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.