A look at the new kids on the JSE

Most of last year’s newly listed com­pa­nies did not fare well on the lo­cal bourse.

Finweek English Edition - - MARKETPLACE - Ed­i­to­rial@fin­week.co.za *The writer owns shares in As­to­ria.

htis

week I want to re­visit the class of 2015, those new en­trants to the JSE, and check in on how they’re do­ing. I am ig­nor­ing the prop­erty stocks as they’re a class of their own. I am also ig­nor­ing spe­cial pur­pose ac­qui­si­tion com­pa­nies (SPACs) as they’re just cash shells un­til they un­der­take a deal – they will be the topic of a sep­a­rate col­umn.

Syg­nia

The big­gest new en­trant to the JSE in 2015 was Syg­nia. This was a much-an­tic­i­pated list­ing for which many had been wait­ing a num­ber of years. The list­ing price was 840c and the of­fer was over­sub­scribed 20 times (in other words peo­ple wanted 20 times more shares than the com­pany planned to list). I sub­scribed for the list­ing, in­tend­ing to sell within a day or two with the ex­pec­ta­tion that I’d make a mas­sive profit quickly.

On the first day of trade Syg­nia traded be­tween 1 300c and 1 675c and I sold, tak­ing my quick profit. The prob­lem was that, as the stock was so over­sub­scribed, I got a very mea­ger al­lo­ca­tion of just a few per­cent of what I had hoped for. I fully ex­pected the list­ing to be mas­sive so had re­quested more shares than I ac­tu­ally wanted, but even so I made far less than I had hoped for. The share now trades at around 2 100c and I think it is very ex­pen­sive at cur­rent lev­els, es­pe­cially con­sid­er­ing the lat­est up­date on as­sets un­der man­age­ment that I wrote about last week.

Bal­win

The other list­ing I was in­volved in was Bal­win Prop­er­ties, priced at the top end of the range of 988c. This com­pany, which spe­cialises in hous­ing de­vel­op­ments, is the one I re­gret buy­ing. The stock cur­rently trades at around 770c and I sold just af­ter for­mer fi­nance min­is­ter Nh­lanhla Nene was fired last year. I am con­cerned about hous­ing as I ex­pect to see pres­sure on both home prices and bank lend­ing, which will hurt Bal­win.

When I sold I also sug­gested I may have got caught up in the hype and in truth I did buy Bal­win more on the ex­cite­ment of some fund man­ager friends, more than my own con­vic­tions. Les­son learnt and price paid.

As­to­ria

The only 2015 list­ing I still hold is As­to­ria*. Part of the An­chor sta­ble, it’s of­fer­ing off­shore in­vest­ing via a listed JSE in­vest­ment. The list­ing price was 1 423c as it had a net as­set value (NAV) of $1. Since the list­ing it has moved up to the 1 950c level, well above its NAV. As a hold­ing com­pany it should trade slightly be­low NAV, tak­ing into ac­count fees and hold­ing struc­ture dis­counts. Since the list­ing, the rand has moved stronger and As­to­ria is now trad­ing at around 1 370c, with a NAV of $0.96 it’s trad­ing at a slight dis­count. The weak­ness doesn’t con­cern me as it re­ally is a fac­tor of rand strength.

Trel­li­dor

The dud from last year was Trel­li­dor, as the list­ing price of 600c seemed well over­priced and a lu­cra­tive exit for ex­ist­ing share­hold­ers. It now trades at around 475c – still above what I would con­sider a fair price to pay. Fur­ther, I am not con­vinced by the busi­ness over­all, so I am avoid­ing this stock.

Stor-Age

The last new en­trant was Stor-Age, which listed at 1 000c and is now around 965c. The point of a list­ing is to price it well enough to make money for the sellers, but leave enough for the new buy­ers to also profit. Only Syg­nia man­aged that. But the big les­son from 2015 is that bull mar­kets tend to ex­pire on the back of a list­ing boom that starts to fade. 2015 was largely a bust year for list­ings, with only Syg­nia above the list­ing price.

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