eBusiness Weekly
Tawanda Musarurwa
Dual-listed seed producer Seed Co International’s secondary shares on the Zimbabwe Stock Exchange (ZSE) appear to be significantly upside due to their comparatively low pricing.
The group is listed on the Botswana Stock Exchange (BSE) where its share price is higher.
As at the end of trading yesterday on the BSE, Seed Co International’s share price was at 300 thebe (which calculates to circa 27 United States cents), although this is significant decline from 550 thebe on a year-to-date (YTD) basis.
And on the ZSE, the share price yesterday closed at 280,45 Zimbabwe cents (approximately 17 US cents).
The lower price of the group’s shares on the local bourse is perhaps indicative of the general underperformance of the market following several currency policy changes in the country.
Analysts say holders of its stock on the ZSE can hope to gain from significant potential upside.
“We estimate a forward EPS of ZW29,13 cents, which implies a F2020F PER of 9,5x. The company is very cheap compared to listed regional competitors (Monsanto and Corteva) with an average forward PER of 22,2x,” said analysts at Morgan & Co.
“The dual listed counter is cheaper in real terms on the ZSE (17,13 US cents) compared to the BSE price of 27,70 US cents. We believe there’s room for a re-rating of the counter on the ZSE to match the BSE price.”
Seed Co International was incorporated in Botswana under the International Financial Services Centre on 7 July 2000. It was Zimbabwean firm, Seed Co Limited’s fully owned subsidiary until shareholders approved the unbundling and separate listing of Seed-Co International on August 9, 2018.
Seed Co Limited retains a 26 percent stake in Seed Co International.
Seed Co International is one of the leading certified seed companies authorised to market seed varieties developed by itself, Government and other associated seed breeders in its markets.
In its half-year to September 30, 2019 results, Seed Co International’s revenues were unchanged at US$17,6 million due the effects of depreciating regional currencies, which offset an increase in sales volumes during the period under review.
But the group’s half-year losses have largely been attributed to the seasonal nature of the business, and observers see its financial fortunes improving in the second half of the year.
