Tuesday, March 27, 2018

Steinhoff International recovered as it price bounces back from low point

Embattled global retailer Steinhoff International recovered as much as 24.5% on Monday, before paring gains, as it bounced back from a low of R2.85 per share last week.

The company’s share price has been volatile since December when CEO Markus Jooste resigned and as it emerged its financial results could not be trusted going back to at least 2015. Investors are
waiting for restated results, while class-action lawsuits on behalf of shareholders have further clouded the company’s outlook.

Analysts said it was still impossible to gauge Steinhoff’s true share value. Steinhoff’s financial picture remained opaque, but the possible sale of further Steinhoff Africa Retail (Star) shares pointed to serious liquidity issues, said Anchor Capital chief investment officer Sean Ashton.

Along with the possible sale of Star shares, a number of senior managers at Steinhoff’s offshore operations had resigned, said independent analyst Syd Vianello. The sale of Star shares suggested the company was running out of money and had no offshore assets that could be easily unloaded, he said.
The departure of managers suggested disillusionment.

"The question is how deep is the black hole. The share could be worth anywhere from R8 to R10, or worth nothing. I am beginning to wonder if it is closer to the latter."

Steinhoff owns a 76.8% stake in Star, but its market capitalisation is dwarfed by its local subsidiary. As of Monday Steinhoff’s market cap was about R14bn, about 20% of Star’s R72bn. Steinhoff’s affairs are also under scrutiny by Parliament due to the large losses incurred by the Public Investment Corporation. Steinhoff officials will be back before Parliament on Wednesday, when MPs want Jooste to testify.

Steinhoff ended the day up 3.56% at R3.20, while Star was up 1.45% at R21.

  • Businesslive

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