(HERALD) UK firm hails Zim economic prospects

UK firm hails Zim economic prospects
By Bright Madera

LONDON-based Amstel Securities NV says Zimbabwe’s economy is "the final frontier market in Africa" and very attractive. Zimbabwe with the potential to grow its GDP to US$12 billion by 2015 is begging to draw foreign investment on the back of huge investment potential.

The securities firm said investors have ignored the country’s tremendous recovery potential brought about by the liberalisation of the economy in February last year. According to the International Monetary Fund, the country’s economy is estimated around US$9 billion having doubled from last year’s value of US$4,4 billion.

The country’s key driver for growth is the mineral wealth, especially in low cost in platinum production with new projects this year worth US$1 billion already underway.

Zimbabwe also offers significant opportunities in the agricultural sector, which is expected to grow by 30 percent this year, buoyed by increased production in tobacco.

Power generation that has threatened the viability of industries also offers opportunities for investors to develop hydro-power projects as well as the tourism sector.

Tourism is the country’s quick win sector, which after a decade of massive decline is forecast to generate about US$1 billion in revenue.

"We consider post-conflict Zimbabwe, the final frontier market in Africa, a high conviction idea, which has been overlooked, reads part of the report, "Zimbabwe has good recovery potential, propelled by the dollarisation of its economy in 2009."

Dollarisation has restored the country’s economy enforcing fiscal discipline.

"These improvements have made Zimbabwe a much more vibrant economy with good further recovery potential," added Amstel Securities.

On the back of economic developments in Zimbabwe Amstel’s coverage of AIM-listed LonZim gives the investment company a fair value of 45p per share implying upside their discounted cash flow valuation per share of 77p.

Amstel said there would be a surge in projected revenue as all of LonZim subsidiaries are expected to perform beyond expectations.

LonZim has got a 51 percent shareholding in Forget Me Not Africa, The Leopard Rock Hotel, and Tradanet, a micro finance company.

FMN Afica supports telecom operators covering 19 million people with unified messaging services after entering into a deal with Safaricom and Econet Wireless Zimbabwe.

The investment company also has a 60 percent shareholding in Zimbabwe Stock Exchange listed firm Celsys Limited, Paynet Zimbabwe 100 percent, Millpal Chemicals 100 percent, Fly540 Zimbabwe, 90 percent, Aldeamento Turistico of Mozambique 80 percent and a 51 percent shareholding in Panafmed Limited in South Africa.

LonZim this year announced its plans to list on the ZSE in the last quarter of the year, and shares would be fully fungible between AIM and ZSE.

LonZim is currently capitalised at US$9 million.

A dual listing will strengthen LonZim’s growth prospects as new investments will become easier and result in maximising shareholder value.