2. Standard Chartered (StanChart) in Zim was a solid bank making good money. In 2016 StanChart made $13 Million in profit and was the 3rd largest bank by deposits in Zimbabwe.
3. Compared to StanChart Globally, however, the Zim operation was still a “small fish"
StanChart Zim Revenue = $55.02 Million
StanChart Group Revenue = $14.06 Billion
StanChart Zim Size = 0.4%
The good thing was in 2016 the small fish had limited drama & was profitable.
4. When you are a small fish in a big pond not attracting unwanted attention is very important.
That is what StandChart Zim did from 2016 - 2018.
They did not really feature in the StanChart Group Annual report & when they did it was for good news -they had won an award👏🏾
5. In 2019, however, that changed. Zimbabwe was suddenly called out in the annual report because it had contributed to the increase of Credit Grade 12 Balances😤 (which is really bad see why in the next tweet).
6. Credit Grade 12 is the worst rating aside from defaulting.
Think of that friend who never pays anyone back - Credit Grade 12.
Zim being called out despite being only 0.4% of the business was a bad sign.
This wasn't necessarily local management's fault however...
7. ...These downgrade issues were probably linked to the reintroduction of the Zim Dollar in Feb 2019.
Whatever the case, the small fish had started to pollute the water in the pond and attract attention,
8. The following year, 2020, Zim was again in the group's annual report. This time because of a decrease in Credit RWA driven by the depreciation of ZWD against the US Dollar.
Whilst not technically always a bad thing it was clear that Zim was on the radar due to currency risks.
9. In 2021, Zim showed up again more related to COVID.
Considering StanChart is in 59 Countries, it's interesting how Zim ended up as one of the examples - attracting attention again.
Why does being mentioned in the annual report matter? See the next tweet...
10. The annual report is the most important document a public company releases yearly. The CEO, CFO, Directors etc spend 100s hours reviewing it.
A small operation should not keep popping up with anything but good news.
Otherwise, Execs start asking why are we in that market.
11. Unsurprisingly in 2022 the decision was announced. StanChart would be exiting 7 markets including Zimbabwe to focus on the "most significant opportunities for growth" (i.e. bigger fish that swim nicely)
The small fish was getting kicked out of the pond.
12. The exit was completed last week with FBC acquiring 100% of Standard Chartered. Another international company bowing out of Zim.
The same applies to most Global companies when small markets become a headache - the effort is not worth the return and so they rather exit.
13. In conclusion, if you are a small market like Zim, to prevent foreign companies from existing - you need to be stable, & predictable, & not take management's attention.
This is not easy in Zim & so other companies may still follow.
What do you think? Comment & Retweet👏🏾
• • •
Missing some Tweet in this thread? You can try to
force a refresh
A good Cash Conversion Ratio, which measures a business's ability to turn profit into cash, is typically anything above 1.0. Simbisa Brands has a Cash Conversion Ratio of 2.6 based on its latest results.
For comparison, Innscor and Delta, both companies that are performing well, have cash conversion ratios of 1.0 and 1.8, respectively.
Simbisa is doing what most companies struggle with: turning profits into lots of cash.
Here’s how—and why investors should take notice.
Let's Unpack!🧵 THREAD 🧵
2/23 About Simbisa Brands
Simbisa Brands is in the Quick-Service restaurant business.
Their biggest offerings are related to chicken, with brands like Chicken Inn, Nando's, and Galito’s.
They also have a strong presence in other categories, such as Pizza, with Pizza Inn.
3/23 Financial Results and Cash Generation
In its latest half-year results, the business showed solid growth, with revenue up 7% and operating profit up 2%.
The real highlight of the results, however, is the net cash generated from operating activities—$23 million, up 51%.
This 27-Year-Old Document Was At The Center Of Econet's Historic IPO And Will Teach You About Vision, Building A Team and Being Bold Even As Young Person.
You can read all 46 pages or spend 5 minutes reading the thread below - you won't regret it.
🧵Thread (from the archives)
By December 1997, Econet had finally been awarded a telecom license.
But after a long battle, the company was financially stretched so Strive Masiyiwa and team came up with a crazy idea - raise cash directly from the public through an Initial Public Offering (IPO).
IPOs are usually for established companies with a long track record. At the time, Econet was very much a startup.
They had only started operating in July 1998 but planned to IPO in September - two months later! Even Google, which also launched in 1998, waited for 6 years.
I looked at the most recent financial results to see if the empty stores were a temporary glitch, as OK says, or if Zimbabwe’s biggest retailer is in danger of complete collapse.
Let's Unpack!
🧵THREAD🧵
At first glance, OK’s half-year results look pretty good.
Revenue was up 47%, with volumes up 28%. EBITDA (a type of operating profit) increased 44% to $17mn.
This looks good until you start examining “Earnings Quality,” a must-know concept when evaluating companies in Zimbabwe.
Earnings Quality can be defined as how reliable a company’s financial results are for assessing current and future performance.
Not all profits are worth the same because financials can include many accounting adjustments that do not always reflect performance.
1/16 Tupperware is bankrupt and closing up shop in South Africa.
What happened?
The business model that made it a success ended up making it a failure.
Here's the cautionary tale of Tupperware's rise and fall that all business leaders and entrepreneurs must know...🧵
2/16 Earl Tupper started Tupperware in 1946, and in its early days, it was sold in hardware and department stores.
However, despite a lot of investment, the business struggled until a single mother from Detroit changed everything.
3/16 Brownie Wise had come across Tupperware in a hardware store and, after trying the products, saw the potential.
Brownie had experience with marketing, advertising, and a new sales model of home-based sales demonstrations, which she thought could work for Tupperware.
1/11 In 2012, South Africa’s Murray & Roberts sold its 46% stake in Murray & Roberts Zimbabwe (now Masimba Holdings and Proplastics Limited) to a consortium of mostly local investors.
The stake was sold for R10 million rand, about $1.3 million. Today, it would have been worth over $18 million and worth more than half of Murray & Roberts Group.
Let's unpack!
2/11 Typically, when a multinational company with a well-known brand sells its interest or exits, people tend to feel less optimistic about the company that is left behind.
This is understandable, but often, breaking out of a multinational company can have significant benefits for the new standalone company, especially in volatile markets like Zimbabwe, where speed and flexibility are key.
Another example is Deloitte Zimbabwe, now Axcentium, after a management buyout that ended its association with Deloitte Global.
At the time, there were doubts about whether the new firm could retain clients after losing the Deloitte name.
However, not only has Axcentium managed to retain blue-chip clients like Zimplats, which is listed on the Australian Securities Exchange (ASX), but it has also won key clients like Nampak from PWC (which has also now exited Zimbabwe) and Tanganda from EY (which is technically a one-year extension).
3/11 What was interesting about Tanganda was that the company dismissed auditors EY because of “differences on certain technical matters regarding the interpretation and implementation of IAS 29 Financial Reporting in Hyperinflationary Economies.”
This implies that EY was rigid, but Axcenitum will be more flexible.