Tardy companies do investors no favours
W ELCOME TO OUR BUMPER winter edition — anchored by the annual survey on private banking and wealth management. Our partner, Intellidex, has compiled another authoritative and insightful look into a niche that — as the research will show — yields interesting observations on the prevailing political and economic funk that investors are fumbling through. Come to think of it, I’m sure Investors
Monthly and the Intellidex team could put their heads together to come up with a few more research ideas that could offer value (and hopefully some solace) to jittery investors.
Times are tough for investors in “real SA stocks” — those not hitched to global JSE counters such as British American Tobacco, Richemont or Naspers.
My SA-aligned bourse watchlist — Hosken Consolidated Investments; Stellar Capital Partners; AdvTech; Value Group; Invicta Holdings; Grand Parade Investments; RECM & Calibre; Sun International; Transaction Capital; ARB Holdings; Consolidated Infrastructure Group (CIL), which is covered by Anthony Clark in this edition; and Hulamin — has only a few bright spots.
The weakest stocks in this little universe do tempt me. But some counters, such as CIL, Sun International and Stellar Capital Partners, simply cannot find the bottom. Does one wait a few months longer, banking on more surreal political developments to further erode sentiment?
With so much bad news, I was taken aback to see the JSE having to warn tardy listed companies about reporting audited results within stipulated deadlines. This is not the time to further frustrate the market!
In some instances, there are valid reasons for financial results being delayed. But 99.9% of listed companies manage to execute this essential service, giving shareholders a recent snapshot of operational and financial issues. Still, a firm running a relatively simple business model with a fairly small turnover should not allow the financial reporting function to falter.
One of the companies warned by the JSE for late reporting is on the acquisition trail. Thankfully, this company was not offering scrip as settlement to the vendors — but investors might like some reassurance on cash flows to confirm that deal making has been prudent.
The extra 30 days offered to errant companies to report their results does shareholders no favour. I’m not sure that delivering numbers four months into the new reporting period is useful for shareholders to accurately assess prospects.
I reckon there’s not much the JSE can do . . . but for repeat offenders that don’t present valid reasons for delays, the bourse should have a right to parachute in an independent director with the authority to access data and assess the delays.