Mixed prospects for firms in 2023

Malawi Stock Exchange (MSE)-listed firms are poised to finish the year on a good note, with the exception of those in telecommunications and trading who have been left bleeding.

In compliance with the listing requirements of the 16-counter MSE, listed companies are required to publish a trading statement as soon as there is a reasonable degree of certainty that the financial statements will differ by at least 20 percent from the previous corresponding period.

A look into 11 published trading statements of listed firms for the period ending December 31 2023 show that while financial institutions have performed well in the current environment of high inflation, weak local currency and increased interest rates.

For instance, TNM plc expect loss after tax of between K4.7 billion and K5 billion, representing an increase of between 161 and 177 percent while Airtel Malawi plc expect its profit-after tax for the review period to be within the range of K1.75 billion and a loss of K2 billion, representing a fall of between 95 and 105 percent, respectively.

“The adverse deviation has arisen from the impact of the foreign exchange loss of approximately K50 billion because the Malawi kwacha has lost 66 percent of its value to the US dollar since June to date,” said Airtel Malawi plc company secretary Hlupekire Chalamba in a signed trading statement.

However, in the tourism sector, the results are mixed. While Sunbird Tourism plc expects its profit after tax to increase by between 70 and 84 percent to K5.2 billion and K5.6 billion while Blantyre Hotels plc accordingly advises that its loss after-tax is expected to increase by between 934 percent and 954 percent to between K1.4 billion to K1.43 billion.

However, for firms in the financial sectors, the story is different.

FDH Bank plc expects a jump of between 27 percent and 31 percent to K29.1 billion and K30 billion, Standard Bank plc expects a jump of between 20 percent and 35 percent to K46.5 billion and K52.3 while Press Corporation plc expects a rise between 73 percent to 92 percent  to K62.8 billion and K69.8 billion.

On the other hand, National Bank of Malawi plc expect a  jump of between 40 percent and 55 percent to K64.4 billion and K71.2 billion, NBS expect a jump of 50 and 64 percent to K28.4 billion and K31 billion while Nico Holdings plc expect a jump of 61 to 74 percent to K61 billion and K66 billion.

Reacting to the published prospects, MSE chief executive officer Jon Kamanga said while on average the market has exhibited strong performance, the telecommunication firms have really been affected due to exchange rate losses.

He said: “We are closing the year with a return on investment of 78.1 percent in kwacha terms while in US dollar terms is by 9.1 percent anchored by a capital appreciation in 15 counters except one.

“Going forward, following the stabilisation of the kwacha, we believe and have all the hope these companies will perform much better as they have turned the dark side of the economic quagmire where we had serious shortage of forex.”

On his part, Minority Smallholders Association of Malawi secretary general Frank Harawa said for shareholders, there are prospects of receiving more dividends is the trend is sustained for the profiting firms.

Taxation consultant Misheck Msiska observed that tax revenues for this year are likely to drop significantly, not just because of foreign exchange losses but also because of inflationary pressures that have gravely affected demand.

He said: “Apart from inflation which the monetary measure induces, the drastic drop in economic activity and ensuing trading losses will immediately hit the tax revenues for government.

“Perhaps gradual devaluation could have assisted.”