JSE shares that sank ...
SALAMANDERS VS SWALLOWS: IT’S TRULY A STOCK PICKER’S MARKET
While small caps are feeling the sharpest losses, it’s evident mid caps are in distress. Moneyweb
The salamanders (losers) are far more numerous than the swallows (winners) on the JSE in the year to date – and it shows an economy in distress. Common themes include: exposure to the sluggish domestic economy and to government business, rand strength, overpriced shares being derated due to slowing earnings growth, poor management and poor decision-making.
1. PBT Group
Prescient has delisted its financial services business, leaving only its tech business within the listed vehicle. Stellar Capital Partners acquired 49% of the financial business for R1.43 billion. Thus, Prescient shareholders received a 85c-a-share cash dividend. The tech business could be interesting to watch.
2. Basil Read
In 2007, it was a market darling. Since then things have gone south, with little sign of improvement. The CEO resigned in April and a R53.6 million net interim loss was announced. There are plans for a rights offer to raise R200m-R300 million to ease liquidity, stabilise the group and fund operations.
3. Dawn
The beleagured construction group has announced the sale of its 49% stake in Grohe Dawn Watertech to Lixil for R324 million. New management will use this to pay off R200 million in debt and drive a recovery plan.
4. Eastern Platinum
The depressed platinum price is the last of this loss-making miner’s problems. Mining Weekly says AlphaGlobal Capital has applied for the winding-up of the company, which it says is unable to pay its debts. Litigation and late filing of results compound the troubles.
5. ArcelorMi al
It’ll take a miracle to restore this steel producer in the current challenging global steel market. Comprehensive interim losses extend to R2.4 billion.
6. Stellar Capital
This investment holding firm looks like a no-brainer. It is invested in the industrial and financial services sectors, which should prove countercyclical. But the industrial assets are battling and the financial assets are too small to make an impact – though this may change with the addition of Prescient. A new CEO took the helm in September.
7. Efficient Group
It has three divisions providing financial planning solutions, a collective investment business and a business targeting corporate and institutional clients.
Its growth is largely organic, with small acquisitions adding top-up growth. It pays 80% free cash flow as a dividend.
8. Group Five
Bad contracts, weak governance, management turnover and shareholder activism led to a disastrous set of results and the board axed. Investors will bet on a turnaround story in a weak economy.
9. Consolidated Infrastructure
Focused on the sub-Saharan Africa energy and oil and gas sectors, it’s in a perfect storm. Its AES business has suffered with Angola’s woes and Conco’s domestic power arm has idled, waiting for R840 million-worth of renewable energy contracts to materialise. It is well-placed for future growth, once hindering factors are rationalised, says an analyst.
10. Adapt IT
Recent headlines tell a story: “Adapt IT defies gravity”, “Adapt IT tracks its 2020 growth target”, “Driven by acquisitions”. It has produced stellar growth since its JSE listing and continues to, at slightly more muted levels. Investor expectations are returning to reality.