Real Estate Investments Zambia PLC ("REIZ")’s (formerly Farmers House Plc)
Background
Real Estate Investments Zambia PLC (REIZ) is one of the oldest companies in Zambia, originally founded in the 1920s as a co-operative. The company was split in two during 1981, with one trading-arm remaining as a co-operative and the other taking over the business’ real estate assets, which were placed into a limited company, Farmers House Ltd. In 2006, the company listed on the Lusaka Stock Exchange, becoming Farmers House PLC...
Property Management
REIZ has interests in commercial, industrial and retail properties throughout the Zambian capital of Lusaka, with the property management including services such as security, cleaning and maintenance. Some companies choose to offer these services in-house, however REIZ stand out from the crowd by employing Southern Africa’s leading property management company, JHI/Merva to maintain its facilities...
Construction
In a similar way to the running of the property management side of the business, REIZ use third-party construction companies, in a strategy which is geared towards optimising efficiency and ensuring properties are completed on budget and to strict time constraints...
REIZ has a long and impressive track record of property development in Zambia.
REIZ (formerly Farmers House Plc) is the only listed property development company on the Lusaka Stock Exchange.
Financial Performance Indicators
- Gross Rental Income: ZMK 26,847 million
- Profit from operations: ZMK 15,291 million
- Change in fair value of Investment property, net of exchange gains: ZMK 47,212 million
- Profit after tax: ZMK 42,518 million
- Total Assets: ZMK 535,895 million
- Increase in Investment properties: 63%
- Increase in Turnover by 390% in 5 years
- Increase in Operating Profit by 568% in 5 years
- Total Assets Increased by 489% over 5 years
Zam-Africa Opinion
After careful consideration of the history of REIZ as Farmers house I give an unbiased view of this stock.Since 2006 to 2012 the stock has risen by 230%.This is from K1500 to K3450 as last quoted on the Lusaka stock exchange.
Price to earnings ratio
With a price to earnings ratio of 6.68...this shows there is still much room for growth in this firm as the market has not priced its shares disproportionately to its earnings.The standard PE ratio for concern is about 20 and given that this one lies way below 20 we can therefore conclude that there exists opportunity for robust growth.
Price to Book Value Ratio
With a price to book value of 0.51 .We can safely assume that REIZ is grossly undervalued.Eventually the market will set things straight at a more realistic book value, maybe even one that over values REIZ.
A key bonus for REIZ is their recent purchase of Arcades for US$25m that has increased their estimated net asset value to beyond US$60 million.
Coupled with a strong track record and the recent aquisition My opinion is that REIZ is a stock to buy and hold for a very long time.
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