Bulls n Bears:::On a Date with Innscor Africa Limited

Thu Feb 9 09:12:55 CAT 2023

On a Date with Innscor Africa Limited

I am the kingmaker of great businesses through my ecosystem which incubate.
You can liken my approach to Berkshire Hathaway

Welcome to On a Date with a listed company on the Zimbabwe Stock Exchange
(ZSE).

THREAD: On a Date with Innscor Africa Limited (INN) .

#1. History

1951, a sign manufacturing business is started in Rhodesia, Bulawayo. The
proprietors are seeing a gap in the market

Neon Fluorescent Co (NFC) relocates to Salisbury to capture a bigger market
as a number of calls for their service is from there

1966, NFC gravitate towards a more lucrative market of refrigerator and
chest freezer manufacturing using Atlantic and later Capri brand for its
products

1968, There is a growing demand for television, TV Sales & Hire (TVSH) is
born led by the Fowler family.

Buying electronic appliances is expensive for ordinary people TVSH comes out
with a solution, hire purchase.

The Fowler family grows the business becoming agents for foreign owned
brands in consumer goods.

1987, Koudounaris and Fowler family open Chicken Inn

The entry into the quick service restaurant business is a success, opens up
new opportunities

1993, Astra Crocodile Ranching & Shearwater Adventures is bought from Astra
Corporation

Distribution Group of Africa (DGA) is started as an agency for global brands

1995, Acquisition and commissioning of a mechanised bread plant in Harare

1998, Capri Corporation is bought facilitating the reverse listing of INN on
ZSE

2003, 26% of National Foods is acquired through a share swop with Takepart
Investments and Old Mutual.

2004, 21% of Colcom Holdings a pork products producer in Zimbabwe is bought.
It becomes 100% owned business of INN 14 years later

2009, shareholding in a poultry producer Irvine's is bought.

2010, Padenga Holdings (PH) is unbundled

2015, The successful quick service restaurant (QSR) business is split from
INN to become Simbisa.

>From the initial Chicken Inn store it grew  with the opening of outlets
which included franchise rights to,

Steers

Nando's

Galisto's

INN proposes to purchase a majority stake in Profeeds, a stock feed
manufacturer through its subsidiary Irvine's.

However the Competition and Tariff Commission (CTC) opposes the deal as
monopolistic.

29% shareholding in Profeeds is eventually bought from 59%

2016, Shareholding in Transerv an auto retail business is bought.

It started as a wholesale spares delivery business supplying workshops and
service centers 14 years earlier.

Transerv, TVSH and DGA businesses are separated from INN to form Axia
Corporation

A minority stake in Probrands, a fast moving consumer goods (FMCG)
manufacturer is purchased from the Philip brothers.

Disposal of the Spar Corporate retail stores which had been started 17 years
earlier in Harare with disposal in Zambia a year later.

2019, Probrands is restructured into specific units creating a separate
business Probottlers focused on manufacturing syrups.

INN acquires a 50.64% stake in Probottlers.

Associated Meat Packers (AMP) is born out of Colcom Holdings restructuring
efforts.

A new investor takes up stake in Skitap or Innscor Appliance Manufacturing
the business holding Capri leaving INN with only 25.05%.

The remaining stake is bought 3 years later by Annunaki Investments an
investment vehicle owned by SSCG Africa Holdings.

INN disposes its interest in Freddy Hirsch a manufacturer of natural sausage
casings, spices and seasonings.

2021, A financial services provider MyCash started by Meikles Limited 5
years earlier sells 30% of its stake to INN.

2022, Buffalo Brewing Co is born

#2. Operations,

INN is a focused light manufacturing and integrated value chain investment
group with a vision for efficient systems.

It is leaned towards agro-processing to produce staples for the mass market
through a woven network of related businesses

INN is divided into 3 main divisions and head office services division.

. Mill-Bake

. Protein

. Light Manufacturing

Mill-Bake

3 businesses make up the Mill-Bake division which are,

. National Foods (37.45%)

. Baker's Inn (100%)

. Profeeds (49%)

Protein

3 businesses are in the Protein division which are,

. Irvine's Zimbabwe (49%)

. Colcom Holdings (100%)

. Associated Meat Packers (50.1%)

Light Manufacturing

6 businesses in this division are,

. PRObottlers (50.64%)

. PRObrands (39.2%)

. PROdairy (50.1%)

. NatPak (58.33%)

. Zando (60%)

. Buffalo Brewing Co (50.2%)

Head Office Division

INN is invested into other related associate businesses which are,

. Paperhole Investments (PHI)

. Afrigrain Trading

. Providence Human Capital

#3. Competitors,

#3. Competitors,

Mega Market

Mutare based producer of consumer goods Top Chef, Ekono, Ideal.

CFI Holdings

The business supporting Victoria Foods, Farm & City.

Surrey Group

A business known for its beef and chicken production in Marondera.

Sable Chicken

Koala Park

Delta Beverages

Dairiboad

Proton

Varun Beverages

Dendairy

Lobels Bread

Arenel

Brighton Piggery

Nampak

Cairns Foods

Kusona Trading

Associated Foods Zimbabwe

Davipel

Willowton Group

Surface Wilmar

Capital Foods

EcoCash

FSG

Windmill

Nestle

#4. Challenges,

Cancellation of the CAT dealership agreement, Barzem's business model
revolved around CAT

Access to foreign currency, business relies heavily on importing thereby
stifled by inadequate forex

Influx of cheaper machinery from India & China

 <mailto:zitfmktg at zitf.co.zw> 

#5. Share price,

812.79 ZWL per share (US73.89c) as at Feb 8, 2023.

713,67 ZWL per share on the 3rd of January 2023

13.9% year to date performance on the ZSE vs ALSI 47.11% and Top 10 at
47.42%

11th most traded stock over the past 3 months to 1/02/2023

575,926,450 issued shares

463.188bn ZWL market cap (US$421m)

#6. Shareholding,

18.70%  is controlled by an investment vehicle owned by the founder of INN,
Zinona Koudounaris.

17.54% is owned by HM Barbour an investment vehicle controlled by another
co-founder of INN, Michael Fowler

The two investors started INN

INN consolidated a portfolio of businesses into a single focused enterprise

The businesses that became units of INN had started almost 50 years before
its establishment

The enterprise became an incubator which had critical mass to acquire
related businesses

#7. Brands,

#8. Management,

Julian Schonken - Group CEO, Sept 2016

He has held a number of financial and managerial positions during his 23
years with the group

Prior to the appointment he led the light manufacturing unit which will be
the strategic focus of the group.

#9. Pitch,

Gaining competitive advantage over rivals by investing US70 million across
its business units in the past period

Reducing future foreign currency needs of the group by empowering local
farmers to grow its raw materials

Superb competent management

Incubation of resilient businesses which thrive after the incubation period
such as Axis Corporation and Padenga.

An investor can benefit by owning INN as there is the prospect to be part of
a another strong business upon unbundling such as Simbisa.

Each week will be on a DATE with a company listed on the ZSE with Martin
Mataga an Investment Democrat. Twitter @MartinMataga. The purpose of this
thread is to assist investors to have a minimum appreciation of listed
firms. Bulls n Bears has made reasonable effort to validate and update the
information before circulation but the onus is on the investor consult their
financial advisor. 

Disclaimer: Do not misconstrue this thread as investment advice. DATE
companies before you buy their shares. For comments and questions reply to
<mailto:bulls at bullszimbabwe.com> bulls at bullszimbabwe.com

Invest Wisely!

Bulls n Bears 

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