanaco shares are 12.9% firmer (YTD) at K3.6 a share representing a 665.9% sprint from FY20 levels.
The other mega stocks include Copperbelt Energy Corporation (CEC) that became the first K10 billion market capitalization entity after a 64% strong winning streak this year. The energy stock has taken a positive cue from dividend payments and above all a positive mining outlook. Most recently the stock jumped 23% after the announcement of the resumption of production at Konkola Copper Mines and the commitment by Vedanta to dismantle its areas for which CEC ranks highest in the cash waterfall.
From 2020 the year since stocks hit rock bottom, CEC has run 491.8% in price. ZCCM Investment Holdings was once the biggest company on the LuSE score board but has to date been joined by three industrial and a services sector stock. The mining stock has since FY20 appreciated 11.1% to current market value of K6.75 billion while Illovo Sugar subsidiary Zambia Sugar, since FY20 was the runner up in rally by 605.9% to K6.75 billion. Other stocks that have shown bull streaks include Zambeef, Puma energy and Chilanga cement respectively as global grain and crude prices soar.
Fundamentally, the mega stocks have shown impeccable resilience fueled by strong earnings growth from bullish business pulse despite rising inflation and constrained macroeconomic growth.
One homogenous attribute surrounding the mega stocks is undervaluation both in kwacha and dollar terms, a very strong case of expected recovery to drive further rallies. With a clientele base north of 5 million, ISIN0000000250 stocks could see a further pricing of exponential growth in an accelerated digital transformation era.
The Kwacha Arbitrageur
