final agriculture in zimbabwe

Agriculture in Africa

Team 9:Joao Simoes, Kailun Wei, Renee Lynn dela Cruz, Sahil Batra, Sameer Mehta, Xenia Hawrylyshyn

It seems that the world cannot even feed its current population, let alone the 9 billion expected by 2050.

Possible solutions:• Increase the yields of the crops• Improve the harvest efficiency• Land expansion

Developing world is an astonishing opportunity for improvement.

AFRICA• Fastest growing continents• More middle income

households than India• FDI increased to $62B

ZIMBABWE• Inexpensive assets like land• American dollar is their official

currency• Liberal financial exchange

control

Potential of Zimbabwe - 80% of the Investment especially in Agriculture

Methodology

• Profitability • Liquidity• DuPont Identity and Return on Equity• Stock price fluctuations• WACC • Cash Flow statements

Background:• One of the largest sugar producers in Africa• Produces around 50% of consumption in Zimbabwe• Dominates Local, and Exports in Europe

• Incremental increase in their Asset Management Ratios

2010 2011 2012 2013 20140.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Profitability Ratios Hippo Valley

Net Profit MarginGross Profit MarginReturn on AssetsReturn on Equity

2010 2011 2012 2013 20140

0.20.40.60.8

11.21.41.61.8

2

Liquidity Ratios: Hippo Valley Estates

Current Ratio Quick Ratio

Recommendation:Do Not Invest•Highly Volatile Market

Cost and Prices

•Dependent on the Climate Change•No prospects for innovation

Background:• Investment holding company with plantations and orchards

business• Interests in:

TeaMacadamia NutsFruits and VegetablesPoultry

2010 2011 2012 2013 2014

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

Profitability Ratios Ariston

Net Profit MarginGross Profit MarginReturn On AssetsReturn On Equity

2010 2011 2012 2013 20140

0.2

0.4

0.6

0.8

1

1.2

Liquidity Ratios: Ariston Holdings Ltd

Current Ratio Quick Ratio

• Weak DuPont Identity

Recommendation:Do Not Invest•Going Concern•Highly Volatile Prices•High Risks

Background:• Premium quality crocodiles skins and meat• Monopoly of the Niche Market• Export unique position

• Days Sales outstanding = 31 days

_x0007_Ju

n2010

_x0007_Ju

n2011

_x0007_Ju

n2012

_x0007_Ju

n20130.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

Profitability Ratios Padenga

Net Profit MarginOperating Profit MarginReturn On AssetsReturn On Equity

2010 2011 2012 2013 416090

2

4

6

8

10

12

14

16

18

Liquidity Ratios: Padenga Holdings Ltd

Current Ratio Quick Ratio

Recommendations:Short Term Investment• Growing market with high profitability• Great Performance• Potential for innovation• Fashion Trends• Ethical Issues

Background:• Grows, Processes and Distributes Tobacco• Owns 75% of the market share• Investing to enhance efficiency and productivity

• Asset management - Inventory turnover increase

2010 2011 2012 2013 2014

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

Profitability Ratios BAT

Net Profit MarginGross Profit MarginReturn On AssetsReturn on Equity

2010 2011 2012 2013 20140

0.20.40.60.8

11.21.41.61.8

2

Liquidity Ratios: BATZ

Current Ratio Quick Ratio

Recommendation:Invest in the Short to Medium Term• Efficient Management of Operation• Strong hold on the Market• Ethical Issues• Rising Health Consciousness

Background:• Producer and Marketer of Hybrid Seeds• Sells to 15 different countries in Africa

Zimbabwe, Zambia and MalawiGovernments are the major buyers

• Above average Days Sales Outstanding = 129 to 254 days

2010 2011 2012 2013 20140.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

Profitability Ratios Seed Co

Net Profit MarginGross Profit MarginReturn On AssetsReturn On Equity

2010 2011 2012 2013 20140

0.5

1

1.5

2

2.5

3

Liquidity Ratios: Seed Co of Zimbabwe Ltd

Current Ratio Quick Ratio

Recommendations:Invest for the Long-term• High Potential for Innovations

• Investing in Research and Development

• Attracting investors (Limagrain, and MAHYCO)

RecapCompany Recommendations

Hippo Valley Estates Do not invest

Ariston Holdings Do not invest

Padenga Holdings Short- Term Investment

British American Tobacco Short to Medium Term Investment

Seed Company Long Term Investment

Final Words• Realistic financial projects with good returns• Seed Co is more than a good financial investment

• End of the era of cheap food + growing concern about how to feed the world

Opportunity to make a difference

Thank You