Latest news with #ZIG
28-04-2025
- Business
Zimbabwe's ZiG battles inflation pressures a year after launch
A year after Zimbabwe launched the Zimbabwe Gold (ZiG) currency to restore confidence and curb market distortions, signs of cautious progress are beginning to emerge. The latest figures from the Zimbabwe National Statistics Agency (ZimStat) show that the annual inflation rate increased to 85.70 percent. The recent release is the first time Zimstat has given a year-on-year local currency inflation rate since authorities launched the ZiG currency. The authorities launched the ZiG currency when the year-on-year inflation rate was 57.50 percent in April 2024. The ZiG is Zimbabwe's sixth attempt at a stable currency in less than 20 years. According to the Reserve Bank of Zimbabwe (RBZ), 'ZiG is a digital currency backed by physical gold reserves, designed to provide an alternative store of value for citizens.' The authorities expected this currency to stabilise the economy by offering a more reliable currency option, supported by the physical backing of gold. The latest figures show that monthly inflation edged up by 0,6 percent in April 2025, after a brief dip into deflation in March. However, the annual inflation rate highlights ongoing economic challenges. According to Bloomberg , since the ZiG's introduction, the authorities have struggled to convince Zimbabweans that the ZiG will succeed, and its value has slumped. The ZiG is not catching on in the informal sector, which is the engine room of Zimbabwe's economy, making up around 80% of it. Most of these small traders and businesses just prefer to stick with US dollars and South African Rands. They see those currencies as more reliable than the ZiG right now. Financial expert Jacob Chincinza believes that where people accept ZiG, it is often due to legal mandates rather than market preference. 'Government regulations have compelled certain formal-sector entities to recognize ZIG for transactions, but this has not translated into voluntary adoption. Businesses frequently impose higher prices for those using ZiG to manage exchange rate risks, further discouraging its use,' he noted. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X, and Bluesky for the latest news.
Yahoo
17-02-2025
- Business
- Yahoo
Is There An Opportunity With Zigup Plc's (LON:ZIG) 44% Undervaluation?
Using the 2 Stage Free Cash Flow to Equity, Zigup fair value estimate is UK£5.66 Current share price of UK£3.18 suggests Zigup is potentially 44% undervalued Analyst price target for ZIG is UK£4.67 which is 17% below our fair value estimate How far off is Zigup Plc (LON:ZIG) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by projecting its future cash flows and then discounting them to today's value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. It may sound complicated, but actually it is quite simple! Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. See our latest analysis for Zigup We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (£, Millions) -UK£8.84m UK£63.5m UK£83.3m UK£98.3m UK£111.4m UK£122.5m UK£131.9m UK£139.9m UK£146.9m UK£152.9m Growth Rate Estimate Source Analyst x1 Analyst x1 Analyst x2 Est @ 18.02% Est @ 13.30% Est @ 10.00% Est @ 7.69% Est @ 6.07% Est @ 4.94% Est @ 4.15% Present Value (£, Millions) Discounted @ 10% -UK£8.0 UK£52.1 UK£61.8 UK£66.0 UK£67.7 UK£67.4 UK£65.8 UK£63.1 UK£60.0 UK£56.6 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = UK£553m We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.3%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 10%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = UK£153m× (1 + 2.3%) ÷ (10%– 2.3%) = UK£1.9b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= UK£1.9b÷ ( 1 + 10%)10= UK£709m The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is UK£1.3b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of UK£3.2, the company appears quite good value at a 44% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Zigup as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 10%, which is based on a levered beta of 1.590. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Strength Debt is well covered by earnings. Dividends are covered by earnings and cash flows. Dividend is in the top 25% of dividend payers in the market. Weakness Earnings declined over the past year. Opportunity Annual earnings are forecast to grow for the next 3 years. Good value based on P/E ratio and estimated fair value. Threat Debt is not well covered by operating cash flow. Annual earnings are forecast to grow slower than the British market. Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. DCF models are not the be-all and end-all of investment valuation. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Can we work out why the company is trading at a discount to intrinsic value? For Zigup, we've put together three essential elements you should look at: Risks: To that end, you should learn about the 3 warning signs we've spotted with Zigup (including 1 which is significant) . Future Earnings: How does ZIG's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the LSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
