Tardy com­pa­nies do in­vestors no favours

Financial Mail - Investors Monthly - - Editor's note -

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.

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