KBL shares take hit

  • Investors incur capital loss of 26% per share
  • Sales volumes decline 4.7 %


During the 2017 full year, share price of the beer brewing firm, Sechaba Breweries Holdings Limited, contracted by 27.89 percent and 22.21 percent in Pula terms and US Dollar terms, respectively, from P27.00 at 04 January 2017 to P19.47 at 29 December 2017.
Thabo Mathews, Chairman of the board of directors announced in the company annual report.
He said this was below overall market performance with the Domestic Companies Index(DCI) having weakened by 5.75 percent in pula terms and strengthened by 1.68 percent in USD terms, to 8,860.13 points during the period under review. The share price decline combined with a gross dividend of P0.46 (0.28+0.18) per share, yielded overall capital losses of 26.19 percent per share for investors during the year ended 31 December 2017. In terms of share price performance, the counter ranked 22nd out of the 23 counters listed on the domestic main board for the period under review. Overall liquidity for the counter improved significantly year on year and was one of the top 10 most active stocks by volume. A total of 17.3million shares worth P353.1million transacted as compared to 3.1million shares worth P89.9million that changed hands in 2016.
Despite the tough regulatory environment which weighed down the company’s earnings, Sechaba remains fundamentally strong registering a Return on Equity and Return on Assets of 19.85 percent and 18.71 percent, above the market averages of 12.78 percent and 7.54 percent respectively. Although uncertainty regarding the counter’s operative environment (regulatory challenges); and the stock’s declining financial performance have eroded investor confidence to a certain extent, this reflected by the weakening share price, the counter is trading at a Price to Earnings ratio of 23.08x, a 69.21 percent premium to the market average of 13.64x, indicative of some positive investor confidence.
Overall total beverage sales volumes at Kgalagadi Breweries (Pty) Ltd contracted by 4.73 percent. Mathews said this decline was driven by three categories Traditional Alcoholic Beverages, all Non Alcoholic brands combined and Clear Beer category which posted declines of 7.6 percent, 7.0 percent and 2.7 percent respectively. Beer in both Traditional and Clear Beer had a tough start to the year on the backdrop of a slow economic downturn and unfavourable weather (Tropical Cyclone Dineo) impacting Botswana and the region with foods during the months of February and March.