| Tue 19 Oct 2004, 15:52 | | Spar's debut on JSE bucks delisting trend |
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Spar`s debut on JSE bucks delisting trend
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Industrial Correspondent
WHOLESALER Spar`s listing on the JSE Securities Exchange SA yesterday, which was driven in part by the robust state of the South African economy, has put the brakes on a long line of delistings from the local bourse.
Spar, which is now valued at about R3,4bn, closed down 9,38% at R20 from its opening of R22,07, having reached an intraday high of R22,49.
More than 1,58-million shares traded in 926 deals on the JSE yesterday.
Sasfin strategist Craig Pheiffer said Spar`s listing was a result of the `purple patch` SA`s economy was currently experiencing.
With more cash in the economy, companies like consumer goods group Tiger Brands were in a good position to unbundle sideline assets, such as Spar, so they could focus on their core businesses, Pheiffer said.
The current low interest rate environment has supported consumer confidence and spending over the past 18 months, resulting in a buoyant housing market and a record vehicle sales.
Spar is the second company to list on the JSE this month, following the partial listing of furniture retailer Lewis Stores.
Pheiffer was not put off by the fall in Spar`s share price yesterday, as he had valued it at about R19.
Tiger Brands shares closed down 18,82% to R82,80 with 265127 shares traded in 211 deals. Tiger Brands` share price wobbled between a high of R82,90 and low of R81,10 yesterday.
Pheiffer said Tiger Brands and its rival Anglovaal Industries (AVI), which is planning to unbundle and list its Consol Glass subsidiary, were making use of the vibrant South African economy to unlock value for the their shareholders.
His view was echoed by independent analyst Mark Ingham.
Ingham was optimistic about Spar`s initial performance on the local exchange. He said because Spar recorded a net income of R145m in the first six months the company was likely to generate at least that much again in the second six months.
This performance indicated a `prodigious` return on equity of more than 40%, Ingham said.
Pheiffer expected the wholesale group to produce solid performances as a listed company.
The company has said that it plans to grow earnings between 5%-6% above inflation.
Turning to AVI, Ingham said the listing of Consol gave investors the chance to put their money directly into the largest glass manufacturing business in the country.
`To be quite frank, I never contemplated the AVI top brass making such a bold and shareholderfriendly move so soon,` Ingham said.
He viewed Consol as a `prized asset` that had never been truly reflected in AVI`s share price
