Worth a punt

Finweek English Edition - - Companies & Markets - MARC HASEN­FUSS

THE SHARE PRICE of en­gi­neer­ing spe­cial­ists PSV Hold­ings is tak­ing strain fol­low­ing a de­ci­sion to walk away from a par­tial buy­out of­fer from UK-based Ian­dra In­dus­tries.

It would seem pun­ters were us­ing the

the un­der­pin for PSV’s share price, which now looks like drift­ing be­low 40c on the AltX.

The mar­ket’s ini­tial re­sponse may be an over­re­ac­tion. One needs to re­mem­ber that PSV walked away from the pro­posed deal with Ian­dra af­ter the pur­chaser could not meet the con­di­tions prece­dent to the par­tial buy­out deal – which re­lated to de­posit­ing money into an off­shore ac­count at a stip­u­lated date.

In the past we have seen small cap coun­ters hang­ing des­per­ately on to drawn out buy­out of­fers, only to see the fi­nal agree­ment dra­mat­i­cally al­tered or sim­ply called off. By that time man­age­ment – which has been work­ing full out to se­cure the of­fer – has most likely lost sight of the ball op­er­a­tionally speak­ing…some­times with dis­as­trous con­se­quences for share­hold­ers.

PSV’s de­ci­sion to walk away from the deal scarcely three months af­ter it was pro­posed is per­haps a sign of no-non­sense man­age­ment ap­proach.

Walk­ing away from Ian­dra also sug­gests direc­tors are more than happy to con­tinue run­ning the di­ver­si­fied en­gi­neer­ing busi­ness – which of­fers ser­vices in pumps, valves and en­gi­neer­ing lin­ings to the min­ing, waste man­age­ment and petro­chem­i­cal in­dus­tries.

The March 2009 re­sults were slightly

share) af­ter the group’s petro­chem­i­cal ser­vices op­er­a­tion Petro­logic un­der­per­formed, de­tract­ing from an oth­er­wise solid per­for­mance from the core pumps and valves busi­ness and a strong per­for­mance from en­gi­neer­ing lin­ings.

While trad­ing con­di­tions are un­doubt- edly tougher, a chunk of PSV’s busi­ness could be con­sid­ered es­sen­tial ser­vices (wa­ter pumps for mines etc). On top of that PSV dis­closed that the 2009 fi­nan­cial year closed off with a healthy or­der book of R150m.

How much down­side risk could PSV hold at 40c?


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