Fail­ing to spark

In a world where food se­cu­rity is an is­sue, pack­ag­ing has a big role to play

Finweek English Edition - - COMPANIES & MARKETS - SHAUN HAR­RIS AND MARC ASH­TON shaunhar­ris@ya­ and marca@fin­

IT’S AL­WAYS en­cour­ag­ing when new listings come to the JSE. How­ever, it’s hardly been an in­spired cou­ple of trad­ing days for new faces Mpact and Hold­sport. Mondi Pack­ag­ing SA (Mpact), which was spun out of Mondi, kicked off at around R16/ share then dropped sharply to trade just above R13. Re­tailer Hold­sport saw some fe­ro­cious trade, with more than 37m shares trad­ing hands on its first day. But its share price was un­moved.

What’s the ap­peal for in­vestors think­ing of in­vest­ing in Mpact? Food se­cu­rity is also be­com­ing a big area for pack­ag­ing, says CE Bruce Strong. “In de­vel­oped coun­tries only 5% of the food is lost be­tween pro­ducer and con­sumers. In de­vel­op­ing coun­tries – like Africa and In­dia – as much as 40% is lost. So in a world where food se­cu­rity is be­com­ing a big is­sue, pack­ag­ing has a big role to play.”

The group is un­der­pinned by ex­ist­ing sup­ply agree­ments with par­ent Mondi, which should make its earn­ings rel­a­tively pre­dictable. But Strong says he ex­pects some solid competition from listed coun­ter­part Nam­pak. “Ever since 2007 – when we bought the plas­tics busi­ness – Nam­pak has been a com­peti­tor. It will re­main so in the fu­ture,” Strong says.

As for Hold­sport, as­set man­agers aren’t par­tic­u­larly up­beat about its prospects ei­ther. “Look, it was largely an exit mech­a­nism and the guys who scored were their pri­vate equity own­ers, Ethos,” says Fran­cois du Plessis, of Vega Cap­i­tal.

Sasha Naryshkine, of as­set man­age­ment firm Ves­tact, was equally un­ex­cited by the list­ing, pre­fer­ring its hold­ing in Mass­mart. Naryshkine says in April 2006 Mass­mart was pre­pared to pay R403,8m for 84,1% of the then un­listed com­pany. Hold­sport cur­rently car­ries a value of R1,3bn and with man­age­ment not re­ally talk­ing up the growth story, the con­sen­sus seems to be there isn’t go­ing to be too many sur­prises in the near term.

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