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

Share price: 195c JSE code: TOR

SELL THIS FOR­MER MAR­KET DAR­LING WILL need to do the “hard yards” op­er­a­tionally to re­store the vi­brant sen­ti­ment that buoyed its share price be­tween 2013 and mid-2015. A re­cent trad­ing up­date con­firms that Torre’s well-di­ver­si­fied industrial bou­quet is wilt­ing some­what as the lo­cal econ­omy takes in­creas­ing strain.

Ma­jor share­holder Stel­lar Cap­i­tal Part­ners has taken ad­van­tage of the weaker share price to hike its stake in the com­pany to 35.46% — trig­ger­ing a manda­tory of­fer to share­hold­ers. This en­tails Stel­lar of­fer­ing 1.25 new shares for ev­ery Torre share — an of­fer that at an ef­fec­tive 225c/share un­der­cuts Torre’s NAV. There might be some re­sis­tance to swap­ping into Stel­lar, which is a hodge­podge of elec­tron­ics man­u­fac­tur­ing and fi­nan­cial ser­vices, but there seems a chance the Torre price could weaken once the of­fer falls away.

Over­all, Torre’s sit­u­a­tion might well be a case of good bunch of busi­nesses caught at a bad time. Head­line earn­ings for the year to end June should come in around 16.5c/share and 19.5c/share — dis­ap­point­ing in terms of the high ex­pec­ta­tions for the com­pany, but not a train smash when com­pared with the per­for­mances from other industrial coun­ters.

The rapid ac­qui­si­tion strat­egy also kept ex­citable pun­ters in­ter­ested in Torre. But sig­nif­i­cant deal mak­ing seems un­likely this year. The counter may be bet­ter as­sessed later in 2016, when the long-term value of­fer­ing may be even more com­pelling.

Pic­tures: iSTOCK

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