TNM shareholders wary as price tumbles

It never rains but pours for TNM plc shareholders as the counter’s share price continues to tumble following an anticipated 55 percent drop in after-tax profits in the year ended December 2012 from the year before.

Last week, the only listed mobile telephone company issued a new cautionary statement to its shareholders advising that net profit after taxation is expected to dip by between 45 percent and 55 percent compared to the previous year.

This is contrary to an earlier statement which reported that after-tax profit will drop by between 20 percent and 30 percent.

“This [profit drop] is largely due to foreign exchange losses incurred following the recent sharp devaluation of the Malawi kwacha during the second quarter of the year, coupled with the continued depreciation of the currency during the third and fourth quarter of the year and resultant increase in finance charges,” said TNM’s company secretary Christina Mwansa.

The Reserve Bank of Malawi (RBM) devalued the local unit by nearly 50 percent in May 2012 and subsequently adopted a market-determined exchange rate which has seen the kwacha losing value.

TNM share price shed 3.3 percent last week to settle at K1.16 per share, and market analysts have warned the counter’s share price will continue to ease as shareholders become desperate to offload the shares.

The share market’s response to the TNM profit warning resulted in both indices, the Malawi All Share Index (Masi) and the Domestic Share Index (DSI), heading downward by 4.32 points and 3.45 point respectively to rest at 6 082.65 points and 4 768.96 points, according to the Malawi Stock Exchange (MSE) weekly commentary.

In the week, the indices tanked despite the market registering share price gains in Illovo Sugar (Malawi) Limited and Standard Bank.

The sugar manufacturer gained seven tambala to end the week at K154.07 per share while Standard Bank closed the week at K141 per share, a gain of K5.50.

The Foreign Share Index (FSI) anchored by one foreign counter, Old Mutual plc (OML) remained steady at 967.79 points owing to no share price movement.

During the week, the market registered trading activity in six counters; FMB, Illovo Sugar (Malawi) Limited, National Bank of Malawi, National Investment Trust Limited, Standard Bank and TNM plc.

The market transacted 3.8 million shares raising K14.9 million ($38 956.01) in 20 deals.

The 14-counter market, one of the tiniest in the sub-Saharan region, has 22 billion shares on issue.