RETAILER and distributor Axia Corporation Limited’s surge in operating cash flows in the half-year to December 31, 2025, signals improving earnings quality as the group ramps up investment in manufacturing and logistics infrastructure, securities firm IH Securities says.
During the period, Axia generated US$11,71 million in net cash from operations—a 239% increase on the same period in the previous year—driven by festive season demand. The increase signals stronger cash conversion and improved earnings quality.
The group’s two main revenue contributors, TV Sales & Home (TVSH) and Distribution Group Africa (DGA), recorded 37% and 44% volume growth, respectively. TVSH handles furniture and appliances, while DGA manages the distribution arm. Overall revenue increased 22% to US$122,03 million compared to the prior year.
“Axia’s 1H26 result is encouraging, with the 119% surge in operating cash flow the headline takeaway, this implies an improvement in the quality of earnings,” IH Securities said in an analysis of Axia’s half-year report under review.
“Management is prioritising vertical integration and infrastructure expansion to insulate the business from market volatility and competitive pressures.”
The improved cash position left Axia with US$1,84 for every dollar of short-term debt, enabling it to finance US$4,34 million in capital expenditure commitments from internal resources and existing borrowing facilities.
“A key strategic pillar involves leveraging internal manufacturing capabilities for TVSH, currently accounting for 50% of stock, to maintain pricing power and mitigate local supply chain disruptions,” IH Securities said.
“In H2 of the year, the group will focus on scaling logistics and production capacity, highlighted by the construction of a new warehouse for TVSH and the completion of the Restapedic relocation to Sunway City.”
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IH Securities noted that Transerv’s earlier optimism on solar products has softened as cheaper imports from Zambia weigh on sales, although the group is shifting sourcing to local suppliers.
Transerv, Axia’s auto parts retailer, posted an 8% revenue increase during the period under review, driven by a 16% rise in volumes following the opening of four new stores.
“There is optimism in the value range stores, and Transerv is looking to open 7 stores in the next half to meet demand,” IH Securities said.
IH Securities also identified potential weaknesses.
“Informal trading continues to affect DGA Zimbabwe, though the group is working on awareness campaigns and revamping distribution models to improve margins,” IH Securities said.
“Exchange rate depreciation in the Malawian kwacha continues to provide pricing pressures for DGA Malawi, as volume uplift isn't supporting revenue growth.”
IH Securities said Axia traded at a rolling price-to-earnings ratio multiple of 12.66x against regional peers at 11.1x, which seemed demanding.
