2012 mid term budget overview

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2012 Mid-term Budget Review2012 Mid-term Budget Review

THE 2012 BUDGET OVERVIEWAccording to the Ministry of Finance, the key objectives in the first two years of the Inclusive Government weremacro-economic stability, creating fiscal discipline, restoring financial intermediation and creating a legacy ofpredictable and consistent policy frameworks. These objectives were achieved through the medium of the ShortTerm Emergency Recovery Programme (STERP) I and II. The 2012 National Budget theme was Sustaining Efficientand Inclusive Growth with Jobs and was intended to focus on democratising the economy through strengthening andsustaining macro-economic stability. Other objectives included leveraging the countrys potential in order to attainefficient, inclusive and pro-poor growth, capable of generating jobs and uplifting the standards of living of thepeople. The following macroeconomic targets and projections were thus made under a US$ 4.0bn budget togetherwith a number of measures and facilities targeted at leveraging the capacity of the productive sectors.

The 2012 National Budget Targets

Indicator Target

GDP Growth 9.4%

Inflation 5.0%

Revenues US$ 4.0bn

O/W Diamond US$ 0.6bn

Expenditures US$ 4.0bn

O/W Current US$ 3.2bn

Capital US$ 0.8bn

Broad Money US$ 4.2bn

Domestic Credit (% of Deposits) Up to 80%

Exports US$ 5.1bnImports US$ 8.3bn

Current Account Balance US$ 3.1bn

The assumptions underpinning the above 2012 Macro-Economic and Budget Framework were:

i. A normal rain season;ii. Guaranteed supply of minimum power and water for irrigation, necessary to support agriculture, mining andmanufacturing;iii. Continued firming of international commodity prices for major exports such as tobacco, gold and platinum;iv. Uninterrupted sales of diamonds and the transparent accounting of diamond revenues;

v. Decent levels of foreign direct investment, on the back of clarity around the policy of Indigenisation andEconomic Empowerment;vi. Less discord and greater political harmony and stability in the Inclusive Government;vii. Greater economic and political integration;viii. Maintaining Public Service manning levels consistent with the resource envelope;ix. Financial sector stability.

Analysts:

Kudakwashe Mundowozi Nontando Zunga+263 4 772 876 810 +263 4 772 772 755kudakwashe.mundowozi @imara.co [email protected]

Equity Research

2012 Mid Term Budget Overview

Zimbabwe

26 July 2012

Imara Edwards Securities

Source: Ministr y of Finance


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Imara Edwards Securities 2012 Mid Term Fiscal Budget

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AGRICULTUREThe Minister stated that the underperformance of agriculture was the main source of GDP slippages in 2012.Referringto latest information from the Second Round Crop Assessment and Livestock Report, it was indicated that agricultureshed 13.2% and is, therefore, now projected to decline to -5.8%. Crops with reduced output were maize, tobacco,wheat, sorghum, soya beans and ground nuts. The downward revision was attributed to the poor agricultural seasoncharacterised by late onset of and erratic rainfall, and long dry spells from the end of December 2011 to midFebruary 2012. Summarised below is the performance of various crops for the period 2011 2012:

Revised Agriculture Projections For 2012 (000 Tonnes)2011 Initial Projection 2012 Revised Projection 2012 2012 Growth

Tobbaco 133 150 130 -0.60%

Maize 1452 1350 968 -4.70%

Wheat 53 53 17 -2.50%

Beef 94 92 94 0.00%

Cotton 250 286 255 0.30%

Sugarcane 3264.6 4476.9 4476.9 2.50%

Horticulture 45 51 51 0.90%

Poultry 65 70.5 70.5 0.40%

Groundnuts 231 240 120 -1.50%Dairy(m lt) 63 68.1 64.5 0.10%

Coffee 2.7 2 1.9 -0.60%

Soya Beans 84 100 70.5 -0.30%

Tea 25 15 24.5 0.00%

Paprika 4 4 4 0.20%

Pork 13 16 13.8 0.00%

Wildlife 47 48 48 0.00%

Sorghum 95 140 64.8 -0.20%

Barley 44 44 44 0.00%

Sheep & Goats 4 2 6.3 0.02%

Sunflower 12 15 15 0.10%

Ostriches 17 17 17 0.00%

Overall growth 11.2 7.4 -5.80%

The countrys maize productivity was said to be at an average of 0.6 tonnes per ha against a world average of above4.2 tonnes per ha and high regional performers such as South Africa of 4.0 tonnes per ha. Local productivity of wheatwas also reported to be declining further, with a substantial number of wheat farmers switching to other crops, asreflected by about 8,000 ha planted in 2012 from 15,982 ha in 2011.

Livestock

The recent drought affected the production of stock feeds and is also expected to adversely affect the production oflivestock in the country. Consequently, production of milk, which was initially projected at 68.1 million litres, has

been revised downwards to 64.5 million litres, mainly due to the high cost of stock feeds and depleted dairy head.

MINING

The Minister also highlighted the significant growth of the mining sectors contribution to GDP, from 4% between1999 and 2008 to current levels of close to 11%. Key minerals, which underpin the sector and their respectiveprojected outputs in 2012 are Gold (15 tonnes), Platinum (12 tonnes), Nickel (8 800 tonnes), Coal (2 million tonnes),Chrome (750 000 tonnes), Palladium (9 600 tonnes), and Black Granite (170 800 tonnes).

Source: Minist ry of Finance


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Volume of Manufacturing Indices2009 2010 2011 2012 Prj

Food stuffs 38.9 43.2 48.6 53.8

Drinks, Tobacco and Beverages 53.7 69.1 72.3 73.2

Textiles and Ginning 12.4 19.9 26.7 26.5

Clothing and Footwear 18.2 15.6 9.7 9.9

Wood and Furniture 85.2 85.3 89.5 96.2

Paper,Printing and Publishing 17.3 16.3 18.6 18.6

Chemical and Petroleum Products 23.2 25.7 32.6 34.8Non-metalic Mineral Products 71.4 76.7 69.4 86.8

Metals and Metal Products 31.9 41.2 64.2 72.3

Transport Equipment 41.3 35.2 32.5 37.7

Other Manufactured Goods 31.4 44.8 57.7 69.2

Value Added Tax on Domestic Products (VAT)The Minister attributed the increase in the VAT on domestic production to improvement in domestic capacityutilisation. Since 2009, VAT collected on domestic products was said to have been on a gradual increase from 50.1% in2009 to 69.8% in the first half of 2012. We however feel this could also be a function of inflation creep due to risingprices.

0%10%

20%

30%

40%50%

60%70%

80%

2009 2010 2011 2012

Composition of VAT

Domestic Imports

Industry Electricity ConsumptionIndustrial production is also being undermined by the erratic supply of electricity. Electricity supply, during the periodunder review was on a decline and skewed towards domestic consumption, resulting in shorter working hours.

0

50

100

150

200

250

300

Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12

Electricity Distribution

Industrial Domestic

Source : Minis t r o f F inance




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Capitalisation

Since 2009, only about 17% of the companies in the manufacturing sector were said to have managed to secureinvestments on new plant and machinery, leaving 83% with no major or new investments save for refurbishment andmaintenance. Government, on its part, has also made efforts in assisting the sector through various industrial facilitiessuch as DiMAF and ZETREF. As at 30 June 2012, applications received under DiMAF amounted to US$ 40.1m. Projectsworth US$ 10.1m were approved and US$ 3.8m has been disbursed to the qualifying companies located in various

provinces of the country.

BANK AMOUNT US$ APPROVALS US$ DISBURSEMENTS

Trust Bank 3,000,000.0 1,000,000.0 1,000,000.0

Kingdom Bank 4,000,000.0 - -

Agribank 5,000,000.0 4,970,000.0 3,889,996.0

BancABC 5,000,000.0 4,000,000.0 -

NMB 5,000,000.0 4,965,000.0 4,633,400.0

POSB 5,000,000.0 250,000.0 -

TN Bank 5,000,000.0 2,140,000.0 20,000.0

ZB Bank 5,000,000.0 4,230,000.0 2,250,000.0

Metropolitan Bank 8,000,000.0 6,150,000.0 5,000,000.0

IDBZ 10,000,000.0 9,504,219.0 6,000,000.0

FBC Bank 15,000,000.0 10,363,538.0 9,047,281.0

Total 70,000,000.0 47,572,757.0 26,840,677.0

Domestic Savings MobilisationSince dollarisation interest rates on deposits have remained low, with savings rates averaging 0%5%, against lendingrates of between 18%30%. This has undermined efforts at mobilising domestic savings, thereby limiting the volume ofmedium to long term resources available for lending to industry. The Ministry has been pursuing efforts via moralsuasion which were reported to have begun to yield positive results as some banks are now offering instruments atcompetitive interest rates and if supported should start attracting larger deposits.

Industry ClustersGovernment, through the Ministry of Industry and International Trade, in cooperation with business through CZI, ZNCCand the NECF, is looking to resuscitate industrial clusters as part of implementing the Industry Development andNational Trade Policies.

TOURISM

Tourism receipts for 2011 amounted to US$ 662.0m, up from US$ 634.0m in 2010. In 2012, receipts are expected toincrease by 11.2%, reaching US$ 736.0m, with the bulk coming from European and American markets. The countrysrecent ascendancy to the Presidency of the Africa Travel Association and its pending co-hosting of the 20th Session ofthe UNWTO General Assembly in 2013, leading to its Presidency-in-Session of that United Nations Specialised Agencyfor the following two years is expected to give the country a grand vantage point from which to address key regionaland global tourism issues.

Capital Expenditure

Capital disbursements to the end of June 2012 amounted to US$ 204.0m against a target of US$ 386.9m as indicatedbelow.



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Sector Budget US$

Disbursement

Targets to June US$

Actual

Disbursements to

June US$

Variance (under-

perfomance US$)

Disbursment as % of

Budget

Energy 47,500,000 23,750,000 6,170,000 17,580,000 0.1

Transport and Communication 113,400,000 53,700,000 22,500,000 31,200,000 0.2

Water and Sanitation 113,245,000 49,622,000 24,245,000 25,377,000 0.2

Housing 118,610,000 54,305,000 19,459,972 34,845,028 0.2

ICT 40,200,000 22,100,000 12,316,418 9,783,582 0.3

Education 85,200,000 47,600,000 14,153,815 33,446,185 0.2

Health 63,425,000 40,712,500 21,497,604 19,214,896 0.3

Agriculture -

Irrigation and Rehabilitation of

Research Institutions 25,850,000 11,925,000 2,950,000 8,975,000 0.1

Strategic Grain Reserve 50,200,000 16,100,000 32,400,000 (16,300,000) 0.7

Crop input Support 37,000,000 20,500,000 19,623,200 876,800 0.5

Constituency Development fund 8,000,000 4,000,000 - 4,000,000 -

Other 97,370,000 42,685,000 28,767,018 13,917,982 0.3

800,000,000 386,999,500 204,083,027 182,916,473 0.3

The shortfall in budgeted expenditures was mainly a result of limited revenue inflows, particularly for those projects

that had been earmarked for financing through diamond revenues.

Employment CostsThe employment cost bill for the period January to June 2012 amounted to US$ 1.167bn against planned expenditureof US$ 1.073bn, as depicted below.

Original Estimates US$ m Jan US$ m Feb US$ m Mar US$ m April US$ m May US$ m Jun US$ m Total Budget Support

Employment Costs 2,281.0 155.2 219.7 200.1 194.2 196.1 201.4 1,166.7

Recurrent Operations 919.0 20.3 41.1 51.9 47.4 29.6 54.3 244.7

Capital Expenditure 800.0 5.0 26.1 32.0 57.2 21.2 39.0 180.6

Total 4,000.0 180.6 286.9 283.9 298.8 246.9 294.8 1,591.9

Composition of the Employment Cost Bill: January to June 2012

Civil Service62%

Pension17%

Grant AidedInstitutions

15%

MedicalAid4%

DiplomaticMission

1%

NSSA1%

Redrafting of the Income Tax ActThe Income Tax Bill has already been approved by the Cabinet Committee on Legislation and is waiting gazettingbefore presentation.


Source : Min is t r o f F inance



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EXTERNAL PUBLIC DEBTGovernment is already making strides in implementing the Zimbabwe Accelerated Arrears Clearance, Debt andDevelopment Strategy (ZAADDS), through accelerated re-engagement with creditors including multilateral financialinstitutions the IMF, World Bank and the AfDB. The strategy aims at achieving debt relief, that way creatingopportunities for new financing and normalisation of relations with creditors.

State of the economy and strategies being proposed

Major revenue sources for the first six months of the year were Value Added Tax 31%, Pay As You Earn 19%, ExciseDuty 11%, Corporate Income Tax 11% and Customs Duty 10%. The cumulative revenue shortfall thus amounted to US$244.2m, largely constituting diamond dividends of US$ 229.3m. Diamonds contributed US$ 41.6m of the projectedUS$ 600.0m.

Monthly revenue collection fell below target as follows:

US$m Actual Target Variance

Collections January 229.7 233.0 1.4%

Diamond Sector 14.5 36.0 148.3%

Collections February 215.3 218.1 1.3%


Collections March 265.9 264.3 -0.6%

Diamond Sector 4.7 45.0 857.4%Collections April 234.6 237.0 1.0%


Collections June (spikedue to quaterly payments) 307.3 245.3 -20.2%

Diamond Sector

Expenditure

Cumulative expenditure totalled US$ 1.6bn against a target of US$ 1.8bn whilst overall expenditureunderperformed by US$ 273.0m. US$ 1.2bn was spent on wages, which is 73% of total expenditure. The Ministryhad targeted 57%, thus indicating the crowding out effect of employment costs. There was a huge increase inemployment levels including 5,200 for the national army although Health and child welfare declined by 547

employees. The Minister announced that future recruitment would need Treasury approval. Foreign travel expenditure was also high and now totals US$ 156.0m since dollarisation, although investment into

the country has been less impressive at less than US$ 370.0m compared to c. US$6.8bn for SSA.

Measures to create additional revenue The Minister noted that there are a number of ministries collecting revenue outside treasury, including the

Registrar Generals office and the Police, while statutory bodies and other parastatals are also holding on tohuge sums of money which will need to be forwarded to Treasury.

Customs duty collections at US$ 112.8m (or 5% of imports) remain low compared to the large amounts ofgoods passing through the border. SADC valuation methods for imports are going to be implemented, whilstZimra systems are going to be strengthened in a bid to increase revenue.

Public Finance Management BillGovernment owes US$ 163.9m in domestic arrears and thus there is a need to avoid accumulation of arrears

and unbudgeted expenditure. Inter parastatal debt amounted to US$ 1.1bn, due to conversion of Zim $debt to US$.

Supply Side Measures A grain deficit of 445,000mt of maize is expected of which 200,000mt will be taken from grain reserves

whilst the balance will be imported by the private sector.



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Companies Analyst Year Shares Price Mkt cap Eps (USc) P/E (x) PBV (x) EV/EBITDA (x) OPM* (%)

end in issue (USc) (US$m) hist +1 +2 hist +1 +2 hist +1 +2 hist +1 +2 hist +1 +2 ST LT

Agr i cul t ur a l na 3,368.3 470.9 20.5 8.5 6.5 0.6

Ariston NSZ Sept 1,378.4 1.1 15.2 (0.5) 0.1 0.4 na 9.5 3.5 0.6 0.6 0.5 (5.3) 7.2 2.4 (13.0) 4.9 10.6 Sell Sell

Border Timbers NSZ June 42.9 10.0 4.3 11.7 8.9 9.0 0.9 1.2 1.2 0.0 0.0 0.0 (3.7) 20.1 5.3 (14.5) 2.4 7.4 Hold Hold

AICO NSZ Mar 531.7 12.0 63.8 1.7 1.8 2.0 11.6 11.0 9.9 1.3 1.2 1.1 5.4 4.9 4.1 15.8 12.2 13.5 Buy BuyHippo Valley Estates NSZ Mar 193.0 100.0 193.0 4.6 9.7 15.2 18.7 8.8 5.6 0.9 0.8 0.7 16.6 8.8 5.7 12.0 14.0 18.0 Buy Buy

Interfresh NSZ Dec 487.6 0.2 0.7 (0.3) (0.5) (0.8) na na na 0.1 0.1 0.1 (3.8) (3.1) (2.6) (19.0) (24.9) (22.4) Sell Sell

Padenga Holdings NSZ June 541.6 5.5 29.8 0.7 1.3 1.5 8.2 4.2 3.7 1.0 0.9 0.7 5.2 2.8 2.4 26.2 47.1 48.6 Buy Buy

Seed Company NSZ Mar 193.0 85.0 164.1 9.0 9.5 11.8 12.4 11.7 9.5 3.1 2.6 2.2 9.7 7.8 6.3 22.3 21.5 22.3 Buy Buy

Bui l d i ng and Al l i ed na 3,114.3 146. 2 0.1 0.0 0.0

Lafarge NSZ Dec 80.0 55.0 44.0 3.4 4.5 5.1 20.9 15.6 13.8 2.8 2.3 2.0 13.9 9.5 8.9 9.7 13.0 12.0 Buy Buy

M & R NSZ Jun 214.3 6.0 12.9 0.5 1.4 1.6 24.7 9.5 8.2 1.6 1.4 1.2 10.3 5.1 4.5 4.2 5.7 6.2 Buy Buy

PGI NSZ Mar 478.3 2.0 9.6 (1.4) (0.6) (0.0) na na na 0.7 0.7 0.9 (2.1) (2.6) (27.6) (29.1) (17.5) (1.1) Sell Sell

Turnall NSZ Dec 493.0 7.0 34.5 0.7 0.9 1.0 13.0 10.4 8.7 1.7 1.6 1.4 7.4 6.2 5.3 14.3 13.8 13.9 Buy Buy

PPC NSZ Sept 15.2 260.0 39.6 7.1 7.8 9.0 29.6 26.8 23.3 24.3 24.3 25.1 13.5 13.5 13.5 34.0 37.6 39.8 Hold Buy

Radar NSZ Jun 55.4 7.0 3.9 (0.5) 0.5 0.8 na 66.4 39.6 0.3 0.3 0.3 6.2 8.0 14.9 12.4 8.0 3.6 Hold Hold

Willdale NSZ Sept 1,778.0 0.1 1.8 (0.1) (0.0) (0.0) na na na 0.3 0.4 0.4 (3.7) (6.8) 17.8 (101.5) (41.2) (7.0) Sell Sell

Be ver ages, Ho te ls a nd Lei sur e n a 4,305.9 1,167. 3 14.2 9.8 7.4

Afdis ATC Jun 95.2 10.0 9.5 (1.0) 1.9 2.9 na 6.7 4.5 3.2 2.2 1.5 (37.9) 5.8 3.2 (3.8) 9.5 12.7 Buy Buy

Delta ATC Mar 1,192.1 70.0 834.5 6.2 7.9 10.0 11.3 8.9 7.0 3.2 2.4 2.0 7.2 5.7 4.5 17.7 18.4 19.2 Buy Buy

Innscor ATC Jun 541.6 53.0 287.0 4.8 7.1 9.6 11.0 7.4 5.5 2.5 2.8 2.2 9.8 6.5 4.0 5.6 7.5 10.3 Buy Buy

RTG ATC Dec 1,645.5 1.8 29.6 (0.1) (0.1) (0.1) na na na 1.7 1.8 2.0 (37.0) (144.3) (290.4) (7.1) (1.5) (0.7) Sell Sell

Afrisun ATC Sept 831.5 0.8 6.7 (0.6) (0.3) (0.3) na na na 0.4 0.3 0.3 (2.6) 29.3 43.0 (16.8) (3.7) (3.7) Sell Hold

Engineer i ng na 2,270.6 33. 5 -5.2 -4.6 -4.0

CAFCA NSZ Dec 8.2 50.0 4.1 15.7 17.9 24.0 4.4 3.9 2.9 0.8 0.7 0.5 2.9 2.3 1.5 10.8 10.9 12.7 Hold Buy

Gulliver NSZ Sept 554.9 0.0 0.2 (0.5) (0.8) (1.1) na na na 0.0 0.0 0.0 (0.9) (1.0) (0.8) (90.4) (88.3) (85.7) Sell Sell

Powerspeed NSZ Sept 379.2 1.4 5.3 0.1 0.1 0.1 0.2 0.1 0.1 0.0 0.0 0.0 3.0 3.0 2.9 3.0 3.0 3.0 Spec Buy Spec Buy

Steelnet NSZ Dec 538.0 0.0 0.0 - - - 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Susp Susp

ZECO NSZ Jan 463.3 0.2 0.9 (0.4) (0.5) (0.5) na na na 0.0 0.0 0.0 (0.2) (0.2) (0.1) (130.1) (138.4) (110.6) Avoid Sell

Zimplow NSZ Dec 327.1 7.0 22.9 0.8 1.0 1.1 9.0 7.8 6.9 1.7 1.5 1.3 5.9 5.4 4.7 22.3 19.9 20.3 Buy Buy

Fi nanci al na 6,975 240. 8 3.5 2.4 1.6

ABC ATC Dec 64.4 54.0 34.8 18.9 30.9 36.9 2.9 1.7 1.5 0.4 0.4 0.3 84.7 82.8 81.5 Accumulate Hold

Barbican ATC Dec 119.0 0.0 0.0 - - - 0.0 0.0 0.0 0.0 0.0 0.0 na na na Susp Susp

Barclays Bank ATC Dec 2,152.6 3.7 79.6 0.1 0.2 0.4 56.7 16.0 8.7 2.4 2.1 1.7 93.5 81.8 73.3 Hold Accumulate

CBZ ATC Dec 684.1 7.0 47.9 4.4 5.4 7.1 1.6 1.3 1.0 0.4 0.3 0.3 56.5 49.8 44.9 Spec Buy Spec Buy

Interfin ATC Dec 20.6 1.7 0.4 0.0 (0.2) (0.2) na na na 3.7 6.3 33.4 Sell Avoid

ZBF Holdings ATC Dec 175.2 11.5 20.1 3.3 4.7 9.2 3.5 2.4 1.2 0.5 0.4 0.3 91.3 78.0 67.3 Spec Hold

FBC Holdings ATC Dec 591.9 6.0 35.5 1.6 2.3 2.9 3.7 2.6 2.1 0.6 0.5 0.5 65.9 60.8 60.3 Spec Hold

NMB Bank ATC Dec 2,807.1 0.7 19.6 0.2 0.3 0.4 4.3 2.8 1.9 0.8 0.6 0.5 67.0 66.3 65.8 Spec Buy Buy

Trust Holdings ATC Dec 359.7 0.8 2.9 (0.3) (1.3) (1.2) na na na 0.0 0.0 0.0 Sell Sell

Insur ance 1, 394.5 122. 6 -0.2 -0.3 -0.6

Fidelity NSZ Dec 108.9 16.0 17.4 1.8 3.2 4.6 8.8 5.0 3.5 0.7 0.7 0.9 Hold Hold

AFRE NSZ Dec 217.1 6.0 13.0 (2.3) (0.3) 0.4 na na 16.8 0.2 0.2 0.2 Sell Sell

Nicoz Diamond NSZ Dec 559.5 3.0 16.8 0.3 0.3 0.5 10.3 8.6 5.9 1.4 1.2 1.0 Hold Hold

Old Mutual NSZ Dec 67.6 144.0 97.3 (9.4) (8.0) (4.0) na na na 0.5 0.6 0.6 Buy Buy

Zimre NSZ Dec 767.4 1.1 8.4 0.3 0.4 0.5 0.0 0.0 0.0 0.0 0 .0 0.0 Spec Accumulate

OPM* - for finanial companies its cost t o income ratio

Recommendation

ZSE Summary Sheet -25 July 2012


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Companies Analyst Year Shares Price Mkt cap Eps (USc) P/E (x) PBV (x) EV/EBITDA (x) OPM (%)

end in issue (USc) (US$m) hist +1 +2 hist +1 +2 hist +1 +2 hist +1 +2 hist +1 +2 ST LT

Food na 1,269.6 168.4 -28.4 47.3 13.3

Cairns NSZ Aug 167.7 0.3 0.5 (4.9) (3.6) (3.8) na na na 0.7 0.2 0.1 (3.9) (3.9) (2.0) (19.9) (29.6) (30.1) Sell Sell

Colcom NSZ Jun 159.0 28.0 44.5 3.1 3.0 3.7 10.6 10.9 8.9 2.3 2.1 1.8 7.6 7.4 6.1 12.2 10.8 11.9 Buy Buy

Dairibord NSZ Dec 356.0 16.5 58.7 2.0 2.7 3.6 9.4 7.0 5.1 1.6 1.4 1.3 5.2 4.2 3.1 11.3 11.7 13.3 Buy Buy

National Foods NSZ Jun 68.4 90.0 61.6 7.3 7.3 11.1 16.1 16.1 10.6 1.9 1.4 1.1 8.9 6.5 5.1 3.5 4.2 4.8 Buy Buy

Starafrica NSZ Mar 518.5 0.6 3.1 (2.9) (2.4) (1.8) na na na 0.5 1.1 0.6 (5.0) (2.7) (2.6) (16.0) (23.0) (19.3) Sell SellIndustrial Holding na 2,868.8 116.0 28.2 17.8 7.1

Apex ATC Oct 503.7 0.1 0.3 (0.2) 0.0 0.0 na 6.7 5.5 0.0 0.0 0.0 (1.1) 0.7 0.6 (14.6) 1.4 1.2 Sell Sell

Astra ATC Aug 139.6 3.3 4.5 0.3 0.9 1.2 5.1 1.7 1.3 0.1 0.1 0.1 1.5 1.1 1.0 5.2 6.3 6.7 Spec Spec

CFI ATC Sep 105.5 5.5 5.8 (0.7) (2.7) (0.4) na na na 0.1 0.1 0.1 (8.5) (9.4) (40.8) (2.9) (2.3) (0.4) Hold Hold

General Beltings ATC Dec 530.2 0.2 1.0 (0.4) (0.3) (0.2) na na na 0.0 0.0 0.0 0.0 (2.7) (2.9) (33.0) (16.0) (9.0) Sell Sell

Meikles ATC Mar 240.8 14.0 33.7 2.4 (0.5) 0.6 6.6 na 29.2 0.3 0.3 0.3 (134.2) 6.7 5.1 (1.8) 1.8 2.1 Spec Spec

Phoenix ATC Oct 87.5 1.0 0.9 0.1 0.1 0.1 33.6 33.3 25.9 0.4 0.4 0.4 5.2 3.8 3.1 1.0 1.4 1.4 Reduce Hold

T A ATC Dec 164.8 12.0 19.8 (3.8) (2.9) (2.1) na na na 0.4 0.4 0.4 15.8 8.8 5.5 0.6 0.6 0.6 Spec Buy Sell

TN Holdings ATC Dec 750.8 3.9 29.3 (0.1) 0.1 0.2 na 30.1 26.3 7.1 5.7 4.7 0.0 0.0 0.0 0.0 0.0 0.0 Sell Sell

T S L ATC Oct 345.9 6.0 20.8 0.3 0.5 0.6 28.7 17.7 15.6 1.5 1.4 1.4 19.9 14.7 13.1 6.1 6.9 7.1 Spec Spec

Mini ng na 443.4 79.9 -4.8 -4.2 -4.6

Bindura Nickel ATC Dec 126.0 3.5 4.4 (13.1) (15.1) (16.3) na na na (1.8) (0.9) (0.2) (0.3) (0.2) (0.2) (372.6) (626.0) (610.4) Sell Hold

Falgold ATC Sept 111.2 10.0 11.1 1.6 6.6 8.1 11.1 13.1 50.9 0.0 0.0 0.0 0.0 0.0 0.0 3.8 3.1 0.8 Hold HoldHwange ATC Dec 166.2 26.0 43.2 2.3 2.0 0.5 na na na 0.0 0.0 0.0 0.0 0.0 0.0 (47.2) (58.6) (101.1) Buy Buy

RioZim ATC Dec 40.0 53.0 21.2 (26.2) (20.5) (17.6) na na na 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Hold Hold

Paper and Packaging na 1,363.0 31.1 -13.8 12.2 7.3

Amalgamated Reg iona l Trading ATC Sep 467.3 0.3 1.4 (0.6) (0.0) 0.2 na na 1.8 0.1 0.1 0.1 5.4 4.2 2.3 0.5 2.0 3.7 Sell Sell

Hunyani Holdings ATC Oct 319.7 7.5 24.0 0.0 0.6 0.8 172.3 10.7 7.9 1.0 0.8 0.7 (54.9) 14.5 8.2 (4.6) 0.1 1.6 Hold Buy

Zimbabwe Newspapers ATC Dec 576.0 1.0 5.8 0.1 0.1 0.2 7.7 4.9 3.8 0.4 0.4 0.3 6.0 (3.4) (1.9) (0.8) 1.0 1.3 Spec Spec

Ph ar m ac eu t ic al s a nd Ch em ic al s n a 2,814.9 2.9 -2.1 -2.3 54.2

Chemco ATC Oct 15 0.5 0.1 (5.7) (7.3) 1.3 na na 3.9 0.2 0.2 0.2 0.6 (0.2) (1.0) (5.1) (13.6) 3.3 Sell Sell

Medtech ATC Dec 2,800 0.1 2.8 (0.1) (0.0) (0.0) na na na 16.3 51.7 (49.5) 123.9 80.7 61.0 (1.5) (1.0) (0.9) Sell Sell

Ret ai l st ores na 5,417.8 148.0 26.3 10.0 5.2

Celsys NS June 1,599.6 0.1 1.3 (0.1) (0.1) (0.1) na na na (0.4) (0.2) (0.1) (2.3) (4.0) (5.1) (64.2) (26.3) (17.9) Sell Sell

Edgars Stores NS Jan 282.7 7.3 20.5 0.8 1.3 1.9 11.7 6.9 4.7 6.1 3.2 1.9 9.7 5.4 4.0 11.9 15.1 15.7 Add Buy

OK Zimbabwe NS Mar 1,020.9 10.0 102.1 0.4 0.8 1.3 25.7 12.3 7.6 2.6 2.2 1.7 11.7 6.5 3.6 2.1 3.4 4.8 Buy BuyPelhams NS Mar 995.6 0.6 5.5 0.0 0.0 0.3 69.5 30.0 2.5 3.0 2.6 1.2 13.9 11.5 2.5 8.5 9.4 35.0 Sell Sell

Redstar NS Mar 1,145.3 0.0 0.0 - - - 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Susp Susp

Truworths NS Jun 373.6 5.0 18.7 0.5 1.0 1.3 19.7 9.8 7.1 9.7 5.7 3.7 14.9 11.2 7.7 10.1 12.2 13.4 Hold Buy

Tobacco na 17.4 37.4 7.7 4.3 4.1

BAT Zimbabwe ATC Dec 17.4 215.0 37.4 28.1 41.8 43.4 6.4 4.3 4.1 3.7 3.5 3.3 4.9 3.6 3.5 16.0 16.0 13.3 Buy Buy

Technol ogy na 171.6 694.8 4.2 3.5 3.1

Econet ATC June 171.6 405.0 694.8 97.8 115.8 132.9 4.1 3.5 3.0 1.8 1.3 1.0 2.8 2.6 2.1 40.0 40.2 40.1 Buy Buy

Tr anspor t na 463.5 23.5 -535.9 8.3 5.7

Pioneer ATC Dec 55.0 2.5 1.4 (2.8) 0.8 1.0 na 8.7 6.9 0.9 0.8 0.7 (21.5) (19.6) (18.1) (1.6) (1.6) (1.6) Sell Sell

NTS ATC Dec 253.8 2.0 5.1 0.1 0.3 0.5 23.6 11.8 6.9 2.2 1.9 1.5 (54.3) 12.3 6.3 (2.7) 6.6 10.7 Hold Buy

TPH ATC A ug 154.7 11.0 17.0 0.8 1.2 1.6 11.2 7.6 5.5 1.0 0.9 0.8 0.0 0.0 0.0 3.9 4.7 5.4 Hold Buy

Property na 7,271.1 105.8 2 3 4

Dawn Properties NS Mar 2,457.2 0.7 16.0 0.5 0.0 0.0 1.3 23.0 13.9 0.2 0.2 0.2 713.1 15.4 10.1 0.4 15.9 19.9 Hold HoldMashonaland Holdings NS Sep 1,859.1 2.0 37.2 1.3 0.3 0.3 1.5 7.5 6.0 0.4 0.4 0.4 0.6 0.9 1.3 61.0 63.9 66.9 Buy Buy

Pearl Properties NS Dec 1,238.2 2.8 34.7 1.3 1.5 0.5 2.1 1.8 5.4 0.4 0.3 0.3 6.2 6.5 7.2 56.5 53.0 50.2 Buy Buy

Zimre Properties Investments NS Dec 1,716.7 1.1 18.0 0.3 0.4 0.5 2.9 2.8 2.2 0.4 0.3 0.3 (0.2) 0.2 0.4 39.1 48.8 57.0 Buy Buy

INDUSTRIALS 3,539.61

Industrials (Zim Reg) 3,492.90

OPM* - for finanial companies its cost to income ratio 7/25/2012

Recommendation


12/12


12

NOTES

Imara CapitalSecuritiesBotswanaGround Floor,Exchange HouseBlock 6, Plot64511

Fairgrounds,Gaborone,BotswanaTel:+ 267 318 8886Cell:+ 267 7 132 1421/ 7 162 4390

Imara AfricaSecurities ( Adivision of ImaraSP Reid)Imara House,Block 3257 Oxford Road

IllovoJohannesburg,2146South AfricaTel:+27 11 550 6200Fax:+27 11 550 6295

Imara SecuritiesAngolaSCVM LimitadaRua Rainha Ginga74, 13th Floor,Luanda, AngolaTel:+244 222 372029/36Fax:+244 222 332 340

Imara EdwardsSecurities (Pvt.)Ltd.Tendeseka OfficePark1st Floor Block 2Samora Machel

Ave.Harare, ZimbabweTel:+2634 790590Fax:+2634 791435

4 Fanum HouseCnr. LeopoldTakawira/JosiahTongogara StreetBulawayoTel: +263 9 74554Fax:+263 9 66024Members of theZimbabwe StockExchange

Imara S P Reid(Pty)LtdImara House257 Oxford RoadIllovo 2146P.O. Box 969

Johannesburg2000South AfricaTel:+27 11 550 6200Fax:+27 11 550 6295Member of theJSE SecuritiesExchange

Namibia EquityBrokers(Pty) Ltd1st Floor CityCentreBuilding, WestWingLevinson Arcade

WindhoekNamibiaTel:+264 61 246666Fax:+264 61256789Member of theNamibia StockExchange

StockbrokersMalawi LtdGround Floor,NBM BusinessCentre,Cnr. HannoverStreet/

Henderson StreetBlantyreMalawiTel:+265 1822803Member of theMalawi StockExchange

StockbrokersZambia Ltd2nd Floor (Wing),Stock ExchangeBuildingCentral ParkCorner

Church/CairoRoadsP O Box 38956LusakaZambiaTel:+260 211232455Fax:+260 211224055Member of theZambiaStock Exchange

This research report is not an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The securities referred to in thisreport may not be eligible for sale in some jurisdictions. The information contained in this report has been compiled by Imara Edwards Securities(Pvt.) Ltd. (Imara) from sources that it believes to be reliable, but no representation or warranty is made or guarantee given by Imara or any otherperson as to its accuracy or completeness. All opinions and estimates expressed in this report are (unless otherwise indicated) entirely those ofImara as of the date of this report only and are subject to change without notice. Neither Imara nor any other member of the Imara Group ofcompanies including their respective associated companies (together Group Companies), nor any other person, accepts any liability whatsoever forany loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Each recipient of this report shallbe solely responsible for making its own independent investigation of the business, financial condition and prospects of companies referred to in thisreport. Group Companies and their respective affiliates, officers, directors and employees, including persons involved in the preparation or issuanceof this report may, from time to time (i) have positions in, and buy or sell, the securities of companies referred to in this report (or in relatedinvestments); (ii) have a consulting, investment banking or broking relationship with a company referred to in this report; and (iii) to the extentpermitted under applicable law, have acted upon or used the information contained or referred to in this report including effecting transactions fortheir own account in an investment (or related investment) in respect of any company referred to in this report, prior to or immediately following itspublication. This report may not have been distributed to all recipients at the same time. This report is issued only for the information of and mayonly be distributed to professional investors (or, in the case of the United States, major US institutional investors as defined in Rule 15a-6 of the USSecurities Exchange Act of 1934) and dealers in securities and must not be copied, published or reproduced or redistributed (in whole or in part) byany recipient for any purpose. Imara Edwards Securities 2012

2012 mid term budget overview

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