Just right for now, maybe
In this fractious market the passive offshore investment vehicle Astoria is starting to look like a bastion of (relative) security. The company’s recent trading update — covering the nine months to end-september — reflects an NAV of $1.20. That equates to a local NAV of R17.86, which means the share price is offering a discount of around 25% on a portfolio that is made up mostly of the biggest global stocks, like Facebook, Apple, Blackstone Group, Admiral Group, Home Depot, Nike, Mastercard and Jpmorgan Chase.
Besides that discount there is a semisupportive offer for control by investment company RECM & Calibre (RAC) of R13.50 a share, pitched partly in cash and partly in scrip.
But that is not all, folks. Astoria, which is fiercely resisting RAC’S attempts to gain outright control, is engaging with major shareholders for support for securing a capital payment to all shareholders as a method of unlocking value for them. What is contemplated is a realisation of investments that are deemed illiquid, like niche funds and private equity investments.
Cynics may argue that RAC’S advance has prompted a grasping of the nettle, remembering that its intention is to liquidate the portfolio and drag in its own “deep value” assets. Hopefully the investments flagged for sale by Astoria can be exited with dignity and a decent dollar haul. As for the narrowing of the discount after a capital distribution, I suspect that Astoria, which will still pay fairly stiff management fees to asset manager Anchor, may still trade some way off a revised NAV. Still, the downside is limited — and what more could you possibly want in the current clime?
Bitter days
Tongaat Hulett shareholders expecting a little sweetness in the new financial year will be gnashing their teeth at the food group’s trading update for the six months to end-september. A 60% plunge in headline earnings is a bitter blow. But there is eventually a price to pay when companies put asset sales through as profits.
This time Tongaat’s conversion and development activities did not add the usual kicker with no major transactions under negotiation concluded by the end of the interim period. Of course, this could swing in the second half. But it won’t be lost on investors that this awful interim performance coincides with the retirement of long-serving CEO Peter Staude and the sudden stepping down of CFO Murray Munro. Unbelievably, the Tongaat share price is now trading at levels last seen way back in 2009. Still, it may be too early to start spooning up scrip — a new executive team must still be assembled to deal with some pesky legacy issues.
Contain your enthusiasm
The breakdown of NAV in Trencor’s interim results to end-june might make investors think twice about regarding the group as merely a proxy for New York Stock Exchange-listed container management specialist Textainer.
At the end of December Textainer — with a value of almost R6bn — comprised about 63% of Trencor’s NAV, while wholly owned container specialist TAC, then worth just over R1bn, represented just 10% of the total value. But as at September 25 the value accorded to TAC is R1.8bn, the higher valuation at least partly explained by a new order of $30m of new containers in the six months ended June.
With Textainer’s value sinking, TAC represented a far chunkier 24% of Trencor’s NAV as at that date. Things also appear to be going swimmingly with TAC, which managed to post net attributable income of $3.8m (2017: $0.2m) on an impressive average fleet utilisation of almost 98% in the six months to end-june.
Readers may recall some initial grumbling when Trencor discounted the chances of paying a special dividend from its sizeable cash pile, preferring to reinvest in operations. With hindsight, this decision might prove inspired at the overlooked TAC operations.
Astoria’s share price is offering a discount of around 25% on a portfolio that is made up mostly of the biggest global stocks