Horse mackerel price will not rise next year, warns a financial analyst. (Photo Credit: Kurt Kulac/CC BY-SA 2.5)
One of the main financial service companies in Namibia forecasts that horse mackerel market price will remain depressed over the next year, as supply continues to outstrip the demand.
This conclusion has been drawn by IJG Securities -- one of Namibia's leading companies offering stockbroker and investment-related services -- after analyzing 2014 financial results of Bidvest Namibia, The Namibian reported.
The financial services company also explains that two other factors contributing to the 18.6 per cent decline in horse mackerel selling price in dollars have been price regulations in the Democratic Republic of Congo and the artificially reduced demand from Nigeria following import restrictions.
Besides, the weaker Namibia dollar offset the lower US dollar price effect on revenues for businesses and also had a significant impact on costs.
“The positive economic environment bodes well for the revenue growth in the commercial businesses, however weaker selling prices of horse-mackerel and lower quota allocations add strain to revenue growth,” IJG informs.
Referring to Bidvest in particular the financial services company told investors that there are concerns about the possibility of a dividend cut given the outlook of the company.
"We do not expect the stock to trade lower from current levels given the illiquidity of the stock and the possibility that once sold units may be difficult to rebuy in future, therefore we change our buy recommendation to a hold recommendation," IJG concluded.
Despite these challenges, Bidvest managed to grow revenues by 10,4 per cent while cost of sales grew at 13,8 per cent and operating costs by 36,9 per cent compared to last year.