Con­cern as share price stum­bles

Look­ing past im­proved op­er­a­tional per­for­mance, there re­mains a worry around in­creased com­pe­ti­tion

Financial Mail - - MONEY&INVESTING - Marc Hasen­fuss hasen­fussm@ti­soblack­star­goup.co.za

Shares in seaborne lo­gis­tics hub Tren­cor took a se­ri­ous beating last week. At one point the shares plunged more than 10% to reach an in­tra­day low of R30.

They set­tled at R33, 15% down on the R39 reached on May 8 and well off the 12-month high of R52 reg­is­tered in De­cem­ber.

As its main­stay in­vest­ment Tren­cor holds a 48% stake in con­tainer-leas­ing firm Tex­tainer, which is listed on the New York Stock Ex­change.

The share-price plunge iron­i­cally co­in­cided with Tren­cor re­leas­ing a NAV cal­cu­la­tion for the end of De­cem­ber. That cal­cu­la­tion pen­cilled in a value of R7.3bn for the Tex­tainer stake, equiv­a­lent to R41.35/share. But there is also a R1bn value ac­corded to spe­cial­ist con­tainer group

TAC (worth R5.67/share), cash of R1.01bn (R6.19/share) and other as­sets worth R1.95m.

Tren­cor’s end-de­cem­ber NAV was about R54/share, con­sid­er­ably higher than the com­pany’s average share price over the past 16 months.

What re­ally ap­pears to have sent shud­ders through the share­holder body was the re­lease of Tex­tainer’s first-quar­ter re­sults for the 2018 fi­nan­cial year, de­spite the ex­ec­u­tive com­men­tary on the first-quar­ter per­for­mance re­flect­ing a bright and breezy tone.

Lease rental in­come in­creased 3% to US$120M and net in­come came in 9% higher at $18.7m. Util­i­sa­tion av­er­ages im­proved slightly to 97.8%, and new con­tain­ers worth $428m had been ei­ther or­dered or re­ceived.

We are head­ing into the tra­di­tional peak sea­son with great mo­men­tum and are well po­si­tioned to ac­com­mo­date the growth and needs of our cus­tomers Philip Brewer

In his com­men­tary, Tex­tainer CEO Philip Brewer said Tex­tainer’s per­for­mance con­tin­ued to ben­e­fit from steady in­vest­ment in new con­tain­ers and favourable mar­ket con­di­tions.

He added: “Though the first quar­ter is tra­di­tion­ally our in­dus­try’s weak­est quar­ter, fun­da­men­tals re­mained strong. New con­tainer prices and lease yields are sta­ble at at­trac­tive lev­els.”

Brewer noted that Tex­tainer has been tak­ing ad­van­tage of at­trac­tive mar­ket con­di­tions by con­tin­u­ing its planned in­vest­ment in new con­tain­ers.

Of the $428m-worth of new con­tain­ers, most are al­ready on lease or com­mit­ted to be picked up by the end of June.

More en­cour­ag­ing was Brewer’s dis­clo­sure that the average rental rate for these new con­tain­ers is sig­nif­i­cantly above the average rental rate of Tex­tainer’s ex­ist­ing fleet.

“We are head­ing into the tra­di­tional peak

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