Up against the wall
The Pinnacle trading update showed improving revenue, but smaller margins will see HEPS off 16.5%-21%. On the other side, we see Mustek reporting HEPS to be 20%-32% higher (a massively wide range). I wonder, is Mustek picking up some market share from Pinnacle? Also of concern are the debt levels at Pinnacle and while the trading update did mention the board’s concern, it hasn’t as yet announced any plans to reduce the debt. The easiest option would have been a rights issue, but not when the stock is more than 50% off recent highs. Another option is to sell the 33% stake it has in Datacentrix, but finding a buyer is not going to be easy. Overall, the Pinnacle story is a mess, the Datacentrix stake was an obvious plan to ultimately make an offer to buy out Datacentrix using Pinnacle script, but with a collapsed share price that option is off the table and it now finds itself in a number of tight corners.