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.
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.
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.
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.
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.
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.
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.