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