
	2005-2006
	FULL COMPANY REPORTS

News

ZPI � Results for the Year Ended 31 December 2009

ZPI posted an impressive set of results as they managed to

make a profit from operations. Though rental incomes

were below our expectations of $5m, they were high

enough to cover all expenses incurred. They made a total

income of $2,6m with $2,1m being rental income. After

incurring expenses of $1,1m, they made an operating profit

of $1,5m. a 27% fair value loss on investment properties

stemming from the illiquidity of the property market,

resulted in them incurring a fair value loss of $11,3m which

took them to a pretax loss of $9,2m. A tax credit which

resulted from the change in tax laws reduced the post tax

loss figure to $4,2m and attributable loss of $3,7m. Their

balance sheet fell from $43,7m in June 2009 to $37m while

NAV stood at $35,2m. The group closed the year in a net

cash position of $503,523.

Operational Review

The group started 2009 at a low base and slowly recovered

to close the year stable. Their collections rose slowly from

17% in Feb 2009 to over 100% in October and steadied

above 80% in the past month (Feb 2009). Average

collection levels rose from 50% in Feb 2008 to 68% in

December while the rental arrears as a percentage of

rentals stood at 34%. Vacancies stood at 5% as a result of

their tenant restructuring exercise. They expect to keep it

at these levels in the short run.

Outlook

ZPI�s future looks bright as they have projects across the whole

nation that should generate a good start for the property sales

market. The following projects are on their list;

� Parklands Bulawayo � 136 stands developed at a cost of

$500,000 and should revalue to $1,3m.

� Rhodene Masvingo � Developments have just gone beyond

the preliminary stage. It is estimated to cost $3,2m and

should revalue to $4,9m when completed.

� Chinhoyi St � Shopping complex estimated to cost up to

$2m. Had been shelved due to the harsh economic

environment but is currently under consideration by

management.

� Bluff Hill (Pabasa) Harare � Over 350 industrial units whose

developments are pending local authorities� approvals. The

estimated cost of developing this piece of land is $18m.

� Willowvale and Bluff Hill Harare � industrial stands pending

local authorities� approvals to develop further.

� Victoria Falls � concept for budget hotel approved.

Awaiting the economic conditions to correct.

� Fernhill Mutare � 900 high-income stands pending

approval from local authorities.

Value and Recommendation

Based on the rental rates currently enjoyed by the group, they

should make rental incomes of $5,2m. Applying rental yields of

8%, their rental properties should be valued at $65,4m. Adding

$1m for the value of their unserviced land, ZPI�s comprehensive

value should be $66,4m (3,9c per share). Trading at a PBV of

0,2x and Market Cap/SQM (MC/SQM) of $139 (local peer

average: $540/sqm), ZPI has great upside potential of at least

400%. We however believe that their being on the US targeted

sanctions list is what has a negative bearing on their value in

which case, this view is short term as Zimbabwe is on a political

recovery path (which saw Zimre and ZPI among other

companies) being removed off the EU sanctions list early this

year. Long term investors could pile in now before the counter

is open to all. STRONG BUY

Designed@Mtetwa