21. October 2020 | 12:08 CET
Orange, Total, Osino Resources: How to benefit from growth in Africa?
Africa is a booming continent: many raw materials attract investors, and the young population is pushing into future-oriented industries with even better training. It is no wonder that many companies from Europe and North America are also doing profitable business in Africa. Mobile phone provider Orange has recognized that the continent has more to offer than many people still believe. Europe's third-largest telecommunications giant has been making aggressive acquisitions in Africa in recent years. Africa and the Middle East now account for more than 13% of sales. Instead of just telephony, Orange acts as a kind of bank in Africa. Thanks to an app, people can make payments - this is safer and more flexible than cash and is popular with the younger population.
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ISIN: CA68828L1004 , FR0000133308 , FR0000120271
Orange: Foot in the door
With its Africa strategy, Orange distinguishes itself from other major telecom giants and has a foot in the door in a potential billion-dollar market. But what about the rest of the business? The most important markets remain in Europe and especially in France.
Although it has come through the Corona crisis well, the share price is sluggish. Over twelve months, the share price fell by 36%, but the dividend, which currently offers a return of more than 7%, could be attractive. Although Orange is consciously breaking new ground, the value is still not an African share - the share of sales is too small. The activities in the Fintech sector are nevertheless exciting.
Total - Investments for the future
Another French Company with a strong focus on Africa is Total. The oil company is one of the top 5 worldwide and wants to work with investors in Mozambique on Africa's largest liquid gas project. An astounding USD 15 billion is to flow into this project. Total is also active in Egypt and has discovered a new gas field there. Despite the ambitious plans, 2020 has not been a good year for Total so far. The fall in oil and gas prices assisted group sales plummeting by almost a third in the first half of the year. The situation may have become somewhat more relative, but the weal and woe of the Group, are still linked to energy prices.
Nevertheless, Total is maintaining its dividend and is currently generating a dividend yield of more than 6%. Total's plans to become CO2-neutral by 2050 is a demonstration that the raw materials sector has long been more than just the exploitation of resources. The Group remains an attractive Company with a good market position in Africa. However, the share price is weakening: within twelve months, the share price fell by just under 40%.
Osino Resources - Expertise and experiences
Osino Resources is also a raw materials Company with a focus on Africa. The Canadian Company is exploring for gold in Namibia and is developing its Twin Hills Gold Project there. On the stock exchange, the Company valuation sits around EUR 100 million - so compared to Orange or Total, Osino is still a small-cap. Nevertheless, the Company's shareholder structure reads like a who's who of the commodity finance industry. In addition to the Resource Capital Fund, Rothchild & Co, Mackenzie Investments, and Earth Resource Investment Group are also on board. Also, insiders hold about 38% of the shares. Analysts have the share price on their screens: The last three price targets set by Canadian analysts were between CAD 2.30 and 2.60. The share is currently quoted at around CAD 1.35. But what is the reason for this?
As an exploration Company, Osino Resources is in the process of exploring and expanding the potential of its property. To this end, drilling will continue until the end of 2020. Each drill result completes the market's picture of the gold project and the associated stock. Given the ongoing gold bull market and the expected news flow, Osino Resources' stock could be a suitable speculative investment. On a twelve-month horizon, the stock has already gained nearly 80% but has recently stagnated somewhat. Further results from the drilling will show whether the Canadian Company continues its success story.