PROFURN STAGES DAZZLING 36% REBOUND IN SHARE PRICE
Cape Town - Following the 40 percent plunge in its share price over the two days last week on fears over bad debt in the low end credit sector; furniture and appliance retailer Profurn staged a dazzling rebound yesterday, climbing 55 percent during the morning session.
The jitters were sparked by Unifer's troubles and a profit warnings by the JD Group.
Retail analysts pointed out that Profurn's bounce was off a low base of 11c and said there was no news to justify the move. The last word from Profurn was a statement released a week ago saying it was not aware of "any events specific to Profurn that have occurred recently to give rise to the recent fall in share price"
Shawn Stockigt, a small to mid-cap analyst at Abvest Asset Management, said no corporate activity had come through since Profurn's last statement but there could be "something in the wings".
Stockigt said the fact that Profurn's share price had not recovered after last week's statement showed that the market was not convinced by Profurn's reassurances.
Another analyst, who preferred not to be named, said the market was waiting for full year results, which are due to be released on March 4, and would closely scrutinise cash flow, solvency and the strength of the balance sheet.
Profurn's management could not comment yesterday on the latest share price jump as the company was in a closed trading period ahead of the release of results. But management referred to a statement it had released on January 30. In that missive, the retailer emphasised that there had been no material deterioration in the debtor's book from the position in June last year, when the net debtor's position amounted to R2.6 billion.
Bloomberg quoted Andile Mazwai, the head of Mazwai Securities as saying that investors had been encouraged by last week's statement.
The share price ended the day 36 percent up at 15c after hitting an intray high of 17c. Latest retail sales figures released by Statistics SA showed an 8.8 percent year-on-year gain at current prices in November and a 4.4 percent rise at constant 1995 prices.
Nigel Suliaman, the retail analyst at Abvest said the 4.4 percent rise indicated that inflation continued to erode retailers' margins. The overall trend was an improving one and December should show a bounce in sales.
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