Delta shares jump 9.5%

Published: 25 November 2013

Delta Corporation Limited's shares have jumped 9.5 percent in a broadly depressed market after the giant beverage maker announced a $16 million interim dividend last week.

The stock rose from US137,50c on November 12 to US150,51c on Thursday after management announced the firm will pay a dividend of US1,30c per share during the group's financials for the six months ended September 30, 2013.

This represents a 14 percent growth on the dividend declared in the comparable period last year, and it is one of the highest dividend payouts on the local market from a blue chip company so far this year.

The dividend yield, a measurement of the payout in relation to the stock price, is only two percent.

But the price-to-earnings (PE) ratio is around 16x, pointing to stronger future growth.

Stockbrokers IH Securities are targeting a price of US173c in 2014, which is an upside of 20 percent.

Over the past year, shares of Delta have consistently out-grown the mainstream industrial index.

The stock has risen from US90c in mid-November last year to current level, representing a growth of 67 percent. Over the same period, the key industrial index has increased by around 45 percent.

On a year-to-date basis, Delta has soared 46 percent and is back at its 52-week high.

Delta is one of the most actively traded shares on the Zimbabwe Stock Exchange (ZSE) with an average $600 000 worth of shares exchanging hands daily.

During the review period, net revenue rose five percent to $316 million, which was in line with analysts' expectations. Net earnings jumped 12 percent to $47,2 million, whilst basic earnings per share increased to US3,83c, up nine percent on prior year.

Total beverage volumes grew by four percent over prior period, driven mainly by the recovery in sorghum beer. Whilst lager volumes fell 10 percent, premium brands helped to mitigate volume loss on revenue and overall market share remained consistent.

Sparkling beverages grew eight percent on the back of improved availability and PET pack innovation.

Sorghum beer grew nine percent as uptake of the new Chibuku Super continued to strengthen.

"Delta's earnings continue to highlight the defensive qualities of the stock. We believe the application of a liquidity premium still exists, whilst downside over the long term, in our view, will be limited," said IH Securities.

The brokers forecast Delta revenue will grow 6,5 percent to $672,2 million in the full year 2014 and net income will increase eight percent to $110 million.
- sundaymail

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