According to the state-run Shanghai Securities News publication, Ant Financials revenue rose by an outstanding 92 percent to reach 10.2 billion yuan last year, equating to a 2.6-billion-yuan net profit sum and a 26-percent margin.
Alipay forms the crux of Ant Financials earning power, representing over 70 percent of its operating income, while about a third of its revenue comes from a 30-percent stake in MYBank (a private-investment bank that received regulatory approval in September) and relatively minor financial operations, such as small loans and credit management businesses.
The immense value of Alipay, which is presently Chinas most widely used online payment platform, means that Ant Financial is valued at between $35 billion and $40 billion.
While representatives from Alibaba, Ant Financial, and financial advisor China International Capital Corp. (CICC) remained tight-lipped about the status of the IPO proceedings, a piece in Caixin magazine reported that Chinas state-backed social security fund, the Postal Savings Bank of China and CDB Capital, are in the process of negotiating stakes of 5 percent, 3 percent and 3 percent, respectively.
According to Shanghai Security News, Ant Financial is seeking to generate an estimated $4-billion private share-placement amount for a 2017 domestic IPO.
Meanwhile, Ma has indicated to the media that he is uncertain about where the IPO will be held.
Gold Fields (NYSE: GFI) released their 2014 results earlier this month with some positives being overshadowed by issues at their South Deep mine. While Gold Fields managed to generate a substantial amount of cash, pay down debt and reduce costs, negative developments at South Deep appear to be front and center for the time being and are holding the stock back.Fourth Quarter and Year End Results
Gold Fields produced 556,000 ounces of gold in the fourth quarter and 2.2 million ounces for 2014, which was an increase of 10% over 2013. Adjusted earnings for the fourth quarter came in at $17 million compared to $14 million for the fourth quarter last year. For the year, adjusted earnings increased from $58 million in 2013 to $85 million in 2014. Gold Fields generated $54 million in cash flow from operating activities in the fourth quarter which marked the 6th consecutive quarter that Gold Fields has generated positive cash flow from operating activities, bringing their yearly cash flow total to $235 million despite 10% lower gold prices. Their fourth quarter 9% free cash flow margin was good considering the lower gold prices, but is a decrease from the 18% FCF margin reported in the second quarter and the 12% FCF margin reported last quarter. Still, in a gold price environment in which many miners are cash flow negative, Gold Fields is doing a good job in this area.
In the fourth quarter, Gold Fields managed to reduce net debt by another $45 million, bringing the yearly reduction total to $282 million. Total net debt stands at $1.45 billion which is still ugly, but is an impressive 16% lower than net debt of $1.74 billion last year. The net debt to EBITDA ratio now stands at 1.3:1 and net debt as a percentage of enterprise value decreased from 41% at the end of 2013 to 29% at the end of this year. With Gold Fields generating substantial cash from operations, I believe they are in a good position to continue to pay down net debt.
Gold Fields is guiding for production in 2015 of 2.2 million ounces which is in line with the 2.2 million ounces produced in 2014. All-in sustaining costs are forecasted to be $1,055 an ounce, which is also in line with 2014 AISC, which came in at $1,053 for the year. With no production increase for 2015, it is a bit disappointing that Gold Fields is not projecting to lower AISC further. It would be nice to see them come in under $1,000 per ounce which would be closer to the costs of other gold majors and would further increase cash flow and earnings.Problems at South Deep Persist
While Gold Fields enjoyed a strong 2014 on the cash flow front, shares were hammered after year end results due to issues that were highlighted at South Deep. Previously, Gold Fields had stated that they expected South Deep to be cash flow breakeven by mid 2015. Now, Gold Fields is stating that they forecast South Deep to be in a breakeven position in 2016. This was very discouraging for investors to hear as there have been numerous issues with South Deep in the past and South Deep is Gold Fields most important mine. The most concerning issue highlighted by management is a lack of skills in mechanized mining practices in South Africa. Gold Fields has stated that they are facing competition with other miners for these limited skills. This basically means that currently Gold Fields does not have the expertise to optimize South Deep which begs the question, if they dont have the expertise now, where is that expertise going to come from?
Gold Fields undertook a ground support remediation program at South Deep in 2014, which cost the mine significantly in ounces produced, with a 34% reduction from 2013. Gold Fields has stated that in light of all the issues at South Deep that they have decided to take a step back to get the basics right and set the foundation to unlock the long-term value inherent in the asset. Not exactly a statement that inspires investor confidence. Despite this, management has stated that they retain confidence in the ore body and the infrastructure at South Deep. To be fair to management, South Deep is the worlds second largest gold deposit and has an estimated 70 year life which invariably means there will be many hiccups along the way bringing a mine of this size to its full potential. I do credit management for their transparency as they have been forthcoming about their struggles at South Deep and have not tried to sugar-coat their problems. It will be important for investors to watch developments at South Deep closely as they will likely have a significant impact on Gold Fields stock price.
For the fourth quarter, AISC at South Deep were $1,640 an ounce which was an improvement over third quarter AISC which were $1,790 an ounce. For 2015, Gold Fields is guiding for AISC at South Deep of $1,400 an ounce which is still high but will be a big improvement if they can meet guidance. The real key for South Deep going forward will be for management to hire and train the skilled personnel required to operate the mine. Further delays on reaching the new break even target of 2016 will likely have a negative effect on the share price; however, any positive news in this regard could send shares much higher.
The liberalisation of the financial sector in Zimbabwe was an integral part of the Economic Structural Adjustment Programme (Esap), a programme which was introduced by the government in 1991.
Esap was aimed at restructuring the economy from a predominantly centralized (state-controlled) economy to a market-driven economy.
The structural adjustment programme was a pre-condition for obtaining lateral support from the Bretton Woods institutions, the World Bank and the International Monetary Fund ("IMF").
The economic reforms saw the liberalisation of interest and exchange rate and de-segmentation of financial institutions. Prior to the financial liberalisation, Zimbabwe's financial system comprised of the Reserve Bank of Zimbabwe (RBZ), five commercial banks, two discount houses, four merchant banks, three building societies, six finance houses and the Post Office Savings Bank (POSB) and specific purpose institutions such as Agricultural Finance Corporation (AFC) the Industrial Development Corporation (IDC), the Zimbabwe Development Bank (ZDB), Credit Guarantee Company, Small Enterprises Development Company (Sedco), and the Venture Capital Company of Zimbabwe (VCCZ).
The market reforms in the financial sector brought up new business opportunities, which encouraged new players into the sector. New banks started operations in the commercial banking, merchant banking, building society, finance house, and asset management sub-sectors.
Over the years the new banks that entered the market included AfrAsia (formerly Kingdom Bank), Barbican Bank, MetBank (formerly Metropolitan), First Bank Corporation, Time Bank, Trust Bank, Interfin Bank (formerly CFX), Royal Bank, ZABG, Genesis Investment Bank, Capital Bank and several other institutions within the asset management, micro-finance, investment banking subsectors.
The financial sector was flourishing and the stock market was booming. New and innovative products were launched. The economy experienced real financial deepening as new players and products came into the market. This was the Zimbabwean dream to encourage local entrepreneurs to participate in the local economy.
UNCTAD research shows that growth of local banks in many African countries is mainly due to a combination of low entry requirements and the perception that banking provides opportunities for profit not available in many other sectors of the economy. In all of the countries where local banks were set up in significant numbers, the regulatory barriers to entry were low. Noteworthy in that research is that political interference subverted prudential criteria in the granting of licences, notably in Nigeria where retired military officers were directors of many banks and in Kenya where many banks had prominent politicians on their boards.
Like in other countries, the Zimbabwean local players saw opportunities to exploit the market gaps not covered by the traditional banks. The locally-banks were able to gain market share by targeting customers neglected by the established banks and by offering better services. However, some of these locally-owned banks were very aggressive in their asset-liability matching when compared to foreign owned banks which have remained very conservative in their lending policies. Moral hazard kicked in due to macroeconomic instability, greed, related party lending, weaker bank capital bases, concentrated shareholder bases as well as the credit markets which these local banks focused on.
Now move on to 2015. Most of the indigenous banks and financial institutions that entered the market are no longer in existence or are struggling to meet regulatory capital requirements. The first high profile case of an indigenous bank failure came in 1996 when Roger Boka's United Merchant Bank (UMB) went under. It is widely accepted that the reason for the failure of that bank was poor risk management; the bank is alleged to have loaned heavily to politicians although the absence of an effective regulatory and supervisory framework in a radically reformed sector could also be partly to blame.
United Merchant Bank, First National Building Society, Zimbabwe Building Society, Barbican, Renaissance Merchant Bank, Trust Bank, Royal Bank, Genesis Investment Bank, Capital Bank Corporation, Interfin Bank and most recently (as this past week) AfrAsia Bank have all gone under. These are some of the locally-owned institutions that came into being as a result of the liberalisation of the financial sector.
Looking at the failed institutions, one can pick up common themes on the causes of the failures. These include illiquidity and insolvency (due to high levels of non-performing loans (NPLs)), moral hazard (insider loans, high risk exposures and real estate), macroeconomic instability, and high operating expenses. All this indicates the vulnerability of indigenous banks to economic cycles and impact of less robust credit management systems. Statistics from the RBZ show that recently failed banks, for example, Capital Bank, Allied Bank and AfrAsia Bank all experienced high NPLs.
Banks with foreign-based parents or links with international institutions have virtually remained unscathed. These include Stanbic (whose parent is the South African behemoth Standard Bank), Standard Chartered (Standard Chartered plc), Barclays Bank (from the Barclays Africa Group), MBCA (owned by South Africa's Nedbank), and CABS (an Old Mutual Group subsidiary). CBZ remains a stellar example of the indigenous banks still in operation thanks to government ownership and business. It is currently the largest bank in Zimbabwe in terms of core capital at $109 million as of 31 December 2014 as listed in the recent RBZ monetary policy statement. Other notable local banks still in operation include Steward Bank and NMB Bank.
While all is not lost in the locally-owned institutions space, local banks face greater risks than their foreign-owned bank counterparties whose parents have geographically diversified operations and deep pockets. The risk of continued failure of locally owned banks could reverse the gains of financial liberalisation and entrench the oligopolistic nature of the sector. There is need, however, for a robust regulatory framework to ensure that banks are fully capitalised and have strong credit risk management and good corporate governance systems, and that there is no concentration of bank ownership, while keeping in check the adverse impact of moral hazard.
Atento SA (NASDAQ:ATTO) has received a consensus broker rating score of 1.00 (Strong Buy) from the three brokers that provide coverage for the stock, Zacks Investment Research reports. Three investment analysts have rated the stock with a strong buy rating.
Brokerages have set a 12-month consensus price target of $17.67 for the company and are expecting that the company will post $0.33 EPS for the current quarter, according to Zacks. Zacks has also assigned Atento SA an industry rank of 79 out of 265 based on the ratings given to its competitors.
Shares of Atento SA (NASDAQ:ATTO) opened at 12.13 on Friday. Atento SA has a 52-week low of $9.05 and a 52-week high of $14.00. The stocks 50-day moving average is $11.65 and its 200-day moving average is $11.18. The companys market cap is $893.0 million.
Separately, analysts at Zacks downgraded shares of Atento SA from an outperform rating to a neutral rating and set a $13.10 price target on the stock in a research note on Wednesday, February 11th.
Atento SA is a provider of customer relationship management and business process outsourcing (NASDAQ:ATTO) services in Latin America and Spain. The Company offers a portfolio of CRM BPO services, including customer service, sales, credit management, technical support, service desk and back office services.
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