WHAT A SHARE PRICE RIDE

Finweek English Edition - - Companies & Markets - SHAUN HAR­RIS

DIREC­TORS AT YEL­LOW metal man­u­fac­turer and ma­jor ex­porter Bell Equip­ment must have, well, had up­set stom­achs to see their share price col­lapse by nearly 60% last week. It wasn’t a sim­ple case of sell Bell – it was a mas­sacre. How­ever, by Fri­day 17 Oc­to­ber Bell’s price had bounced back by around 277%. So what hap­pened?

The com­pany ini­tially thought it was a mistrade on the JSE and com­plained to the se­cu­ri­ties au­thor­ity, says Bell’s group strat­egy and pub­lic af­fairs di­rec­tor Guy Har­ris. But it turned out to be a le­git­i­mate trade, the re­sult of a for­eign in­vestor liq­ui­dat­ing a bas­ket of South African stocks. Bell seems to have been among the last to go near the end of trade on Wed­nes­day, 15 Oc­to­ber at a ridicu­lous “best pur­chase bid” of 505c/share (com­pared to the close to 1800c the share had been trad­ing at). Har­ris says bar­gain hun­ters stepped in and bought the share, bid­ding the price back to 1900c/share.

It’s un­der­stood rel­a­tively few Bell shares were sold, pos­si­bly only around 500. The for­eign in­vestor, whose name we don’t yet know, must have taken a huge loss but prob­a­bly wasn’t too fussed, as Bell was prob­a­bly a small part of a port­fo­lio of SA stocks. What’s re­mark­able is that such a low bid was ac­cepted, prob­a­bly a sign of the cur­rently skit­tish mar­ket.

Bell’s share price is down about 65% over the past year but is prob­a­bly start­ing to look at­trac­tive again due to the sharply weak­en­ing rand. The com­pany earns most of its rev­enue in for­eign cur­ren­cies, a large ex­porter of spe­cial­ist construction and su­gar and tim­ber mov­ing ve­hi­cles with a fac­tory in Europe.

Re­cent in­terim re­sults, with rev­enue up 35% and gross profit up 57%, were de­scribed by Bell as the best half-year re­sults in the group’s his­tory.

Gary Bell

Source: I-Net Bridge

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