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AFC Uzbekistan Fund valuations as of 31st December 2023:
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Estimated weighted harmonic average trailing P/E (only companies with profit):
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4.82x |
| Estimated weighted harmonic average P/B: |
0.96x |
| Estimated weighted portfolio dividend yield: |
3.40% |
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Two small but successful IPOs in December
We have been saying for several years that the government of Uzbekistan needs to privatize SOEs at attractive prices to create some “wins” among local investors to entice more capital into the ecosystem and, in due course, accelerate market activity and to develop a robust alternative mechanism to bank financing, which remains prohibitively expensive at over 20%.
On 15th December, 2% of each Uzbek Telecom, with 83% market share in broadband and 24% in mobile, and UzbekInvest, the largest state-owned insurer with a 15% market share, were sold to 11,100 investors for a total of USD 3.9 million. The former’s offering was 131% oversubscribed, while the latter was 128.4% oversubscribed. This is a small but necessary step in capital markets development, and we are pleased with the success of these two IPOs and look forward to others, as well as the eventual secondary offering of shares in Uzmetkombinat (TSE: UZMK), planned for 2024 after a delay in 2023.
Looking to 2024 and beyond
With inflation in the single digits, at 8.8% from November 2023, foreign direct investments (FDI) reaching USD 7.5 billion in the first nine months of 2023, and foreign exchange reserves standing at USD 32.9 billion, Uzbekistan’s economy continues to benefit from solid growth.
In December, President Mirziyoyev signed the law on the state budget for 2024. GDP is projected to grow 5.6% to 5.8%, while inflation is expected to remain in check at 8% to 10%. The budget deficit is expected to fall from ~5.5% of GDP in 2023 to 4% in 2024 and 3% in 2025 as the government tightens its belt, presumably on social programs, in a bid to balance the budget and help support the currency.
On the capital markets, we have talked ad nauseam about the visibility of opportunities on the Tashkent Stock Exchange. In the first quarter of 2024, a friend of ours is expected to launch a market database platform, which will include aggregated financial and valuation data, historical prices, charts, and economic news on Uzbekistan. Along with several foreign brokers preparing to enter the market, and several upcoming corporate debt and public equity secondary offerings, this should make 2024 a much more active year for the AFC Uzbekistan Fund after a quiet 2023.
While the AUF Uzbekistan Fund ended 2023 just in positive territory, we are optimistic that the above catalysts will drive accelerated market activity and lead to a better year of performance for the fund.
AFC Uzbekistan Tour 2024
For those interested in visiting Uzbekistan with us, we are planning our third AFC Uzbekistan Tour, which will be held from Sunday 19th May 2024 to Tuesday 21st May 2024. We will begin on the 19th with a day tour of Tashkent, followed by company meetings and site visits on the 20th and 21st. If you are interested in joining, please write us at This email address is being protected from spambots. You need JavaScript enabled to view it..
