ZSE Q2 top picks

HARARE - Old Mutual Securities (OMSEC) has recommended five counters as top picks on the Zimbabwe Stock Exchange (ZSE) during the second quarter of the year.

The counters are Axia, African Sun Limited (ASL), Art Corporation, Econet Wireless and Barlcays.

Axia has three main business interests, a 50,01 percent in Distribution Group Africa their highest revenue earner, 66,67 percent in TV Sales and Home and 26 percent of Transerv, a vehicle sundries, spares and parts company.

“The business has been consistently growing despite several constraints being experienced in the economy.

“We expect the company to grow more if the economic environment turns a corner for the better. The company exhibited strong interim earnings growth hence our revised target price forecast as we maintain a cautiously optimistic view for the outlook,” said OMSEC.

Axia’s current price is trading at 23 cents and are targeting a price of 41 cents.

Punters have taken advantage to buy cheaper stocks, but the market is taking too long to pick-up as foreign investors are not active on the local bourse as was the case last year.

ASL owns major hotels in tourist hotspots in the country such as Victoria Falls, the Nyanga mountainous region, Hwange National Park and City Hotels in Harare, Bulawayo and Mutare.

“Following the completion of Victoria Falls Airport, tourist arrivals have improved markedly.

The company’s profitability has improved on the back of debt and organisational restructuring with an international hotel management company taking charge of its major hotels,” OMSEC said.

The company is said to be in buy territory on the relative strength index scale and neutral on the moving average convergence divergence scale. The counter is presently trading at 3,75 cents and is targeting 6,83 cents by the end of the second quarter (Q2).

Commenting on Art Corporation, OMSEC said government’s directive to protect locally manufactured goods against imports has worked incredibly well as this has underpinned the company’s battery sales division.

“Significant shareholder changes and restructuring of their finances has buttressed this company’s performance and the outlook looks brighter,” they said.

The company is targeting price of 5,2 cents in Q2 from the current 4,33 cents.

“Econet is turning into a conglomerate as its sources of income through innovative technology provision continue to grow. We forecast that its banking subsidiary and dominant market share in mobile transaction services will ensure significant earnings growth for its upcoming results whilst its mobile communication business is expected to maintain its profitability whilst offering overhead cost containment advantages,” OMSEC said.

— The Financial Gazette

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