Ascendis shareholders must be rather bilious

Shareholders in health-care conglomerate Ascendis must be feeling rather queasy at this point.

Since August the share price has more than halved, which, at the time of writing, was a new low for Ascendis.

In the year to date, Ascendis has shed more than 60% of its value and now looks nothing like the market darling whose acquisitive exploits helped to drive the share price to as high as R28 in late 2016.

Like so many other growthby-acquisition counters, the centre simply did not hold as firmly as expected when operational strains increased.

But the pale share price probably affords brave investors an opportunity to back a turnaround effort in its early stages.

Normalised earnings for the year to end-June were reflected as R738m, compared with Thursday’s market capitalisation of just over R3bn.

Ascendis has already signalled an intention to simplify its breadth and scale in areas where it has a sustainable competitive advantage.

This might not be a quick fix, though. Presumably a good number of assets and brands will need to be sold off, and it will be interesting to see what prices can be garnered in the prevailing dour economic clime.

In the meantime, spare a thought for Coast2Coast (C2C), the major shareholder in Ascendis, which backed a rights offer at R20/share in late 2017. Ascendis shareholders will be hoping C2C — which presumably has significant gearing attached to its shareholding — can endure the recuperation process.

A big seller in the market is the last thing Ascendis needs right now.

The latest mining data from Statistics SA underlines the difficulties in SA’s gold sector, which posted the largest fall in production of all the country’s minerals.

The data for September showed a 1.8% fall year on year, with a 19% fall in gold output compared with the same period a year earlier, more than offsetting a 7% increase in platinum group metals (PGMs).

Mineral sales, an important element in SA’s economic lifeblood, dropped by 3.6%, with gold falling nearly 54%, outweighing large and positive contributions from PGMs, coal and manganese.

SA’s importance as a source of world gold has dwindled in recent years, as it fell to eighth place from its dominant position for decades.

Harmony Gold has spoken of closing old mines over the next five years. AngloGold Ashanti, once the driving force in SA’s gold industry, has sold and shut mines and is now down to a single underground mine and a tailings retreatment operation.

Sibanye-Stillwater, SA’s largest source of domestic gold, reported a tough nine months at its gold mines after seismic events and other safety incidents resulted in the deaths of more than 20 people in the first half of the year.

Pan African Resources is winding down its Evander gold mine as its focus switches to treating tailings.

The drop in the sales revenue generated by gold, to just under R4bn in September, put the metal in danger of being overtaken by iron ore and manganese sales.

Gold is a far distant third to the revenue generated by coal and platinum of R12.3bn and R10.5bn, respectively.