Sappi increases its US shareholding
July 24, 2003
By Margie Inggs
Johannesburg - Sappi, the global pulp and paper group, had increased its US shareholding to 50 percent of its total 228 million shares traded worldwide within three years, Andre Oberholzer, Sappi's spokesperson, said yesterday.
"The group has done particularly well in the US because the country has a well-developed forest product sector into which Sappi fits," he said. "It is, therefore, beginning to benefit from growing coverage by analysts and asset managers."
One third of the shares traded by North American shareholders are American depositary receipts on the New York Stock Exchange. The JSE Securities Exchange handles 38 percent and Europe 12 percent.
"However, there is a natural ceiling to US growth because Sappi is not domiciled there," Oberholzer said.
Paul Leslie-Smith, Sappi's group investor relations manager, said two-thirds of North American shareholders traded on the JSE as some investor mandates were limited to certain bourses.
"JSE is trading close to an average 1 million shares a day, compared to 600 000 a day in December
."
He ascribed the improvement to a perception that the industry was approaching the bottom of its cycle and that investors were now taking up their positions going forward.
The group issued a trading update in June warning that its profit for the third quarter would be cut by about 50 percent.
Nico Lambrechts, a Merrill Lynch analyst, said anticipated results for the third quarter, which will be reported on July 31, were in line with the $0.13 predicted by Sappi. Lambrechts' forecast for the fourth quarter is $0.17, making $0.78 for the full year.
The highest average number of trades a day on the JSE was in January 2001 when it peaked at 1.26 million, largely because of the buy-in by US investors after Sappi started its share buy-back programme. The group hit its lowest local level three years ago when traded volumes sank to about 220 000 a day.
Sappi closed down R2.15 at R91.
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