LEADING research firm Fincent Securities says the Victoria Falls Stock Exchange (VFEX)-listed Simbisa Brands Limited continues to be a standout performer, not only according to its financial indicators but in its strategic initiatives as well.
It said the company’s 10% revenue growth in Zimbabwe, coupled with a remarkable 31% surge in operating profit, reflected a resilient business model.
“Despite economic challenges, Simbisa’s ability to enhance purchasing efficiencies and maintain robust margins contributed to a significant 22% increase in adjusted operating profit, reaching US$21,4 million,” Fincent said in its analysis of the company’s trading update for the half year ended December 31, 2023.
“Simbisa’s commitment to shareholder value is evident through its consistent delivery of dividends. This aligns with the characteristics of a lucrative blue-chip, emphasising the company’s dedication to generating free cash flows for shareholder benefits.”
Simbisa reported a 7% surge in revenue, reaching US$147 million, fuelled by a 10% increase in Zimbabwe and a 2% rise in the broader region. Despite economic challenges, Kenya continued to be a pivotal market, contributing to Simbisa’s success through higher average customer spending.
The company’s adjusted operating profit experienced notable growth, up by 22% to US$21,4 million, reflecting improved purchasing efficiencies and stronger margins.
Additionally, the company successfully reduced its debt from US$16,1 million to US$12,2 million, achieving growth in operating profit while maintaining a lower gearing ratio.
Simbisa’s healthy cash and cash equivalents closed at US$9,5 million, providing a positive buffer of available cash.
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However, Fincent said the heightened dollarisation in the local economy had a significant impact on operating expenses, leading to a 19% increase.
The research firm said despite recent liquidity challenges Simbisa’s stock remained highly liquid, with an average monthly trade volume of 1,8 million shares since its listing on the waterfall bourse.
“Furthermore, Simbisa Brands is well-positioned for future growth, as indicated by its strategic restructuring efforts. The decision to close underperforming outlets and transition smaller markets into a franchise structure demonstrates a commitment to operational excellence,” it said.
“By focusing exclusively on its best-performing core brands and markets, Simbisa aims to optimise its operations and drive sustained growth.”
In the stock market, Fincent said Simbisa’s performance on VFEX remained dynamic.
“Simbisa Brands Limited is well-poised for medium to long-term upside potential. The company’s strategic restructuring, commitment to dividends, and focus on core brands and markets position it as a compelling investment option in the region,” it said.
“Investors can anticipate sustained growth and value creation as Simbisa continues on its trajectory of operational excellence and financial strength.”
