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Apri

l 2016

CEMAC CAPITAL MARKETS QUARTERLY REPORT

Douala 125, Rue de la Perousse Bonanjo , BP 4593 Douala - Cameroun

Tél : (237) 233 42 04 13 , Fax : (237) 233 43 83 48

[email protected]

Casablanca 4 Rue Calavon, 1er étage Quartier des Hôpitaux – Casablanca - Maroc

Tél : (212) (0) 5 22 22 56 70

[email protected]

Q1/2016

www.financiacapital.net

African equity market performance ended in positive for Q1 2016 as a result of increase in the US interest rates. Q1 average return recorded

across eighteen African stock indices was 3.4%.

Amongst the eighteen equity markets, there were 9 gainers and 9 losers. Namibia stock exchange was the top performer, by adding 14.6% in Q1

while Zimbabwe Stock Exchange was crowned the biggest loser in Q1, by shredding off 15 %.

Amongst the largest stock exchanges in Africa, Tunisia Exchange and Egypt exchange showed positive market sentiment at 7.5% and 7.4% gains

respectively as reflected in the table below. African equity return averaged 4.4% (on a 1 month return basis) and 0.5% over Q1.

African equity market outperformed major developed and emerging equity markets in Q1. However, it underperformed the Brazilian equity

markets which recorded 26.43% year-to-date return on dollar basis.

The early part of 2016 saw high volatility driven mainly by commodities.

Crude oil prices continued to collapse reaching multi year lows in early

February, crude oil producing countries continued to feel the strain.

However, as volatility stabilized towards the end of the quarter so did oil

prices which traded back above USD40/barrel as a result of Russia and

Saudi Arabia temporarily freezing production.

Natural gas saw fairly big price declines to their lowest level in 18 years,

with spot Henry Hub prices hitting $1.57 per million Btu.

From a metals perspective iron ore saw great gains of 40% closing the

quarter at a price of USD 55.52/t.

Gold and silver also saw notable gains at 17% and 10% respectively.

Crude palm oil price continued to rise by 22% ending at USD 632.79/t

in this quarter supported by the impact of the El Nino weather

phenomenon.

Cocoa beans industry saw reduction in production due to frosty pod rot

(a crop disease) in Ghana and Ivory Coast.

A shortage of Robusta coffee beans, resulting from weather issues in

producing nations, also has developed. The shortage of Robusta has spilt

over to support Arabica prices.

In Q1, cotton was the second worst performing soft commodity posting

a loss of 7%.

Source: FINANCIA capital

Country Exchange Index Month on Month 3M 6M YTD 1Y

Net chg % chg % chg % chg % chg % chg

Ivory Coast BRVM BRVM Composite All Share 11,49 3,8% 3,5% 5,6% 3,5% 19,8%

Egypt Egyptian Exchange Egyptian EGX 30 Capped 1378,06 22,4% 7,4% 2,6% 7,4% -17,6%

Ghana Ghana Stock Exchange GSE Composite -60,16 -3,1% -4,2% -4,7% -4,2% -13,9%

Kenya Nairobi Securities Exchange NSE All Share 5,41 3,8% 1,2% 0,4% 1,2% -15,8%

Morocco Casablanca Stock Exchange MASI Float 419,54 4,7% 4,5% 2,3% 4,5% -9,2%

Nigeria Nigerian Stock Exchange NSE All Share 735,49 3,0% -11,6% -18,9% -11,6% -20,3%

South Africa Johannesburg Stock Exchange JSE All Share 2834,97 5,7% 3,1% 4,3% 3,1% 0,1%

Tunisia Bourse de Tunis Tunis All Share 132,87 2,5% 7,5% 2,8% 7,5% 2,0%

Africa FTSE ASEA Pan Africa Index FTSE ASEA Pan Africa 32,7 3,4% -3,1% -7,8% -3,1% -19,3%

Africa S&P All Africa S&P All Africa 100,7 11,7% 7,4% 1,2% 7,4% -15,1%

2%

-10%

17%

10%

2%

40%

7%

5%

-4%

-8%

-7%

44%

22%

-20% -10% 0% 10% 20% 30% 40% 50%

Brent Crude

Natural Gas

Gold

Silver

Aluminium

Iron Ore

Copper

Coffee( Arabica)

Coffee(Robusta)

Cocoa

Cotton

Palm Kernel Oil

Palm Oil

2

African Stock Markets

Commodities

Q u a r t e r l y R e p o r t Q 1 / 1 6

Source: FINANCIA capital

Douala Stock Exchange Libreville Stock Exchange (BVMAC)

Shares

The DSX saw a 6.1% reduction in value in Q1 2016 as a result of adverse

conditions in the palm oil industry which accounts for 92% of the total

market share in the DSX. SOCAPALM and SAFACAM which are the two

palm oil and rubber producers listed in the DSX experienced a 4.55% and

10.5% reduction in market capitalization in this quarter: respectively FCFA

156 bn and FCFA 47.8 bn. The reduction in value was due to the

corresponding reduction in share prices and traded volumes. A comparative

graph displayed below shows the performance of each listed entity

compared to Q1 2015 and Q4 2015. To offset the negative effects of the

palm oil and rubber industry, the Cameroon government has just

authorized operators in the palm oil sector to import 47,000 tonnes of

palm oil at preferential terms this year (2016). This translates into a

reduction of tariffs and exemption from value added tax (VAT).

Bonds

On the 31st March 2016 the total bond market capitalization amounted to

CFA F 252.79 billion. These include 334 bonds from the state of Chad with 6%

coupon rate (2013–2018) and 300 ECMR bonds with coupon rate of 5.50%

(2014-2019) with respective pricing of CFA F 2 045 506.18 and CFA F 3 042

945.

Other active bonds within the market include: BDEAC 5,5% net 2010–2017,

ECMR 5,90% net 2013-2018, Etat du Tchad 6% 2013–2018, FAGACE 5,25%

net 2014-2019 and ECMR 5,50% net 2014-2019.

Shares

BVMAC Equity market remains dormant in Q1 with Siat Gabon’s last

trading on 19th May 2015. A total of 1 468 shares were traded at a price

of FCFA 28 500 amounting to FCFA 41 838 000 in value. The share

price remained unchanged at FCFA 28,500 in at the end of Q1.

SIAT Gabon is the leading agricultural company in Gabon with three

main activities: palm oil production, rubber production and cattle

breeding. The company was listed in 2012 and remains to date the only

listed company.

Palm oil and Rubber prices have been escalating in the first quarter of

2016. Palm oil prices gained support from falling Indonesian and

Malaysian stocks while rubber prices owe their surge to a cut in global

production.


Bonds

In the first quarter on 2016 there was only one bond trade that took

place in BVMAC. The trade which took place is the State of Gabon bond

(EOGA2) with a coupon rate of 6% (2015-2020). The trade value was

CFA F 400 million derived from a volume trade of 40 000 at 100% price

value.

Q1 also saw coupon payments in two of the bonds issued in BVMAC

namely Petro Gabon (EOPGA) and BGFI Holding Corp (EOBHC) at the

price of CFA F 13.35 and FCFA 796.7 per coupon respectively.

EOPGA was issued at coupon rate of 6% (2010-2017) and EOBHC was

issued at a coupon rate of 5% (2013-2020).

Palm Oil & Rubber Prices Trends – 6M

21

* Q1 2015 Earnings have been extrapolated from S1-2015 figures

Source: Index Muni, FINANCIA Capital

Source: DSX, FINANCIA Capital

Source: DSX, FINANCIA Capital

Source: BVMAC, FINANCIA Capital

Entity Vols

Traded

(3m)

Mkt Cap

(M CFA)

Share

Price

(CFA)

Earnings*

(M CFA)

P/E

SOCAPALM 1 408 96 087 20 999 4 122 23x

SEMC 323 120 126 31 500 n.a n.a

SAFACAM 325 47 815 38 499 981 49x

Entity Av Vols

(3m)

Mkt Cap

(CFA M)

Price

(CFA)

Earnings

SIAT Gabon n.a 4 132 28 500 n.a

58

Q1 2016 Traded Volumes



SOCAPALM SAFACAM SEMC

6 336

1 403

1 408

97

592

325

229

323

48

53 50

52 53

60

63

60 59

55 57

55 57

66

Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16

Palm Oil (USD/t)/10 Rubber (Usc/lb)

DSX Listed companies’ market Traded evolumes evolution

3

Mobile Banking Market

Mobile Financial Services also referred to as Mobile Banking or Mobile Money

is a method of sending money and paying for goods/services from a mobile

phone instead of using cash, checks and credit cards. There are several types of

mobile means of payment including near-field communication, direct mobile

billing, SMS-based transactional payments and mobile web payments.

Mobile money has more than 145 million customers though-out Africa. Kenya

leads the path with 26 million. Regulation has been adapted to stimulate the

booming market. As a matter of fact, BDEAC West African Central Bank has

agreed to allow electronic money issuance.

The Cameroonian Mobile Money took off in September 2011 with Orange,

closely followed by MTN. As of March 2015 more than 4 players are found on

the booming industry, Orange claims ~1.5 million customers of which ~250K

million active customers, while MTN claims ~1.3 million customers of which

~145 K active clients.

Telecommunication providers are the major service providers on this market,

There are non-conventional players including banks, money transfer

companies.

Other mobile financial services providers include

(3) Monifone: service jointly proposed by ENEO (electricity provider)

and Société Générale (bank) to pay electricity bills

Regulatory Framework

ELECTRONIC

MONEY

REGULATOR

(BEAC)

1. BEAC grants electronic money issuance authorizations to financial

institutions, which, in return should comply with regulatory requirements

(transactions settlement, payments etc.).

2. The Bank converts electronic money (electronic value units, EVU) into

paper money. The bank is answerable for any dysfunction or fraud during

the process. The Bank signs a partnership agreement with a bearer.

3.The bearer must use the service ONLY for EVU transfer or payment within

a network defined with the Bank.

4. The technical operator (mobile network provider) is under TRB regulation.

It enters into partnership agreements with the bearer.

5. The TRB is in charge of the control of the industry and protection of

consumers.

All participants in the multi-banking network (including Commercial Partners)

must hold settlement accounts at the Bank.

Legislation:

Instruction /GR UMAC

&

REG 01/11 CEMAC-UMAC

TELE-

COMMUNICATION

REGULATORY

BOARD

(TRB)

BEARER

Mobile

Banking

Service

BANK

Electronic

Money Issuer

TECHNICAL

OPERATOR

4

1

2 3

5

Source: BEAC, FINANCIA Capital

Mobile Financial Services (1/2)


(4) Express Union Mobile: service provided by money transfer service

provider Express Union.

2015 Estimated Market in volume

~CFA F 36 Billion*

-

3,4 M customers **

* Simplification assumption: revenues are 2%

of volumes

** Of which 0,5M active clients (who use the

service at least once a month) (1) Orange Money

proposed by

telecommunication player

Orange Cameroon is the

leader with ~55% of

market shares. Orange is

backed by BICEC. (2) MTN Mobile Money is

the challenger of Orange

Money with an estimated

30% market share. MTN

MM is backed by Afriland

First Bank and Ecobank.

4

Mobile Banking Industry Industry Forecasts

Mobile Financial Services (2/2)


Estimated Market Share in Cameroon, as of 2015 Industry Forecast (volumes in Bn CFA F)

2015 2016 2017 2018 2019

36 48

40

50 51

Orange

Money

55%

MTN Mobile

Money

30%

SGC/ENEO

Monifone

9%

Express

Union Mobile

6%

Mobile Financial services market should grow in the coming years, mostly

driven by

(i) strong mobile penetration,

(ii) geographical proximity with consumers through points of sales

(iii) payment of common transactions (water and electricity bills, school fees,

insurance etc.)

The market should become highly competitive in the coming years (price and

service accessibility to even non subscribers).

Express Union

Revenues breakdown by service

* Simplifying assumpiotn: revenues are 2% of volumes

** Wallet: services are not yet available due to regulatory reasons

Airtime Money

Transfer Billing Banking Transport Tax Payment

Merchant

payments Insurance Wallet

45% 32% 10% 2% 2% 1% 5% 3% n.a

50% 30% 10% 1.5% 2% 1% 3% 0% n.a

Main Competitors Cash, Monifone (Eneo)

Banks, MFE Cash Cash Microfinance,

Banks

Cash, cheques Cash, cheques

Orange Money

MTN Mobile

Money

Source: FINANCIA Capital



Industry Drivers

Network coverage Is the network coverage reliable at a nation-wide level?

Is the service available 24/7 ?

Commercial Strategy Is the service at the consumers’ doorstep?

e.g: Number of sales points as of December 2015 : Orange ~1 500. MTN ~800

Partnership Strategy Is there an array of day-to-day, common services (airtime, electricity & water pay-TV bills, insurance,

etc)?

Pricing Strategy Are money deposit, money withdrawal and money transfer billed? If yes, how high compared to

competition?

Service Access Strategy Is mobile-finance available to non mobile subscribers?

Is this access free?

5


CEMAC News

News Room

Cameroon News

UEAC Council of Ministers:

The 30th Ordinary Session of the Council of Ministers of the Central African

Economic Union (UEAC) was held in Diploho (Equatorial Guinea) from 14-16

January 2016. The Council has set the economic budget of CEMAC (Economic

and Monetary Community of Central Africa) for the year 2016 at FCFA 73 654

514 869 (- 23.5 percent compared to the corresponding budget in 2015). A

punctual relocation of the CEMAC Commission office to Malabo has been

agreed upon, as well as a new mechanism for the automatic debit of the TCI

(Integration Community Tax).

CFA Franc Area’s Ministers of Finance Meeting:

From 8-9 April 2016 the Cameroonian capital, Yaoundé, hosted the biannual

meeting of the CFA Franc zone’s ministers. This reunion also gathered the

governors of the UEMOA and CEMAC Central Banks, the heads of the

institutions of the eight UEMOA countries and the six CEMAC countries, the

Comoros Union and France. French minister of Finance also attended the

meeting.

According to a communique from the Cameroonian ministry of finance, the

attendees discussed ‘the state of the nominal and real convergence in the franc

zone, the adaptation of public policies in the face of the drop in the prices raw

materials coming from the mining industry, and the improvement and raising of

tax resources in the franc zone’.

Republic of Gabon:

February 2016, S&P downgraded Gabon’s long term sovereign credit rating in

foreign and local currencies to “B” from a stable outlook of “B+”. Over a year

Gabon has been downgraded twice by the agency (from BB+ to B+ on February

2015). S&P also graded the country “B” on its short term sovereign credit

rating. The agency said the downgrading was due to the fall in oil price.

Central African Republic:

Parliamentary elections were postponed from the 18th October 2015 to the

13th December 2015. The run-off presidential vote held on 24th January 2016

led to the election of Faustin Archange Touadera who named a 23-members

cabinet.

Republic of Congo:

A referendum in October removed the 70-year-presidential-age ceiling as well

as two-term limit. Presidential elections were held in January, which led to the

appointment of Sassou Nguesso, 72 in office since1997 (with a previous 1979-

1992 reign as Head of the State).

Republic of Chad:

Presidential elections were held in 10th April, which led to the appointment of

Idriss Deby Itno, 63, in office since 1990. Chad has one of the most capable

armies in the region and Deby has played a key role in efforts to combat the

Boko Haram.

Republic of Equatorial Guinea:

Presidential elections were held in 24th April, which led to the appointment of

Teodoro Nguema Obiang, 73, in office since 1979.

2016 Budget Approvals by some National assemblies in CEMAC:

Gabonese government has a CFA F 2 626 Billion budget (-4%).

Cameroon government has a CFA F 4 237 Billion 2016 budget (+12%).

Chadian government has a CFA F 1 455 Billion 2016 budget (-14%).

Inflation:

An increase in the inflation rate (for local goods) has been registered by the

INS + 2.6% on a yearly basis as of February 2016 mainly driven by a sharp rise

in fresh products prices (+6.8%). Energy had a lesser impact on inflation

(+1.8%). Prices for household consumption rose by 1.1% over a year, starting

February 2015; the increase over a year, from January 2015 onwards is

+1.9%.

Imports:

An important rise of imported goods has been observed n Q3 2015 (+5.2%)

vs. Q3 2014 notably fueled by papers manufacturing products imports +34.2%

(led by school stationary) as well as agricultural processing product (+20%)

and chemical industry goods (+17%.). However, there is a sharp decline in oil

imports between the third quarter of 2014 and that of 2015 (-34.6%) .

Exports:

SNH, the State’s secular arm in oil transactions, has announced an increase in

oil imports in 2015 to 34.4 million barrels against 27 million barrels in 2014 .

However, this production increase did not lead to an upsurge in oil’s

contribution to the national budget. Amidst plummeting oil prices, only 378

Billion of oil revenues were poured in the State coffers vs 444Billion in 2014 (-

14,9%).

According to the National Cocoa and Coffee Board (NCCB), Cameroon's

coffee production dropped 27% last year as the number of coffee cuttings fell

short, but exports rose at 23 673 tons for the 2014/2015 campaign, +8.24%.

2014-2015 cocoa campaign has been very productive: +10.8% at 232 530

tons. The national production during the 2015-2016 campaign is forecast at

210 000 tons, a decrease of c.20 000 tons due to the so-called dormant period

of cocoa farms, that occurs every 5 years.

Cameroon has experienced a minor drop in Banana exports by 371 tons (-

1.4%) to 25 995 tons for 2015.

New Taxes:

2016 Budget includes a new tax on telephony, communications and internet

services: mobile operators and Internet Service Providers will pay the State

2% of their turnover on calls and internet services.

Cement Industry:

The cement industry has been very dynamic over the past year, with (1) the

entrance of 2 new players (Nigerian Dangote Cement with 1.5 Mt capacity and

Turkish Medcem with 0.5 Mt capacity) and (2) a decrease in prices in the end

of 2015 (to FCFA 4 700, for historical player Cimencam, closely followed by

Medcem at 4 700).

On April 16th 2016, Medcem announced a capital increase from FCFA10

million to FCFA 400 million through "cash contributions" from the

shareholders.

Upcoming

17-18 May – Yaoundé: An International Economic Conference entitled

« Investir au Cameroun, terre d’attractivité » will be held in Yaoundé. It aims at

promoting the country as a land of opportunities to potential investors.


6

DISCLAIMER

Financia Capital has set up an organization and procedures designed to ensure the independence of its analysts. However, the information contained in this document, or any opinion expressed in it, not in any way

constitute an incentive for investment in the industries and markets covered in this note. They are only indicative and should not be treated as a recommendation. Although some calculations and projections are from

our analysts, most of the data compiled in this report is mostly public information obtained from several sources.

This document was prepared only for Financia Capital clients. It is intended for internal use only by the recipients. For more details, please contact us.

www.financiacapital.net

Douala 125, Rue de la Perousse Bonanjo , BP 4593 Douala - Cameroun

Tél : (237) 233 42 04 13 , Fax : (237) 233 43 83 48

[email protected]

Casablanca 4 Rue Calavon, 1er étage Quartier des Hôpitaux – Casablanca - Maroc

Tél : (212) (0) 5 22 22 56 70

[email protected]

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