A local investment advisory firm has urged Malawi Stock Exchange (MSE)-listed firms to take a business unusual approach to counter and mitigate revenue losses due to Covid-19 pandemic.
Cedar Capital Limited chief executive officer Armstrong Kamphoni said in an interview yesterday the impact of Covid-19 on firms will be varied, but advised investors to tread cautiously.
He said firms have to keep their fingers crossed because opportunities will certainly arise amid the pandemic.
Kamphoni said physical supply chains are far less significant for banking entities than for companies in other sectors.
But he said manufacturing companies, which are recipient of loans and advances, will be affected by production and distribution interruptions and deteriorating credit quality.
Said Kamphoni: “Banks need to incentivise the performing customers by, among others, reducing rates. This will not only ensure sustainability of those borrowers but also enable the bank to have some revenue to meet its costs and thus preserve capital. Banks may also look at bridging finance which will be hard to come by since every economy is affected.”
He said wholesale and retailers are in a more difficult situation as they mostly rely on walk-in customers and this is a time for them to develop online trading platforms and door deliveries.
“This is easier said than done in a country that does not have doorstep addresses. This may only help the sales side, but the supply chain disruptions will affect them as well.
“They will need to clear out perishable goods by obviously discounting them and reduce expenses which might unfortunately mean staff layoffs,” he said.
Kamphoni further added that the Covid-19 environment is expected to be much friendlier or even enhance the fortunes of mobile network operators in the short-term before they succumb to the general economic downturn in the long-run.
He said: “In the first instance, the working from home culture means higher growth in data usage and increased minutes of use on voice.
“On the other hand, corporate data usage will slow down, but will have little impact on revenues as most are structured as monthly fixed contracts. The other growth area for mobile networks will be mobile money.”
Meanwhile, stock prices of listed counters in the telecommunications sector are showing resilience to the current environment as share prices have picked up, signalling confidence investors have in the sector, according to market analysts.
Nonetheless, some listed counters have projected a tough year in view of Covid-19.
Published financial statements for the year-ended December 2019 show that firms including Press Corporation plc, Sunbird Tourism plc and National Bank of Malawi plc show that general business confidence remains at low ebb in light of Covid-19 with prospects of lower profits compared to last year.
Performance on the local shares market has lately been sluggish with analysts saying this is because the economic environment has not been good conducive for growth.