Monthly Highlights: November 2021

•  West African equity markets were mixed equities as strong performance in Nigeria was offset by weaker returns in the BRVM and Ghana
•  East African equities were dragged lower by Kenya, Mauritius, Uganda and Rwanda
•  North Africa equities underperformed amid broad based weakness across the region
•  Southern African equities were mixed as strong performance in Namibia and Zambia were offset by weaker returns in Zimbabwe, Malawi and Botswana
 

In November, African markets were generally weaker with only four posting positive performance in dollar terms led by Namibia (+10.0%), Zambia (+5.9%) and Nigeria (+2.9%) while Zimbabwe (-13.32%), Mauritius (-6.1%) and Kenya (-5.6%) were the biggest losers. The markets were driven lower towards the end of the month, as South African scientists detected the Omicron Covid variant that has a "very unusual constellation" of mutations, which are concerning because these could help it evade the body's immune response and make it more transmissible.

West African equity markets were mixed equities as strong performance in Nigeria was offset by weaker returns in the BRVM and Ghana

West African equity markets were mixed equities as strong performance in Nigeria was offset by weaker returns in the BRVM and Ghana. In Nigeria, economy grew by 4.0% y/y in 3Q21 in real terms. This was lower than the 5.0% y/y growth reported in 2Q21, but was significantly higher when compared to the 3.6% contraction in 3Q20. On the earnings front, we digested poor 3Q21 results from Access Bank (G/E -12.3% y/y; PAT -9.1% y/y) mainly driven by lower non-interest income (-46.5% y/y) and higher operating expenses (+36.4% y/y). Zenith Bank posted mixed 3Q21 numbers (GE: +9.0% y/y; PAT: -0.6% y/y) as non-interest income growth of 15.8% y/y was offset by higher provisions (+659.4% y/y). UACN reported disappointing 3Q21 results (T/O: +17.5% y/y; PAT: n/a y/y) as the company reported a loss driven by lower efficiencies with gross margin shrinking by 458bp due to rising raw material costs and supply chain disruptions, particularly in the paints segment. MTN Nigeria announced intentions to proceed with a public offer for the sale of up to 575m shares in MTNN in November through a book build to institutional investors and at a fixed price to retail investors. Flour Mills of Nigeria (FMN) announced that it has signed an agreement to acquire a majority equity interest in rival Honeywell Flour Mills. The agreement enables FMN, to purchase a 71% stake in Honeywell Flour Mills. In Ghana, annual inflation accelerated to 11.0% in October from 10.6% in September, exceeding the central bank’s target band for a second straight month.

East African equities were dragged lower by Kenya, Mauritius, Uganda and Rwanda

East African equities were dragged lower by Kenya, Mauritius, Uganda and Rwanda. In Kenya, we digested impressive 3Q21 results from Kenya Commercial Bank (GE: +20.1% y/y; PAT: +198.9% y/y) as net interest income rose +19.2% y/y and provisions were lower -69.4% y/y. Similarly, Equity Bank posted strong 3Q21 results (GE: +19.4% y/y; PAT +49.7% y/y) driven by higher net interest income (+18.1% y/y) and lower impairment charges (+66.9% y/y). Cooperative Bank also posted strong 3Q21 results (GE: 18.6% y/y; PAT +18.9% y/y) as provisions fell by -50.3% y/y coupled by impressive growth in net interest income (+21.3% y/y). Telecoms operator, Safaricom, released relatively strong 1H22 results (T/O: +17.5% y/y; PAT: +11.4% y/y) driven by strong topline growth which was supported by a recovery in Mpesa revenue (+45.8% y/y) after the return to charging on P2P and Lipa na Mpesa transactions below KES 1k from 1 January 2021.In Mauritius, MCB released impressive 1Q22 (G/E +2.9% y/y; PAT +17.2% y/y) mainly driven lower Impairments ( -32.8% y/y) to MUR 0.8bn as the cost of risk decreased to 0.3% in 1Q22 from 0.5% in 1Q21.

North Africa equities underperformed amid broad based weakness across the region

North Africa equities underperformed amid broad based weakness across the region. On the earnings front, Commercial International Bank of Egypt reported strong 3Q21 earnings (GE: +13.2% y/y; PAT: +62.5% y/y) driven by non interest income which rose by +99.9% y/y and a -81.1% decline in impairment charges. CIRA, the education provider, posted impressive FY21 results (T/O: +27.8% y/y; PAT: +21.1% y/y) on stronger revenues and margin improvements derived from its higher education segment, and were broadly in line with our estimates. EIPICO posted positive 3Q21 numbers (T/O: +27.3% y/y; PAT: +14.8% y/y) driven by an impressive recovery in local sales (+41% y/y; c77% of 3Q21 sales), as retail sales (c90% of local sales) increased +27% y/y, following poor 2Q and 3Q20 performance due to the normalisation in its tenders business (+249% y/y; c10% of local sales) following disruptions that took place last year due to the restructuring of the Unified Procurement Authority. Integrated Diagnostics Holdings released impressive 3Q21 results (T/O: +104.6% y/y; PAT: +130.7% y/y) driven by the contribution from COVID-19-related tests which increased to c54% of 3Q21 revenue (c94% core tests [PCR, etc.] and c6% other related tests) vs. 21% in 3Q20 due to a recovery in international travel. Rameda reported study 3Q21 numbers (T/O: +33.7% y/y; PAT: +82.0% y/y) driven by a 42% y/y increase in total volumes sold, which managed to more than offset a -6% y/y decline in the blended average pricing. Cleopatra Hospitals reported muted 3Q21 results (T/O: +16.4% y/y; PAT: +1.7% y/y) as decent revenue growth, was pressured by: i) lower margins across the board; ii) a spike in depreciation and amortisation charges and iii) lower net interest income (-46% y/y to EGP4mn). In Morocco, Mutandis issued a 3Q21 trading update reporting that revenues were 30.0% y/y higher to MAD 467.0m attributable to progressive sales returning to the market and the contribution of the US Season Brand.

Southern African equities were mixed as strong performance in Namibia and Zambia were offset by weaker returns in Zimbabwe, Malawi and Botswana

Southern African equities were mixed as strong performance in Namibia and Zambia were offset by weaker returns in Zimbabwe, Malawi and Botswana. In Zimbabwe, Delta reported strong 1H22 results (T/O: +192.1% y/y; PAT: +73.7% y/y) on the back of volume recovery, driven by Sorghum beer (+68% y/y), Lager beer (+57% y/y) and Sparkling beverage (+95% y/y). CAFCA Limited reported solid FY21 results (T/O: +292.2% y/y; PAT: +139.9% y/y) as operating performance was anchored by volume growth, improved sales mix (more copper conductor sales and less aluminium conductor sales) and increase in the price of copper. In Zambia, Zambeef issued a trading update for FY21 financial year with revenues expected to be between 10% – 15% ahead of current market expectations, and EBITDA and EBIT to be ahead by 10% – 12% while profit before tax is expected to be 65 – 75% ahead of current market expectations.