SEKUN­JALO

Financial Mail - Investors Monthly - - Opening Bell - Marc Hasenfuss Fi­nan­cial Mail

Share price: 195c JSE code: SKJ

SELL IT SEEMS AW­FULLY CRUEL TO TAG Sekun­jalo a sell af­ter the hard work the ex­ec­u­tive team has done in se­cur­ing cash flows, re­in­forc­ing the bal­ance sheet and pay­ing out a div­i­dend that had eluded the com­pany from its list­ing in the late 1990s. The com­pany also seems keen to shed its con­tro­ver­sial past — propos­ing a name change to African Eq­uity Em­pow­er­ment In­vest­ments, and re­cently an­nounc­ing the re­tire­ment of founder and prime mover Iqbal Surve. In­vestor sen­ti­ment has steadily firmed, but the share price, fu­elled, no doubt, by spec­u­la­tion over the na­ture of a cau­tion­ary no­tice, has run very hard in the last six weeks, (touch­ing an all-time high of 315c as IM was go­ing to press). Sekun­jalo’s share price is now well ahead of the last stated of­fi­cial (and con­ser­va­tively) net as­set value of 116c/share — though, it must be said, the share can hardly be re­garded as ex­pen­sive on an earn­ings mul­ti­ple ba­sis con­sid­er­ing head­line earn­ings of 16c/share in the year to end-Au­gust. Sekun­jalo’s an­chor in­vest­ment, Pre­mier Fish­ing, should ben­e­fit from a weaker rand as a vast chunk of its busi­ness is ex­port­ing lob­ster. It also seems a big­ger div­i­dend from its in­vest­ment in Bri­tish Tele­coms SA is on the cards. But whether the out­come of the cau­tion­ary (the has spec­u­lated it in­volves Sekun­jalo in­creas­ing its stake in Saab SA) jus­ti­fies the re­cent run in the share re­mains to be seen. IM has a feel­ing Sekun­jalo’s shares might well take some time to rest and re­cu­per­ate from re­cent ex­er­tions.

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