Mustek dives after headline earnings shock

Mustek’s share price fell the most in two years on Friday as the information and communications technology (ICT) group warned that its interim earnings to end-December would more than halve.

The company expects to report a drop in headline earnings per share (Heps) — which strip out the effects of one-off financial events — to 77.61c99.78c, which is 55%-65% lower than the 221.74c reported in the prior matching period.

Mustek, now worth R646m on the JSE, is an assembler and distributor of ICT products. It was established in 1987 and listed on the JSE in 1997. Most of its revenue comes from selling hardware. Its brand portfolio includes Acer, Asus, Samsung and Lenovo.

The group said its performance decline “reflects the adverse impacts of the prevailing local and economic challenges. Revenue was impacted by a decline in the sale of greenenergy products from a strong comparative period. In addition, higher interest rates impacted finance costs.”

After the statement was released on Friday the company’s share price plunged the most since early March 2022, down 8.7% on Friday to R11.23, bringing its losses for the past year to about 30%.

Net asset value per share is expected to be 2,720c-2,730c, compared with 2,575.24c previously.

In September, Mustek said it aimed to take advantage of businesses upgrading their systems and growing interest in artificial intelligence (AI) to spur its growth in the present financial year.

At the time, Mustek reported a rise in Heps of 5% year on year to 375.2c and operating profit, generated from core operations, jumped 11.7% to R454.8m.

The company expects to release its half-year results on or about March 6.