Botswana Building Society (BBS) shed 16 thebe this week. The share price dropped below P1 a share, eroding nearly P77 million in market capitalization.
The share price decline follows one transaction which saw 7,310 shares crossing hands on Wednesday, to the tune of P6,140.40. BBS was the only counter on the chopping block for the day. According to market data issued by the Botswana Stock Exchange (BSE), the offer was 80 thebe for a share. In the past weeks offer stood at 85 thebe.
BBS has been trading at P1 a share with little to no demand for its shares pending commercial banking license. The counter has been limited by delay in the license approval impacting on its financial performance and ability to restore confidence in the market. A fortnight ago, the company’s management told this publication that because they don’t have a license they are currently constrained in terms of what they can do. Finance Director Hildah Mhaladi said “we have limited income streams at present” and “once we have been provided with the commercial licence we can expand to more banking products”. This combined with the transition to become a commercial bank has translated in losses and no dividend for investors.
Overall, BBS has experienced losses from 2018 to 2020. The company recorded a loss of P35.761 million for the 12-month period to December 2019 compared to a loss of P26.191 million recorded for the 9-month period between April 2018 and December 2018. In 2020, BBS recorded a loss of P14.652 million. However, in the six months ending 30 June 2021, the company has reported a profit of P14.525 million compared to a loss of P14.652 million. While the company shows that it is turning the corner, thanks to reduced expenses, the share price remain intact at P1 only to dip this week.
Experts who spoke to this publication still argue that the company has potential provided its license is approved. The sentiment is that they need cheap capital from clients’ deposits. Letshego, the micro lender has fared well in attracting customer deposits to diversify funding mix. When speaking to this publication, Mhaladi revealed that the counter will roll out a deposit mobilisation. “We have a deposit mobilisation. We are reaching out to our customers and creating awarenss about the deposit products that we have brought to the market,” the finance director said disclosing that the company’s funding mix is purely bonds and borrowings whose funds it utilises to lend out to customers. BBS recently issued a bond in August 2020 to raise capital to fund lending.
BBS listed on the Serala Board in 2018 being the first company in history to register shares on this platform. Unlike the main board, the Serala Board has relaxed requirements. The company has been trading on the board for nearly three years. According to the BSE, companies can be registered on the Serala board for a period not more than five years thereafter it is expected to graduate into the main board. It was expected that once BBS attains its license it will transition into the main board within 18-20 months.
