Major International Business Headlines Brief::: 15 April 2019

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Major International Business Headlines Brief::: 15 April 2019

 


 

 


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*  S. Africa's Group Five to shed assets, interim results delayed

*  South Africa's Oceana Group sees HY profit up 30 pct

*  S.Africa's Brimstone quits Clover buyout after anti-Israel pressure

*  Tanzania agrees $1.7 bln financing deal with World Bank

*  Auto giants battle used car dealers for Africa's huge market

*  Egypt accepts French wheat cargo after re-testing

*  Could Harry and Meghan’s child pay US taxes?

*  American Airlines extends Boeing 737 Max flight cancellations

*  Guinness maker Diageo removes plastic from multipacks

*  Debenhams boss Sergio Bucher 'expected to step down'

*  Facebook, Instagram and WhatsApp suffer outages

*  Stratolaunch: 'World's largest plane' lifts off for the first time

*  Is Uber really worth $100bn?

*  Democrats set new deadline on Trump tax returns

*  Jumia: 'Africa's Amazon' in landmark stock market listing

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

                                      


S. Africa's Group Five to shed assets, interim results delayed

JOHANNESBURG (Reuters) - South African builder Group Five said on Friday it
would be disposing of a number of assets as it enters business rescue,
similar to chapter 11 bankruptcy protection proceedings in the United
States.

 

The company, which filed for business rescue in March after its lenders
pulled the plug, also said the process had delayed the release of its
interim results until a later date. They had been due to be released by
March 31.

 

 

 

 

 

 

 

 

 


 <mailto:info at bulls.co.zw> 

 



South Africa's Oceana Group sees HY profit up 30 pct

JOHANNESBURG (Reuters) - South African fishing firm Oceana Group expects its
half-year profit before tax to increase by between 26 and 30 percent, buoyed
by higher canned fish sales volumes and stronger fishmeal and fish oil
prices, it said on Friday.

 

Profit for the six-months ended March 31 was also boosted by good hake and
horse mackerel catch rates and prices combined with higher cold store
occupancy levels in the South African coastal stores, Oceana, whose
principal market is the lower-end consumer, added in a statement.

 

Headline earnings per share for the period are expected to decrease by
between 18 and 22 percent to between 254.5 cents per share and 242.1 cents
due to a higher tax charge than in the comparative period.

 

At 1403 GMT, shares in Oceana were up 1.85 percent to 77.05 rand.

 

 

 

S.Africa's Brimstone quits Clover buyout after anti-Israel pressure

JOHANNESBURG (Reuters) - South Africa’s Brimstone Investment Corporation
said it was pulling out of a proposed 4.8 billion rand ($345 million) buyout
of dairy firm Clover Industries, amid opposition from an anti-Israel group.

 

It has a 15 percent stake in Milco SA, the consortium offering to buy
Clover, which is headed by Israeli beverage firm Central Bottling Company
(CBC).

 

Brimstone said on Friday it was in advanced negotiations with an investor to
take over its role, and another partner in the consortium would acquire its
stake if it had not found a suitable replacement by the end of this year.

 

The South African investment firm pulled out after criticism of its
involvement from pressure group Boycott, Divestment, Sanctions against
Israel in South Africa (BDS SA).

 

Shares in Clover, which processes products including yoghurt and olive oil,
initially slipped around 2 percent but had recovered by 1253 GMT to stand at
23.23 rand, down 0.51 percent on Thursday’s close. Brimstone shares, which
often go days without trading, had not yet traded.

 

A representative for Clover said the firm had no comment on the news while,
in Jerusalem, CBC was not immediately available for comment.

 

Brimstone said in a stock exchange filing that it was in talks regarding the
Milco stake with a “potential replacement B-BBEE shareholder” - meaning a
broad-based black economic empowerment investor that, like Brimstone itself,
would be majority black-controlled and managed.

 

If it has not found a suitable replacement by December, it has secured a
backstop agreement with one of the other partners, International Beer
Breweries Limited, to then acquire Brimstone’s entire stake.

 

($1 = 13.9685 rand)

 

 

 

Tanzania agrees $1.7 bln financing deal with World Bank

DAR ES SALAAM (Reuters) - Tanzania has agreed a new $1.7 billion financing
deal with the World Bank to fund various projects during fiscal year
2019/20, its finance ministry said on Saturday.

 

The agreement, which is comprised of low-interest loans and grants, includes
a $400m loan for education and $300m for a poverty reduction programme.

 

“Part of the financing will also be used to fund various infrastructure
projects, such as roads, water, information and communication
technology...and energy,” the ministry said in the statement.

 

Tanzania plans to raise its total spending in 2019-20 (July-June) slightly
to 33.11 trillion shillings ($14.16 billion), with the funds going towards
improving roads, railways and rural electricity supplies.

 

The financing deal was reached during talks between Tanzania’s finance and
planning minister Philip Mpango and the World Bank Vice President for Africa
Hafez Ghalem in Washington.

 

The spending is up from 32.48 trillion shillings in the fiscal year that
will end in June.

 

Loans and grants are a big source of foreign currency for Tanzania.

 

 

 

Auto giants battle used car dealers for Africa's huge market

JOHANNESBURG/NAIROBI (Reuters) - At the edge of Nairobi’s Ngong Forest,
thousands of used cars glitter in the hot sun on a dusty field, waiting for
buyers.

 

Imported from Japan or the Middle East, they offer an affordable route to
vehicle ownership in Kenya and have dominated the market for decades.

 

That is an obstacle big carmakers must overcome if they are to crack Africa,
a market promising rapid growth as trade tensions threaten sales elsewhere.
African consumers also still need conventional engines just as demand in
more traditional markets is curbed by restrictions on carbon emissions.

 

Volkswagen, BMW, Toyota, Nissan and others have joined forces to lobby
governments for steps that would reduce the imports that have made
sub-Saharan Africa notoriously difficult terrain and allow local production
to flourish.

 

“The question on Africa isn’t, ‘Is it a market of the future?’” Mike
Whitfield, Nissan’s top executive for Africa, told Reuters. “It’s a case of
when.”

 

Four years after forming the Association of African Automotive Manufacturers
(AAAM) their efforts are starting to bear fruit. Carmakers that set up local
assembly plants could get tax holidays of up to 10 years and duty exemptions
in Nigeria, Kenya and Ghana, according to government plans seen by Reuters.

 

Thomas Schaefer, who heads Volkswagen’s Africa business, said there is a
potential market in sub-Saharan Africa for 3 to 4 million new cars, up from
just 420,000 in 2017.

 

But that will require addressing the well-entrenched interests of
second-hand car dealers, smugglers and lowering the price of new cars.

 

“It will largely depend on how successful the African governments are in
limiting the amounts of second-hand imports and how price-competitive new
vehicles can be with their tariffs,” said Craig Parker, Africa research
director at Frost & Sullivan, a U.S.-based market research firm.

 

MULTIPLYING EFFECTS

Africa’s population and household incomes are rising rapidly. But its 1
billion inhabitants account for only 1 percent of the world’s new passenger
car sales, industry data shows. South Africans bought over 85 percent of
those vehicles.

 

The AAAM identified Kenya, Nigeria and Ghana as potential manufacturing hubs
and helped draft legislation setting up standards and incentives.

 

Details of governments’ plans provided to Reuters demonstrate that African
nations are keen to secure a spot as a beachhead for the industry. Nigeria
and Ghana are preparing to offer automakers tax holidays of up to 10 years
and duty-free imports of parts and components used in local assembly.
Nigeria also plans to double the levy on new, fully-built imported vehicles
to 70 percent to boost demand for locally produced cars, though the policy’s
approval has been delayed. In Kenya, automakers will pay no import or excise
duties and get a 50-percent corporate tax break. For African nations facing
massive demographic pressures, such concessions make sense if they create
jobs, said Jelani Aliyu, of Nigeria’s National Automotive Design and
Development Council. “The multiplying effects are exponential,” said Aliyu,
who foresees supporting industries developing around the plants.

 

Legislative and fiscal frameworks are being finalised, but companies are
already investing millions of dollars in new plants.

 

VW and Nissan have set up operations in Nigeria, Kenya and Ghana or have
pledged to do so. Honda and Peugeot have launched assembly plants in
Nigeria, and Peugeot has done the same in Kenya. Carmakers sorely need the
business. Their South African divisions, which typically direct operations
elsewhere on the continent, face stagnating domestic sales and scant growth
prospects in their main export market, Europe. A chaotic Brexit or U.S.
tariff hikes could further dampen sales.

 

Toyota South Africa’s chief executive Andrew Kirby said the strategy is:
“Focus on Africa because Africa is going to grow significantly.”

 

A pivot to Africa could also help insulate automakers from the immediate
effects of the electric vehicle revolution. The continent is ill-placed to
join it at the moment due to the higher prices of EVs and unreliable power
grids.

 

Just 66 electric cars were sold last year in South Africa - the continent’s
most developed economy.

 

“Africa will most likely remain as the last bastion of internal combustion
engines,” Parker said.

 

DISTORTED MARKET

Nevertheless, industry officials say the biggest hurdle to developing the
market for new cars is dumping from countries such as Japan, where strict
vehicle inspections force cars out of circulation after just a few years.

 

They say this distorts the market by allowing dealers to buy the cars at
scrap prices and export them to Africa.

 

They blame the cheap imports for killing off assembly sectors in a number of
African countries including Nigeria, which built around 150,000 cars per
year until the 1980s.

 

Political will is needed to change that, and without it there is little
point in considering a country for local production, according to VW’s
Schaefer.

 

“The markets ... are literally not functioning right now due to importation
of used vehicles,” he said.

 

In Kenya, the government plans to wind down imports of cars more than three
years old by 2021. Exceptions will be made for passenger vehicles with 1.5
litre or smaller engines.

 

The policy could see mid-range imported models double in price, according to
the 300-member Kenya Auto Bazaar Association (KABA). The lobby group has
taken out ads in local newspapers denouncing the policy and is demanding a
meeting with Kenya’s president.

 

Mark Oburu, KABA’s vice-chairman, said the move would hit an industry that
delivers 85 percent of Kenyan car purchases.

 

“The middle class will not be able to own a vehicle of their choice,” he
said.

 

In the Nairobi bazaar, Grace was shopping for her eldest son’s first car.
She said she could not afford to buy a new one.

 

“If they don’t rescind that decision, we will be on boda bodas
(motor-bikes).”

 

Both Ghana and Nigeria have also pledged to tackle the issue. Nigeria hiked
taxes on imported used cars in 2014, but smuggling has undermined that
effort to boost demand for local production, according to manufacturers and
government officials.

 

Used cars are also among the leading imports in many African countries, and
governments will have to wean themselves off the associated tax revenues.

 

There are other stumbling blocks: access to financing is limited, and
countries that don’t host assembly plants must also be persuaded to limit
used imports and reduce tariffs on African-made vehicles. That will be hard
to do if the only outcome they see is higher sticker prices.

 

“The purpose is not to take the most lucrative slice of the industry,” said
Ghana’s minister of trade and industry, Alan Kyerematen, suggesting that
neighbours could produce components for his country’s assembly plants.

 

Auto executives acknowledge the challenges but point to a famous precedent.
When VW and GM entered China in the 1980s and 90s, vehicle ownership rates
were lower than in many African markets. Today, those two companies alone
sell over 3.5 million vehicles annually in China. “Everybody was laughing,
saying China doesn’t need cars, they only need bicycles,” Schaefer said.

 

 

 

Egypt accepts French wheat cargo after re-testing

CAIRO (Reuters) - A French wheat cargo Egypt had rejected by Egypt due to
high levels of the grain fungus ergot has been re-tested and found to have
acceptable levels, a ministry document showed and an Egyptian official said.

 

The cargo at the Red Sea port of Safaga will be offloaded and distributed to
mills after the test showed a 0.01 percent ergot level, Othman Mohammad
Younes, general manager of the Safaga silo, told Reuters. A ministry of
agriculture document, obtained by Reuters, also showed a test result of 0.01
percent.

 

Egypt’s ministry of agriculture was not immediately available for comment.

 

On Tuesday, sources told Reuters that the cargo of 63,000 tonnes of French
wheat had been rejected and negotiations were underway to resolve the issue.

 

At the time, one source said a 0.1 percent ergot level had been found and
that the acceptable level was 0.05.

 

An official source at Safaga later confirmed the rejection because of the
0.1 percent ergot content and said unloading of the wheat had been refused.
A request was then made to re-test the cargo, he said.

 

Egypt, the world’s largest wheat importer, rattled the global market in 2016
when it reinstated a ban on even trace levels of ergot, which can cause
hallucinations but is considered harmless at minor levels.

 

After several wheat cargoes were rejected, the government later readopted an
internationally recognised standard allowing up to 0.05 percent ergot in
wheat.

 

 

Could Harry and Meghan’s child pay US taxes?

The Duke and Duchess of Sussex are expecting their first child and along
with the excitement and nerves of being new parents could come an unwanted
tax bill.

 

As US citizens, Meghan - and her child - are liable to pay US taxes.

 

With the baby's due date and the US's tax day - 15 April - fast approaching,
here's a look at why these royals could be forced to pay money to the US
government.

 

The US is one of only a few countries to charge tax based on citizenship and
not residency. Other countries that tax non-resident citizens include
Eritrea and Myanmar.

 

This means that even though the duke and duchess will be living at Frogmore
Cottage in Windsor, the US government still expects Meghan to file tax
returns with the Internal Revenue Service (IRS) - the US tax authority.

 

That goes for Prince Harry and Meghan's baby too. Any American who has lived
in the US in the last five years automatically passes on their citizenship
to their offspring.

 

Meghan is expected to apply for UK citizenship, but that process takes time.
Ahead of their wedding in 2018, Harry's communication's secretary, Jason
Knauf, said Megan would be "compliant with immigration requirements at all
times". That means she needs to live in the UK for at least five years.

 

Once she is a UK citizen, the duchess could renounce her US citizenship and
her tax liability.

 

That process isn't simple either and it requires paying - you guessed it -
more taxes. The US government charges an exit tax on all assets owned by
anyone above the age of 18-and-a-half years renouncing their citizenship.

 

While the Duchess of Sussex will be able to renounce her US citizenship in a
few years when she becomes a UK citizen, her child will have to wait until
he or she is at least 16.

 

Under US law minors under the age of 16 are "presumed not to have the
requisite maturity" to relinquish citizenship.

 

What is taxed?

The US and the UK have an agreement that gives US citizens a tax credit
based on the amount of tax paid in the UK, but that's unlikely to erase
either Meghan's or her child's US tax bill.

 

US citizens living abroad are obliged to pay taxes on income, gifts over
$15,797 (£12,080) assets over $200,000 (£152,930) and disclose any foreign
bank accounts.

 

Meghan and her baby will have to report any gift they received over the past
year if the total value is over $15,797 (£12,080)

For Meghan, this will include baby shower gifts. Her child's birthdays could
become an accounting exercise.

 

Any future income from investments or trusts put in the child's name will
also be taxable.

 

"All the royals are probably beneficiaries of various trust and they will
need to be careful," says Sam Ashley, US tax director at The Tax Advisory
Partnership.

 

Mr Ashley does not advise any members of the Royal Family but says it's
likely the advisers they do have started planning for this a long time ago,
possibly even before the wedding.

 

Royal income

As an actress, Meghan was reportedly paid $50,000 per episode of the show
Suits. While she is no longer a working actress she will receive some
payments whenever the show is rebroadcast.

 

The duke and duchess's expenses - such as living costs, travel, clothing -
are covered by Harry's father for their role as working royals, representing
the Queen. The Prince of Wales funds his sons and their families with income
from the Duchy of Cornwall.

 

Its likely that when Harry accepts any money from his father he keeps his
accounts separate from Meghan's to avoid giving the US tax authorities any
insight into the Duchy or any other family trusts.

 

Any money given by Prince Charles directly to Meghan or his grandchild will
have to be declared to the US authorities and will be taxable.

 

The potential exposure of the Royal Family's complicated finances is a
bigger risk than a large tax bill.

 

"The Royal Family likely have some quite complicated trust structures to
pass down family wealth and it's unlikely they would want the US to look
into that," says Mr Ashley.

 

Most married couples in the US file their taxes jointly, but the duchess
will probably file as an individual to avoid revealing her husband's
finances.

 

Children who earn under $2,000 can file their taxes with their parents', but
a royal baby will possibly have gifts and inherited assets that will have to
be declared to the IRS.

 

No matter what insight the US government gains into the Royal Family's
finances - and experts stress that is likely to be limited - the public
won't get that same view. US tax returns are confidential.

 

Renouncing US citizenship

But if both royals do give up their status as Americans they won't be alone.
Many wealthy and well-known figures have given up their US citizenship and
ditched US tax liability.

 

The former foreign secretary relinquished his US citizenship in 2016. He was
born in New York to British parents. All children born in the US are
automatically US citizens. In 2013 he called the US taxation system
"absolutely outrageous" when US tax authorities demand he pay capital gains
tax on the sale of his north London home.

 

The son of US actress Grace Kelly found himself in a similar predicament as
the child of Harry and Meghan will soon be in. His mother passed on her US
citizenship which he renounced at age 21. He became Prince of Monaco in
2005.

 

The US-born singer voluntarily relinquished her citizenship after living in
Switzerland for 12 years.

 

 

The co-founder of Facebook gave up his US citizenship just before the social
network became a public company in 2012. He became a citizen of Singapore
which does not allow dual nationalities.--BBC

 

 

 

American Airlines extends Boeing 737 Max flight cancellations

American Airlines is extending the cancellation of its Boeing 737 Max 8
flights from June until mid-August.

 

The move is to "provide confidence" to customers during the peak summer
travel season, the airline said in a letter.

 

Last month, 737 Max aircraft were grounded worldwide following fatal crashes
involving Ethiopian Airlines and Indonesia's Lion Air.

 

Boeing is developing new software for the jet's anti-stall system, which has
come under scrutiny since the crashes.

 

Senior officials at American Airlines said they were "confident" that the
Boeing upgrade would be approved by US aviation regulators before 19 August,
despite its decision to ground its fleet of 24 planes until then.

 

The cancellations will affect up to 115 flights a day, Reuters news agency
reported.

 

Last week, Southwest Airlines made a similar move and United Airlines has
also cancelled 737 Max 8 flights until June.

 

The plane is grounded as investigations continue into the Ethiopian Airlines
crash last month which killed all 157 people on board.

 

A preliminary report says the aircraft nosedived several times before it hit
the ground despite pilots "repeatedly" following the procedures set out by
Boeing.

 

In October a 737 Max 8 flown by Indonesian airline Lion Air crashed,
claiming the lives of 189 people.

 

Investigators are focusing on the plane's anti-stall software, the
Manoeuvring Characteristics Augmentation System (MCAS).--BBC

 

 

Guinness maker Diageo removes plastic from multipacks

Drinks giant Diageo has announced that it is removing plastic from
multipacks of its Irish stout brand Guinness.

 

Plastic ring carriers and shrink wrap will be also removed from packs of
Harp, Rockshore and Smithwick's beers, as part of Diageo's £16m initiative.

 

The change will be phased in with multi-can packs sold in "100% recyclable
and biodegradable cardboard" in Ireland from August this year.

 

The new packaging will then be used in the UK and globally next year.

 

Many companies have been committing to being more green after concerns about
plastic waste were highlighted in shows such as the BBC's Blue Planet 2,
narrated by Sir David Attenborough.

 

Last year, rival brewer Carlsberg switched to using a glue instead of
plastic to hold together its cans.

 

And more recently, Nestle got rid of plastic straws from its products and is
using paper ones instead.

 

'Sustainable brewery'

Diageo's bottling and packaging plant in Northern Ireland will be the first
site producing the new packs, with the firm investing £8m in its east
Belfast plant.

 

It packages products which are exported around the world, including to the
US, Canada, South Korea and Europe.

 

Diageo says under 5% of its total packaging is plastic and the changes will
reduce usage by over 400 tonnes annually.

 

Oliver Loomes, country director of Diageo Ireland, said: "Managing our
environmental impact is important for the planet and the financial
sustainability of our business.

 

"We already have one of the most sustainable breweries in the world at
(Dublin's) St James's Gate and we are now leading the way in sustainable
packaging. This is good news for the environment and for our brand."

 

Prime Minister Theresa May has pledged to ban all avoidable plastic waste in
the UK by 2042.--BBC

 

 

 

Debenhams boss Sergio Bucher 'expected to step down'

Debenhams boss Sergio Bucher is expected to step down following the
struggling department store chain's recent takeover by its lenders.

 

"Having stayed on and got the refinancing in place, Sergio thinks now would
be the right moment to move on," a source close to him told the BBC.

 

"The upcoming restructuring can then be led by someone offering a fresh
start," the source added.

 

The retailer was taken over less than a week ago after entering
administration.

 

The group of lenders that now owns Debenhams - including banks such as
Barclays and US hedge funds such as Silver Point and Golden Tree - have
provided the retailer with £200m in funding.

 

The group said it had "extensive turnaround experience, which we will deploy
to support the management's turnaround plan".

 

It also said it intended to "work closely with management and the board to
position Debenhams for a long-term successful future".

 

"We are pleased that now under new ownership, the business can look forward
with confidence," they added.

 

Debenhams: Three things that went wrong

Unlikely stars bucking the High Street slump

Mr Bucher had already been voted off the retailer's board after major
shareholders, Mike Ashley's Sports Direct, and Landmark Group, voted against
Mr Bucher's re-election in January.

 

Sports Direct founder Mr Ashley - who held a near 30% stake in Debenhams -
made several offers to take it over.

 

However, his final offer of £200m was rejected because it was conditional on
him becoming chief executive.

 

'National scandal'

Mr Ashley subsequently described the Debenhams takeover as a "national
scandal" and called for the administration process to be reversed.

 

Debenhams is the biggest department store chain in the UK with 166 stores.
It employs about 25,000 people.

 

Its stores will continue to trade as normal during the initial restructuring
process, before closures begin next year.

 

As well as the planned closures, it has also been renegotiating rents with
landlords to tackle its funding problems.

 

It has not released a list of which shops may be shut.

 

Debenhams is one of a string of well-known names suffering in a tough High
Street environment.

 

Last year, Poundworld, Toys R Us and Maplin all went bust and disappeared
altogether.

 

Other household names - Homebase, Mothercare, Carpetright and New Look -
were forced into restructuring deals with their landlords, closing hundreds
of stores.

 

Music chain HMV recently fell into administration before being bought.

 

The increasing popularity of online shopping, higher business rates, rising
labour costs and the fall in the pound following the Brexit vote - which has
increased the cost of imported goods - have been blamed for contributing to
retailers' woes.--BBC

 

 

 

Facebook, Instagram and WhatsApp suffer outages

Social networks Facebook and Instagram, as well as messaging service
WhatsApp, were unavailable on Sunday for more than three hours, users said.

 

The website Down Detector reported that thousands of people globally had
complained about the Facebook-owned trio being down from 11.30 BST onwards.

 

Facebook users were presented with the message: "Something went wrong."

 

At 14:50, the site said it had resolved the issue after some users
"experienced trouble connecting" to the apps.

 

A spokesman for the company added: "We're sorry for any inconvenience."

 

 

Facebook did not comment on the cause of the problem, or say how many users
had been affected.

 

In March, Facebook experienced one of its longest ever outages, with some
users around the globe unable to access its site, as well as Instagram and
WhatsApp, for more than 24 hours.--BBC

 

 

 

Stratolaunch: 'World's largest plane' lifts off for the first time

The world's largest aeroplane by wingspan has taken flight for the first
time.

 

Built by Stratolaunch, the company set up by the late Microsoft co-founder
Paul Allen in 2011, the aircraft is designed to act as a flying launch pad
for satellites.

 

The idea is to fly the plane to 10 km (6.2 miles) high before releasing
satellites into orbit.

 

Its 385 ft (117 m) wingspan is the length of an American football field.

 

Microsoft founder announces space venture

The billionaires fuelling a space race

If successful, such a project would be a cheaper way to launch objects into
space than rockets fired from the ground.

 

The twin-fuselage six-engine jet flew up to 15,000 ft (4,572m) and reached
speeds of about 170 miles per hour (274 km/h) on its maiden flight.

 

The pilot Evan Thomas told reporters the experience was "fantastic" and that
"for the most part, the airplane flew as predicted".

 

According to their website, Stratolaunch aims to "make access to orbit as
routine as catching a commercial airline flight is today".

 

British billionaire Richard Branson's company Virgin Galactic has also
developed aircraft that launch rockets into orbit from great height.

 

Stratolaunch describes its vessel as the "world's largest plane" but there
are aircraft which are longer from nose to tail.-BBC

 

 

 

Is Uber really worth $100bn?

Everything about Uber is big.

 

The taxi app and delivery business is America's biggest venture
capital-backed company.

 

It is forecast to raise $10bn ($7.6bn) when it sells its shares on the New
York Stock Exchange - one of the largest amounts on record.

 

And the 10-year-old company could be valued at as much as $100bn when it
floats.

 

However, the other big thing about Uber is its losses which, although down
on the previous year, hit $3bn in 2018.

 

And that raises the biggest point of all - when will Uber make a profit and
perhaps justify that massive market valuation?

 

It is the question that Uber's chief executive, Dara Khosrowshahi, will face
over the next few weeks as he embarks on a roadshow to visit potential
investors ahead of the flotation, which is expected in May.

 

What reception will Uber get?

Uber is not the first of its ilk to float this year.

 

Of the so-called unicorns - venture capital-backed businesses valued at $1bn
or more - Uber's closest US rival, Lyft, floated at the end of March, while
online scrapbook company Pinterest is expected to list its shares next week.

 

But so far, those initial public offerings (IPO) have shown that there is
some caution over valuations. Lyft's stock price has fallen 15.2% since it
floated.

 

Pinterest has priced its shares at between $15 and $17 each, which gives it
a value of up to $11.3bn. However, that is still below the $12bn valuation
the company had during its most recent round of private funding two years
ago.

 

Against this backdrop, will Uber be able to hit that $100bn valuation?

 

Kathleen Smith, from Renaissance Capital, says: "I think sometimes they are
a little bit tone deaf because they've been in a world where everyone has
been climbing all over themselves to get to invest in their companies.

 

"They think then 'oh, that means they'll roll out the red carpet in the
public markets' - and it's not that kind of place."

 

When will Uber make a profit?

The company is unlikely to make any money soon, according to the IPO
documents it filed on Thursday.

 

"We have incurred significant losses since inception, including in the US
and other major markets," it said. "We expect our operating expenses to
increase significantly in the foreseeable future, and we may not achieve
profitability."

 

It expects losses to continue in the "near-term" because of higher
investment in areas such as increasing the use of its apps, expanding into
new markets and continuing to develop its autonomous cars division.

 

In a letter to potential shareholders, Mr Khosrowshahi said: "We will not
shy away from making short-term financial sacrifices where we see clear
long-term benefits."

 

Jordan Stuart, from Federated Investors Inc., says investors are willing to
be patient when it comes to profit, but only if a company can spell out how
it intends to get there.

 

Amazon, for example, didn't make an annual profit until six years after its
1997 flotation. Even then it took while before investors could see a
sustainable path to profitability.

 

Mr Stuart said: "The stock really moved let's say five or six years ago when
they were really able to show 'hey, we can turn off investment to show
profitability if we want and give up top line growth for bottom line growth
but we're not going to do that'.

 

"Some of these companies, if they can show that scalability, that ability to
turn that profit nozzle on or off, then I think investors... are going to
give companies a chance to say 'this is worth X amount of billions of
dollars'."

 

Uber's sales are growing. Revenue has risen from $3.8bn in 2016 to $11.2bn
in 2018.

 

Gross bookings from Uber's core business - which accounts for the majority
of sales - jumped from $18.8bn in 2016 to $41.5bn last year.

 

In its filing, Uber says it expects people to move away from the expense of
owning a car to using services to get around.

 

Uber is also investing in e-bikes and e-scooters where it hopes to capture
customers who make shorter journeys.

 

But investors want to see a plan.

 

Mr Stuart said: "I do believe [investors] have raised the bar and said
'we're not going to look at clicks or eyeballs or users anymore unless you
can show us where is that profitability'."

 

What do Uber's IPO documents reveal?

Dan Ives, managing director and equity analyst Wedbush Securities, said the
company's IPO filing is the first time people will be able to "really get
under the covers of Uber to understand the financials".

 

But there are some areas of concern.

 

The firm's US and Canadian business does not appear to have recovered from
the #DeleteUber campaign in 2017 - not a stellar year for the company -
which was first spurred by claims that Uber attempted to break a taxi strike
by New York taxi drivers.

 

The hashtag then reappeared on social media when former Uber engineer Susan
Fowler wrote a blog which alleged a toxic work environment at the company.

 

Uber said "our ridesharing category position generally declined in 2018 in
the substantial majority of the regions in which we operate impacted in part
by heavy subsidies and discounts by our competitors in various markets".

 

Another potential concern is the employment status of Uber's drivers. They
are classed as independent contractors, but Uber is still facing legal
issues about this and if workers were to be considered employees then Uber
could face higher costs.

 

What now for Uber?

Uber did not specify what price it will sell its shares at - that is
something to be determined over the coming weeks as Mr Khosrowshahi meets
potential investors.

 

"A lot of technology investors are looking for is who is going to be the
next FAANG," said Mr Ives, referring to the acronym for Facebook, Amazon,
Apple, Netflix and Alphabet, which is the parent company of Google.

 

But Ms Smith said: "In light of the fact that we have seen Lyft and its very
poor trading and then in seeing what Pinterest is doing tells me that
investors may be a bit more 'wait and see' about Uber."-BBC

 

 

 

Democrats set new deadline on Trump tax returns

US President Donald Trump's tax returns must be given to House Democrats by
23 April, a committee chair has said.

 

The administration has already failed to comply with a 10 April deadline.

 

In a letter to the Internal Revenue Service (IRS), House Ways and Means
chairman Richard Neal said failure to comply with the new deadline would be
interpreted as a denial of request.

 

One of Mr Trump's top aides said last week that the Democrats would "never"
see his tax returns.

 

Mr Neal is the only member of the House of Representatives authorised to
request individual tax information under a federal law. He has asked for six
years of Mr Trump's personal and business returns.

 

Trump lawyer dismisses tax return demand

NY to examine Trump tax affairs in 1990s

How did Donald Trump make his fortune?

Republicans have called the request as an overreach of confidential taxpayer
data.

 

But in the letter, Mr Neal told IRS Commissioner Charles Rettig: "None of
the concerns raised can legitimately be used to deny the committee's
request... If you fail to comply, your failure will be interpreted as a
denial of my request."

 

Every US presidential candidate since 1976 has released their tax returns,
but there is no law requiring it. Democrats claim the request is both legal
and necessary.

 

The Democrats gained control of the House of Representatives in mid-term
elections last year, empowering them to launch investigations into Mr
Trump's administration and business affairs.

 

A lawyer for President Trump likened the request to "harassment".

 

Mr Trump has claimed previously that he could not release his tax returns
because they were being audited by the IRS.

 

But the IRS has said that he could release the returns even if they are
under audit.--BBC

 

 

 

Jumia: 'Africa's Amazon' in landmark stock market listing

Shares in Africa's largest e-commerce firm have debuted on the New York
stock market, which could see other tech start-ups on the continent follow
suit.

 

Jumia is listing 17.6% of the company at $14.50 a share, giving the company
"unicorn" status - a technology start-up worth $1bn-plus.

 

It is the first tech start-up from Africa to float on Wall Street.

 

The so-called "Africa's Amazon" has 4 million customers on a continent where
just 1% of retail sales are via online.

 

Jumia was founded in Lagos, Nigeria, by two French entrepreneurs in 2012 and
now offers services to most of the African population, in countries such as
South Africa, Tanzania, Egypt and Ivory Coast.

 

Its largest shareholder is MTN, Africa's biggest telecoms company.

 

 

The company said on Friday that the flotation on the New York Stock Exchange
would raise $196m (£150m) for shareholders and for future investment.
Jumia's financial advisers had been pitching the shares to investors at
between $13-$16 each.

 

Jumia operates in 14 countries, including Kenya, Ghana, Algeria, Angola, and
Senegal. The website sells everything from electronics to clothes, and there
is a hotel and flight booking site, and a takeaway food delivery platform.
In Kenya, Jumia has teamed up with French supermarket giant Carrefour to
offer online deliveries.

 

The company's sales jumped by almost 40% last year to $147.3m.

 

The BBC's Africa Business Editor, Larry Madowo, said that Jumia was not yet
profitable and had accumulated losses of nearly $1bn since it was founded.

 

Although there are technical and infrastructure hurdles to growing Africa's
online retail market, he said a big selling point was that Jumia accepted
mobile money payments across a continent where few people have credit or
debit cards.

 

However, he said Jumia faced tougher competition. "Its initial public
offering coincides with the launch of a competing app from global logistics
provider DHL allowing consumers in 11 African countries to buy directly from
global retailers.

 

"The DHL Africa eShop brings together more than 200 American and British
retailers and will deliver directly to homes, something Jumia has struggled
with."

 

Erik Hersman, chief executive of Nairobi-based internet and software firm
BRCK, said Jumia's listing sent an important signal to other African
start-ups that a major stock market listing was possible.

 

"It's an important event in the evolution of the African tech scene," he
told the BBC last month.--BBC

 

 

 

 

 

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


Zimbabwe 

Independence Day

Zimbabwe

18 Apr 2019 

 


 

Good Friday

 

19 Apr 2019

 


 

Easter Saturday

 

20 Apr 2019

 


 

Easter Sunday

 

21 Apr 2019

 


 

Easter Monday

 

22 Apr 2019

 


 

Workers Day

 

01 May  2019

 


 

Africa Day

 

25 May 2019

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
other member of Bulls ‘n Bears nor any other person, accepts any liability
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
report shall be solely responsible for making their own independent
investigation into the business, financial condition and future prospects of
any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 


 

 


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