Low Forex Supplies Threat To Proplastics Inventory Management

Author Name
Rugare Mukanganga
Author
Markets 1 month ago

The ZSE’s piping specialist managed to double revenue from the previous half year period, overturn a loss and maintain a solid financial position.


Revenue (infl.adj)  120%

Profit  197%


Despite the generally positive set of financials recorded in the period, the Group continues to face logistical constraints stemming from foreign currency shortages. In its most recent set of financial statements, Proplastics noted with concern a built-up Central Bank allotment backlog of much-needed foreign currency which the Group needs each time it sources production components from its regional and other international suppliers.

Unlike local largely cash-based producer-supplier relationships in the manufacturing sector, the Group’s trading partners have more flexible procurement arrangements, likely to be made up of credit facilities and negotiated payment plans.

These however have limitations which, if stretched too far, compromise producer-supplier relationships and gradually erode trading relations Proplastics will have built over time. Continued forex shortages also have the effect of decreasing one’s buying power under credit procurement arrangements, assuming that debt settlement is a recurring issue.

With lower caps on imported stock, inventory management becomes a concern when one factors in anticipated piping demand growth in mining, agriculture and manufacturing sectors – future pillars of Zimbabwe’s economic recovery.

Given the reported cash challenges cited in the half-year ended June 2021, the Group may be pushed towards importing more raw materials and inventory classified as "Work in progress", as opposed to higher level "Finished goods" that are likely to be more expensive and therefore more cash-draining. 


Stock Market ● 1 week ago
Room for FMCG ETF on ZSE

Since its January 4th debut on the ZSE this year, Old Mutual Limited's Exchange Traded Fund (ETF) has had an impressive run so far, presenting a good case for market interest in alternative financial investment instruments through formal & regulated channels. YTD price up 300% YTD market cap up 616% at ZWL 574.5m Broadly speaking, the ETF tracks and mirrors trading performance of the ZSE’s...


Stock Market ● 3 weeks ago
Cassava's trade suspension another thorn in ETF's side

Having violated ZSE listing requirements, shares of Cassava Smartech have been suspended from trading (effective October 1st 2021). The firm was due to publish its set of financial statements for the year-ended February 2021. Seven months later & no financials are out. Cassava’s market cap stood at ZWL 81.5 billion, with the firm well-positioned among the ZSE’s basket of “market heavies” – the To...

Stock Market ● 3 weeks ago
ZSE sustains record highs as magnitude subsides

The ZSE sustained record-breaking momentum in mid-week trades albeit at subsiding levels. The mainstream All Share Index surged by 1.97% in today’s session, a slow-down from an average daily gain of 3.7% over the past 5 days, to close at an all-time high of 8586.7 points. This is due to a -78% decline in demand as well as subsiding margins in market heavies and penny stocks respectively. On t...

Markets ● 3 weeks ago
Suppressed HY-21, Rosy Year-End Lined-Up For RTG

In the six-months ended June 2021, the Rainbow Tourism Group's occupancy closed the period at 24%, a 4% improvement from prior year levels. Inflation-adjusted revenue grew to ZWL 706m from ZWL 462m, representing a 53% growth. The Group says that in the face of business interruptions, gross margins managed to rise from 63% to 67% in the period. At ZWL 161m, EBITDA ended the half-year 6% down from...

Stock Market ● 3 weeks ago
Challenging the ZSE's "top performing stock market" narrative

After surpassing its own performance record (again), the ZWL-denominated exchange extended 2021 gains as the market’s counters continue facing economic uncertainties in the closing quarter of the year. Index up 198% YTD ZWL continues to depreciate Parallel market remains out of control Unlike steady-moving regional peers, the ZSE’s All Share Index (ASI) has nearly doubled its 2020 year-end...