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Listed firms eye ballooning profits

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Malawi Stock Exchange-listed Mpico Limited, Nico Holdings and Press Corporation PLC are expecting profits for the year ended 2017 to be significantly higher than the earnings realised in 2016.

A weekly market report circulated by Cedar Capital, a brokering and dealership company formerly operating as African Alliance, says Mpico has forecast a jump in profits 100 percent higher than, what the company realised in 2016.

Towards the end of the 2016 Financial Year, Mpico raised K9 billion in a renounceable rights issue, which converted its loans into equity.

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The report says the effect of this transaction was a reduction in finance charges on loans, reported at K4.1 billion in Financial Year 2016.

“We believe this is the main driver of earnings for 2017. On the other hand, we think the reduction in debt burden should help unlock value in rental income, especially from the Gate Way Mall, whose occupancy rates were reported to be on the rise.

“We, therefore forecast a minimum of 25 percent growth in 2018 barring any setbacks, especially on the long outstanding government debt,” the report reads.

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Nico Holdings, according to the report, expects 2017 profit to be at least 180 percent higher than the previous year.

Cedar says Nico’s life insurance business seems to be the major contributor to the group’s performance and growth and forecasts that it [Nico Life] will continue to anchor the group into the future.

“The company has updated its trading statement and says to expect at least 300 percent increase,” the report reads.

Further, the report indicates that the cleaning aspect involving subsidiaries of conglomerate, PCL, will unlock the group’s performance, predicting a profit jump of 90 percent in 2017.

“The beginning of the year saw changes at the top management level in the group with George Partridge taking over from Matthews Chikaonda. George was formerly Chief Executive Officer of PCL’s subsidiary and cash cow, National Bank of Malawi. His initial focus seems to be to address all bad apples within the group and curtail their loss making status.

“In this regard, MTL has been restructured by forming a fibre optic company while the cdma-based mobile telephony business line has been abandoned. Top management changes have been effected in PTC Group, which seems to have revisited its strategy in order to survive competition from incoming supermarket chains, who only target the main cities.

“We think, the jump in profit might be attributed to TNM and a one-off profit from a sale of a stake, which analysts will be well advised to discount going forward,” the report reads.

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