Risk of go­ing un­der is real

Finweek English Edition - - MARKETPLACE - By Simon Brown

Re­sults re­leased just be­fore the end of last year showed losses in both the power and con­sumer di­vi­sions of this busi­ness but the good news, in a sense, is that the re­sults con­tained no ma­jor sur­prises. We know about Me­ga­tron be­ing in busi­ness res­cue, and while the con­sumer di­vi­sion mak­ing a loss wasn’t ex­pected, it has been strug­gling. But there was noth­ing to fur­ther frighten in­vestors.

How­ever, the bal­ance sheet re­mains very frag­ile and looks like it will need an in­jec­tion of cash to get it into shape, and I don’t know where this money will come from. Pre­vi­ous rights is­sues al­ways seemed to be vague on the amount of money be­ing raised, but will in­vestors have ap­petite to put more money in and if yes, at what dis­count?

The com­pany is truly at risk of not sur­viv­ing and we should wait to see real signs of a turn­around be­fore investing. That will mean a higher price to pay but at a sig­nif­i­cantly lower risk, so well worth the wait, oth­er­wise we could end up with a real dog in the portfolio.

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