THE WAITING GAME
Pinnacle came out with a surprising trading update saying that HEPS would be 15%-22% lower for the year ending June. This spooked the market, and the share lost 25%, taking it to below R10 and well off the highs of almost R30 from about a year ago. The first collapse was on the news of the director being arrested for bribery (a news event that was massively mismanaged by the Pinnacle management team). The question is simple: is this fall in earnings in any way related to the bribery case that is ongoing or is it a ‘normal’ operating performance? Neither is comforting to existing shareholders as Pinnacle has a long track record of increased earnings, and a decline raises a number of red f lags that will only be cleared with the release of the full results expected on 5 September.