Nice...20% of share holder value going up in smoke over the last couple of weeks...couldn't help but be intrigued by this... So the rights issue essentially pegging the share price at ZAR18.00...is the recent drop in price a good time to get in? Currently BAT offers an extremely attractive div yield but I read somewhere that they are reconsidering their dividend payment structure...does anyone have any specifics on this? And what's the opinion on the rights issue...any takers?
Well, for starters they are increasing shares by 3:1, 2ndly Ball has resigned and the new guy must still earn his spurs and it will now be an investment co. which normally trades at a discount to NAV (witness Remgro). They are valuing NAV at R16.50 (you can do own calcs to verify) add a discount of lets say 15% then value should be around R14.00. I maybe off the mark, but that is my thinking.
Their dividend structure will change, so they say. They are ambiguous in their communication, maybe, maybe not. Expect much less if any at all and rely on capital appreciation aka Berkshire Hathaway style. I sold and look to re-enter below R16.
Yes, Brait is a solid company. I researched them for a couple of weeks in Dec and Jan 11 and was impressed with their growth and income potential. The addition of PEPCOR and Premier will be good for them, they a low margin, high volume businesses, most of it cash transactions. Ball has had a good run and the restructure should work for them.
I guess it depends on how you value Pep. But there has to be a discount to NAV and the new team is not a patch on the original. If you think Pep is worth more than 15-18 PE you can buy this stock, but for my money its a Sell all the way down to R15