Letshego alarmed by share price fall

SHARE   |   Monday, 05 September 2016   |   By Kabelo Adamson
Letshego's Group Managing Director Chris Low [R] with Letshego CFO, Colm Patterson Letshego's Group Managing Director Chris Low [R] with Letshego CFO, Colm Patterson

Letshego Holdings Limited is disappointed with its share price on the Botswana Stock Exchange (BSE). This was said by the group’s Managing Director, Chris Low, on Friday when presenting the company’s half-year financial results. Letshego’s share price has lately been on a free fall and by Friday the group was looking to approach stock brokers on the issue, Low said. Its price is currently trading at 202 Thebe per share following numerous falls. He said there has been little liquidity in the Botswana market, adding that they believe the share price is undervalued. One of the avenues that Letshego is looking at is share-buy but Low could not reveal the exact percentage that the group is looking at. He said BSE conditions allow a maximum of 5 percent of the total issued shares.

Low said there are a number of factors that influence dropping of the share price explaining that if there are more sellers than buyers, the price is bound to fall. On the financial performance side, Letshego has seen its pre-tax profit remain flat at P489 million due to macro-economic headwinds in some markets, including Nigeria where the economy is said to be in a recession. The group’s loan book grew by 9 percent while the loan loss ratios remained less than 3 percent with an increase on coverage ratios. The level of customer deposits fell slightly mainly due to the maturity of some corporate deposits whereas borrowings remained flat from the year end.“However a funding pipeline is in place to support the business going forward,” the group said a statement accompanying the financial results.

Letshego’s shareholder equity suffered a reduction of P297 million due to depreciation of local currencies but the group considers itself to be capitalised and profitable. For the sixth month period, Letshego’s operating income soared by 10 percent which is said to reflect the underlying growth in advances to customers and supported by stable interest margins, cost of funding and cost of credit risk. “However, the growth in income was lower than the growth in costs which resulted in a higher cost to income ratio and flat profitability.” Letshego’s cost to income ratio has also increased during the period and at 38 percent, it is higher than targeted levels of 35 percent.
Staff costs is considered one of the factors that contributed highly to the costs influenced by acquisitions in Nigeria and Tanzania where businesses there have staff complement of more than 200 people.