The Covid-19 pandemic has continued to hit the two Malawi Stock Exchange (MSE)-listed hospitality firms, registering average share price loss of 19.9 percent in the first quarter (Q1).
Market analysts and shareholders have attributed this to Covid-19 containment measures which have reduced patronage and occupancy levels in most of the hospitality units.
Figures from MSE and local investment management firms show that share price of Sunbird Tourism plc, which owns hospitality units in all the country’s regions, dropped by 14.29 percent from K120 to K90 per share in the first quarter of 2021 while Blantyre Hotels Limited (BHL), which owns Protea Hotel by Marriot Blantyre Ryalls dropped by 14.9 percent from K12.94 to K11.
The MSE data, however, show a mixed performance in share prices in the financial services sector where four counters, namely National Bank plc, NBS Bank plc, Standard Bank plc and Nico Holdings plc shares gained while FMBCapital Holdings plc, PressCorporation pcl, Old Mutual Malawi plc and National Investment Trust Limited plc share prices declined.
Similarly, in the real estate and communications sectors, the results were mixed with Icon Properties gaining from K10.49 to K12.18 per share while Mpico Limited plc shares dropped by K4.11 from K25 to K20.89 per share.
On the other hand, Airtel Malawi plc shares gained from K17.50 to K27.95 while TNM plc share price declined to K16.39 from K25.54 per share.
In an interview on Tuesday, Minority Shareholders Associations of Malawi secretary general Frank Harawa described the drop in share prices as bad news for shareholders.
He said: “The capital gains that shareholders made over time have been eroded now through this. In the current scenario, it is even difficult for these companies to pay dividends because they are not performing well.
“Our hope is that as the country has started administering the vaccine, the Covid-19 issue will be history and things will normalise, including trades in the most affected companies.”
A financial statement from Sunbird Tourism plc shows that the difficult trading conditions of 2020 largely due to the drop in occupancy levels resulted in a deterioration in cash generation, with operations generating only K392 million compared with K2.5 billion in 2019.
On the other hand, BHL total revenue amounted to K2.07 billion, which was 49 percent below 2019 revenue of K4.06 billion.
The drop in revenue, according to a published financial statement, was due to the impact of the Covid-19 pandemic which had adverse effects in the hospitality industry worldwide.
The data shows that Ryalls Hotel occupancy levels were at 30 percent compared to 61 percent during the same period last year.
Cedar Capital Limited has said Sunbird’s asset heavy business model means profits are more vulnerable to drop in volumes and it could take
time to regain previous profitability levels going forward.
Malawi Tourism Council chairperson Johns Malili admitted that tourism industry continues to be affected by the Covid-19 pandemic and this year growth in the sector will be subdued.
He said: “The regional economy, specifically the tourism sector, has suffered a greater loss in the year, as we saw a drop in international traffic by almost 95 percent by July, a 57 percent drop in international arrivals and a 73 percent drop in accommodation occupancies.”
In the first half of 2020 alone, about 35 000 workers in the tourism sector were laid off due to business slowdown and closure due to Covid-19, according to the Department of Tourism.
Meanwhile, the first quarter market analysis by MSE shows that the market was generally mixed as it registered a positive return on investment of 0.53 percent