RAHA KAMILI
JF-Expert Member
- Dec 5, 2014
- 203
- 83
TCCIA Investment PLC (TICL) is a public limited liability Company established under the sponsorship of the Tanzania Chamber of Commerce, Industry and Agriculture [TCCIA] with an aim of expanding its financing sources.TICL has invested on 8 listed companies, blue-chip stocks at the Dar es Salaam Stock Exchange (DSE). The investment portfolio of TICL offers an opportunity for investors to diversify risk of their investments and be in a position to generate high returnsby investing in more than 8 different companies listed on the Dar es Salaam Stock Exchange. Before the listing, the investment portfolio of TICL constitutedstocks from companies namely; Twiga (TPCC), TCC, Swissport, CRDB Bank, Simba (TCCL), DCB, NMB and TBL.
Performance of TICL portfolio from 2011 to 2015
A. TICL portfolio has outperformed DSE;
From 2011 to 2015, if an investor bought all shares at DSE and another invested the same amount of fund only at TICL; the fund invested at TICL could have grown more than 4.5 times greater than the one invested in all shares at DSE. This is because all shares at DSE yielded a cumulative return of 91.91% from 2011 to 2015 quarterly, as indicated by All Share Index (ASI); while TICL portfolio yielded a cumulative return of 422.16%.That means, TICL managed to select stocks at DSE that yielded a better return.
B. Dividend Income;
From 2011 to 2015, TICL portfolio received more than 5 billion (5,249,009,156/=) of dividend from stocks which it has invested in. The dividend received has been increasing in an increasing rate since 2011, on average each year 154 million has been increased compared to the previous year. This indicates the best selection of stocks that provides better dividends every year.
C. Structure of the Portfolio
From 2011 to 2015 TICL has been selecting the best companies to invest. Up to now, 91.30% of the portfolio is invested on the leading stocks at DSE. These leading stocks are TBL, NMB and TCC, of which 74% of the dividend received by the company from 2011 to 2015 comes from those three leading stocks.
NMB is also the first bank to come out of recession in 2016 with an increasing share price from August. This shows TICL pay close attention to their portfolio in order to maintain the good performance of the portfolio. Consider the following chart of NMB share price;
Other important facts:
The followingare four important facts that illustrates how bright TICL future is;
A. Stock Brokerage Business
B. Expected Liquidity of TICL shares at DSE
C. Current TICL value
D. Fixed Income Securities
A. Stock Brokerage Business:
It is in the future plans of the company after the IPO to obtain a Broker-dealer’s license. That means, it will engage in a stock brokerage business; therefore, adding more revenue to the company due to brokerage fees.
The stock market in Tanzania is in a rapid growth more than many other sectors. The number of investors who buy and sell shares on daily basis is constantly increasing. Consider the following illustration;
Number of participants
2014
2016
Residents
196,443
464,350
Non-Residents
564
766
TOTAL
197,007
465,116
(236% rise)
For the period of 2 years (2014 to 2016), markets participants at DSE grew by 236%. This indicates the market is growing at the high rate. The market is expected to grow at a higher rate because up to now it is only 1% of the Tanzanians that are participating in the market.
B. Expected Liquidity of TICL shares at DSE:
Companies whose shares are wholly owned by Tanzanians normally have a higher trading volume at DSE. This is due to the availability of the shares in the market. Shares that are owned at a larger percentage by non-residents have a lower trading volume, for example, ACA, JHL and NMG. 1 billion shares of CRDB mostly owned by Tanzanians, as a result it has great share supply which increases its trading volume (liquidity).
TICL investors will be assured of the high trading volume of their shares because TICL is currently (before IPO)wholly-owned by Tanzanians. Investors will be in a great position to benefit in case of any price movements of TICL shares.
C. Current TICL value:
Currently, TICL are being offered at the lowest price. The valuation to determine the offering price of Tshs 400/= was conducted on September 2016, at the bottom of the current recession. Therefore, the determined price became lower than how it could have been a year before that.
Since the market has started to gain its momentum slowly, the shares of TICL will be increasing as the market increases due to the positive relationship between TICL portfolio and DSE All Share Index.
This is a great opportunity for potential TICL investors for they are able to buy the company at the cheapest price ever!
Consider the following tables which illustrate the difference in value between December 2015 and September 2016;
Valuation of TCCIA Investment PLC as at 31 December 2015
SHARES
QUANTITY
CLOSING PRICE
VALUE
Twiga
88,348
3,000
265,044,000
TCC
301,800
15,950
4,813,710,000
Swissport
101,427
7,350
745,488,450
CRDB Bank
4,249,064
405
1,720,870,920
Simba
68,269
2,670
182,278,230
DCB
656,104
570
373,979,280
NMB
2,611,886
2,500
6,529,715,000
TBL
1,183,655
14,800
17,518,094,000
TOTAL VALUE
32,149,179,880
No. OF SHARES
71,092,400
VALUE PER SHARE (THERE ARE NO LIABILITIES)
450
If TICL was to be sold about a year ago, the price could have been Tshs 450/=.
Therefore, investors have an opportunity of buying the shares today at a lower price!
D. Fixed Income Securities
From the letter of the chairman, he pointed about the future products and plans of TICL, he said, “We will widen investment areas in other products that are currently missing from our portfolio such as Government securities, REITs, infrastructure bonds and other debt instruments. These offer a good trade off when returns in the equities board become unattractive”
Currently, the company only invests on equities. The expansion of the portfolio to risk free asset will ensure a stable return of the portfolio. Investors will be assured with the growth of the company’s portfolio.
HINT: TICL shares are available to the general public including foreign investors and diaspora, there are no restrictions in a matter of nationality. Any person interested can subscribe for the share through any Tanzanian broker. For more information, the sponsoring broker for TICL Initial Public Offer is Tanzania Securities Limited http://www.tanzaniasecurities.co.tz.
By Brian Edward Chuwa
Stock Analyst
CEO, Beacon Financials Limited
Performance of TICL portfolio from 2011 to 2015
A. TICL portfolio has outperformed DSE;
From 2011 to 2015, if an investor bought all shares at DSE and another invested the same amount of fund only at TICL; the fund invested at TICL could have grown more than 4.5 times greater than the one invested in all shares at DSE. This is because all shares at DSE yielded a cumulative return of 91.91% from 2011 to 2015 quarterly, as indicated by All Share Index (ASI); while TICL portfolio yielded a cumulative return of 422.16%.That means, TICL managed to select stocks at DSE that yielded a better return.
B. Dividend Income;
From 2011 to 2015, TICL portfolio received more than 5 billion (5,249,009,156/=) of dividend from stocks which it has invested in. The dividend received has been increasing in an increasing rate since 2011, on average each year 154 million has been increased compared to the previous year. This indicates the best selection of stocks that provides better dividends every year.
C. Structure of the Portfolio
From 2011 to 2015 TICL has been selecting the best companies to invest. Up to now, 91.30% of the portfolio is invested on the leading stocks at DSE. These leading stocks are TBL, NMB and TCC, of which 74% of the dividend received by the company from 2011 to 2015 comes from those three leading stocks.
NMB is also the first bank to come out of recession in 2016 with an increasing share price from August. This shows TICL pay close attention to their portfolio in order to maintain the good performance of the portfolio. Consider the following chart of NMB share price;
Other important facts:
- Tax Advantage: TICL has a great advantage when it comes to capital gain tax because in Tanzania there is no Capital Gain Tax. This means profits of the company derived from selling of securities will not be reduced due to tax. Therefore, the company has an opportunity to make more profit from the sale of securities.
- Dividend Policy: TICL has a dividend policy of paying 50% of the profit after tax as dividend to the shareholders. On average, most listed companies at DSE pays a dividend of 30% to 40%; this shows that TICL investors will be receiving more of what their company yields as compared to other investors.
The followingare four important facts that illustrates how bright TICL future is;
A. Stock Brokerage Business
B. Expected Liquidity of TICL shares at DSE
C. Current TICL value
D. Fixed Income Securities
A. Stock Brokerage Business:
It is in the future plans of the company after the IPO to obtain a Broker-dealer’s license. That means, it will engage in a stock brokerage business; therefore, adding more revenue to the company due to brokerage fees.
The stock market in Tanzania is in a rapid growth more than many other sectors. The number of investors who buy and sell shares on daily basis is constantly increasing. Consider the following illustration;
Number of participants
2014
2016
Residents
196,443
464,350
Non-Residents
564
766
TOTAL
197,007
465,116
(236% rise)
For the period of 2 years (2014 to 2016), markets participants at DSE grew by 236%. This indicates the market is growing at the high rate. The market is expected to grow at a higher rate because up to now it is only 1% of the Tanzanians that are participating in the market.
B. Expected Liquidity of TICL shares at DSE:
Companies whose shares are wholly owned by Tanzanians normally have a higher trading volume at DSE. This is due to the availability of the shares in the market. Shares that are owned at a larger percentage by non-residents have a lower trading volume, for example, ACA, JHL and NMG. 1 billion shares of CRDB mostly owned by Tanzanians, as a result it has great share supply which increases its trading volume (liquidity).
TICL investors will be assured of the high trading volume of their shares because TICL is currently (before IPO)wholly-owned by Tanzanians. Investors will be in a great position to benefit in case of any price movements of TICL shares.
C. Current TICL value:
Currently, TICL are being offered at the lowest price. The valuation to determine the offering price of Tshs 400/= was conducted on September 2016, at the bottom of the current recession. Therefore, the determined price became lower than how it could have been a year before that.
Since the market has started to gain its momentum slowly, the shares of TICL will be increasing as the market increases due to the positive relationship between TICL portfolio and DSE All Share Index.
This is a great opportunity for potential TICL investors for they are able to buy the company at the cheapest price ever!
Consider the following tables which illustrate the difference in value between December 2015 and September 2016;
Valuation of TCCIA Investment PLC as at 31 December 2015
SHARES
QUANTITY
CLOSING PRICE
VALUE
Twiga
88,348
3,000
265,044,000
TCC
301,800
15,950
4,813,710,000
Swissport
101,427
7,350
745,488,450
CRDB Bank
4,249,064
405
1,720,870,920
Simba
68,269
2,670
182,278,230
DCB
656,104
570
373,979,280
NMB
2,611,886
2,500
6,529,715,000
TBL
1,183,655
14,800
17,518,094,000
TOTAL VALUE
32,149,179,880
No. OF SHARES
71,092,400
VALUE PER SHARE (THERE ARE NO LIABILITIES)
450
If TICL was to be sold about a year ago, the price could have been Tshs 450/=.
Therefore, investors have an opportunity of buying the shares today at a lower price!
D. Fixed Income Securities
From the letter of the chairman, he pointed about the future products and plans of TICL, he said, “We will widen investment areas in other products that are currently missing from our portfolio such as Government securities, REITs, infrastructure bonds and other debt instruments. These offer a good trade off when returns in the equities board become unattractive”
Currently, the company only invests on equities. The expansion of the portfolio to risk free asset will ensure a stable return of the portfolio. Investors will be assured with the growth of the company’s portfolio.
HINT: TICL shares are available to the general public including foreign investors and diaspora, there are no restrictions in a matter of nationality. Any person interested can subscribe for the share through any Tanzanian broker. For more information, the sponsoring broker for TICL Initial Public Offer is Tanzania Securities Limited http://www.tanzaniasecurities.co.tz.
By Brian Edward Chuwa
Stock Analyst
CEO, Beacon Financials Limited
