When in Greece…
AT 580c/SHARE Iliad Africa is trading a little off its low for the past year but its share price has been pummelled throughout the year, losing more than a third of its value. No surprise in that. A cautionary announcement earlier this month warned shareholders Iliad is realigning a portion of its portfolio, with the costs thereof expected to have a “significant adverse impact” on interim results. Those results are due on 24 August. So how bad will the costs be? Clearly, bad enough to decimate interim results. About the best advice Iliad can give shareholders is to wait for a detailed trading update ahead of its interim results.
There’s more amiss at Iliad. In April the board announced executive director Neil Goosen was resigning. No clear reason was given, but since the effective date of his departure on 30 June he’s been breaking collars and selling shares like crazy. It doesn’t create confidence in the share. Homer would have wept.
But in our books Iliad is a buy – a very, very speculative buy. The share price could well go lower. It’s often harder to call the bottom than the top. Why is it a speculative buy? Because – like the epic poem it’s named after – Iliad may come fighting through this one. The Iliad was set in the Trojan War, a tough decade in Greece and warm up for what’s going on now. But those crazy Trojans survived.
OK, an ancient poem isn’t a good enough reason to buy the share. But perhaps because the building industry it supplies materials to is so run down there must be a recovery. Horrible full-year results earlier this year indicated the main reason for its slump in operating profit and earnings was the residential property market. There seem to be tentative signs of recovery there.
Also, despite its financial blues, its dividend was maintained at 20c/share. And cash generation was up.
There are also a few major asset managers and institutional shareholders backing the company, including Coronation, value investors RE:CM and Afena. Iliad could again resume its odyssey, at least once its interims are out the way.