Trencor shareholders spooked by rival Triton

Trencor directors — as reported last week in Business Day — fought hard to convince the JSE not to suspend the company’s shares for an unavoidable delay in publishing financial results that was caused by mind-boggling accounting intricacies.

Frankly, it might have been better to take the suspension because Trencor shareholders endured considerable pain on Wednesday morning, with their shares down as much as 14% at one point.

The share recovered a tad in the afternoon, but the brittle sentiment is worrying.

The price weakness followed the release of first-quarter results by Trencor’s mainstay investment, container leasing firm Textainer, which is listed on the New York Stock Exchange.

At first glance, the headline numbers for Textainer don’t look too bad. Lease rental income was up 3% to $120m, with net income up 9% to $18.7m, or $0.33/share.

Utilisation averaged 97.8% for the quarter, which represented an improvement of 40 basis points over the previous quarter average.

Textainer directors said that although the first quarter was traditionally the industry’s weakest quarter, fundamentals remained strong.

The company had also ordered or taken delivery of $428m of new containers in 2018, most of which were already on lease or committed to be picked up by the end of June at average rental rates “significantly above” the average rental rate of the existing fleet.

So what the heck has spooked local Trencor shareholders so badly?

Perhaps it is a realisation that Textainer – while the company is showing some operational improvement – is lagging behind its larger rival Triton.

Certainly the recent share price patterns, which show Triton ticking up and Textainer dribbling down, suggest the growth stories for these container leasing companies is being perceived very differently.

The annual general meeting of enduring empowerment company Brimstone Investment Corporation (founded in the 1990s) sets an example of concerted and convincing shareholder engagement.

The meeting is held in the evening for the convenience of shareholders and, because it is the one time a year shareholders can meet executives, much of the function is aimed at ensuring they have ample opportunity to mingle with the top brass.

Every subsidiary and investment, and Brimstone’s charities, set up stalls, giving shareholders an overview of the company’s investments and a business philosophy that has always been tinged with philanthropy.

It is only the Remgro and PSG general meetings that might challenge Brimstone in attracting such large shareholder numbers. More companies should follow suit.

A snippet that did emerge was that Brimstone might have finally tired of feeding the voracious short-term insurance company Lion of Africa.

Lion is short on critical mass and has battled for sustainable profit. It was one of the causes of Brimstone’s R107m loss in its unlisted subsidiaries, along with clothing manufacturer House of Monatic.

When asked about the fate of this unprofitable subsidiary, Brimstone CEO Mustaq Brey said various options were being considered.

His parting shot was: “We will set the Lion free.”