Analysts initiate coverage on GetBucks Zimbabwe with a 4,18c target price
ANALYSTS have set 4,18c 18-month target price on GetBucks Zimbabwe on an intrinsic value of US$41,8 million.
GetBucks Zimbabwe opened its IPO on Monday to raise a total amount of US$3,2 million through the subscription of 93 567 251 ordinary shares in the company at a subscription price of 3.42 cents per share. On conclusion of the IPO the entire share capital of GetBucks Zimbabwe of 1 093 567 251 ordinary shares will be listed on the Zimbabwe Stock Exchange on January 15, 2016.
GetBucks Zimbabwe is a financial technology company 55 percent owned by GetBucks Limited, also a fintech company with operations in nine countries with the remaining 45 percent owned by Brainworks Capital. The fintech is a growing sector with statistics showing that investment in financial technology more than tripled to more than US$12 billion in 2014 from $930 million in 2008
GetBucks Zimbabwe commenced operations in 2013 as a provider of microcredit and over the past 2 years grew to become one of the leaders in offering microcredit in the country. In addition, GetBucks Zimbabwe has broadened their services to offer insurance services.
Initiating coverage on the company, ABC Stockbrokers Research believes that the outlook of the company looks bright and as such are forecasting an uplift on the IPO price. They also see the company paying out consistent dividends to shareholders if its capital levels are strengthen.
“The IPO should mobilise US$3,2 million in fresh equity. In addition, the company seeks to raise US$10 million worth of debt.
“This should enable GetBucks to double loans for 2015/16. Assuming current interest margins are maintained, GetBucks’ income from lending activities is expected to double in 2016F.”
ABC is forecasting CIR to come down to 25 percent in 2016F from 27 percent and continue to drop over the next 3 years to 21 percent where it is likely to stabilise. This will be driven by an aggressive growth in the Company’s loan book in the face of stagnant to dropping operating expenses.
“Based on these assumptions, we forecast a 95 percent growth in profits for 2016F and 30 percent for 2017F.
“We do not anticipate any dividend to be paid out in 2016F. This should grow shareholders’ equity by 177 percent thereby resulting in GetBucks’ ROE coming down from 76 percent to 48 percent. This trend should continue as GetBucks strengthens its capital levels and thus we target ROE to normalise at 38 percent whereupon the company will begin to pay out dividends to shareholders.”
GetBucks is the first IPO after dollarisation.
The company is listing in order to regularise its shareholding structure. Brainworks Capital will need to reduce its shareholding to a maximum of 25 percent to comply with the RBZ rules on shareholding for deposit taking institutions. This is expected to be done within five years from the date of licensing, which is 16 July 2015. The listing will also improve brand visibility while also ensuring good corporate governance is upheld. FinX
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