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Regarding the recent SENS announcements pertaining to the Afdawn Directorship:

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MichaelG
Occasional Contributor
Regarding the recent SENS announcements pertaining to the Afdawn Directorship: One should note that these directors have been battling to keep there positions ever since the CFD issue earlier this year. In addition to that, one of the newly ex-directors, if I'm not mistaken its financial director, is currently involved with another Altx company experiencing similar problems. It may not be such a bad thing that they'll be replaced. It's the business model that drives this business, not the management. From a fundamental perspective, the business is as close to perfect as any deep value investor could hope for. The stock has been wiped out by the recent revelations, which in an absolute worst case scenario could only affect earnings and NAV by a maximum of 30%. Afdawn is in no way exposed to any of Allegro's creditors. This share is a text book value purchase, the perfect falling knife - and it happens to come with growth that rivals a tech stock back in the nineties. For those concerned with further downward movement, consider this - MTN recently had its shares suspended (for one afternoon) in order to defend against a panic sell off resulting from a failed merger with Bharti - This was done because backlashes are a normal component of market activity - despite this, when the entire senior directorship of Afdawn is removed (a far more impactful event than a failed merger), the share price dropped by only 8 percentage points for the day - if that doesn't show a resistance to further downward movement then what does. The market is being irrational with regard to this share, and the recent resistance shown by the stock is a testament to the fact that eventually, basic economic principles always step in. This share is a gift.
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24 REPLIES 24
foschinni
Contributor
It's a good thing the directors are out. The company needs fresh management. Fundamentally the business model is sound. Key question, when will it be the right time to go in. I'd wait for an announcement of the new board!
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ACDT
Occasional Contributor
Michael I like your summary of Afdawn. Any other shares at discounted value?
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SimonPB
Valued Contributor
It's the business model that drives this business, not the management ?? really ?? I would say that management is way more important as they exucute the business plan ..
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Galuc
Super Contributor
Eskom, SAA, SABC are also all good business plans but with moegos steering it, it can only go one way. I agree the bus plan is pretty solid and I will wait to see who the new management is before I take the plunge.
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MichaelG
Occasional Contributor
Michael I like your summary of Afdawn. Any other shares at discounted value?" "by ACDT posted: 05 Oct 18:16.... ....Thank you kindly ACDT.... - I'm currently looking at Amecor, I put a buy order in at 91, which I must admit is probably asking for a little too much for my money, however the volumes are extremely low at the moment, which may motivate those who are in urgent need of cash-flow to bail-out on my terms. The business (from a fundamental perspective) is astonishing. Went over their annual report the other day, and I consider it as close to perfect as this exchange can muster. Please note though that due to the liquidity being in the state it is currently, this would be a long term investment whether the investor likes it or not..... ...."It's the business model that drives this business, not the management" ?? really ?? I would say that management is way more important as they execute the business plan. by Galuc.... ...Galuc - When a great management team meets a weak business model, it's usually the business model that wins out. The inverse is also true, If bad/average management are given a perfect business model to manage, they would be hard pressed to fail outright. The example I like to use is as follows: The amount of coca-cola that is consumed on a daily basis on this planet is greater than the amount of water that falls off of niagara falls over the same period - If I gave you 500 Billion Rand and the 50 top managers on the planet, you COULD NOT create a product that could out-sell this product. You simply cannot create a cafe, restaurant, coffee shop, shopping centre, hotel, vending machine, etc that does not supply this beverage, if you do, why even bother opening your doors? Failure is inevitable. If I placed the world's most incompetent directorship in charge of coca-cola tomorrow, would it result in the human race consuming less coca-cola? Of course it wouldn't. The retailers wouldn't even notice, and while the business may experience some operating inefficiencies, the model its-self would take 20 years to destroy completely, if that's even possible, by which time the incompetent management would have been long ago been replaced. Business models (good or bad) endure. Management may or may not.
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Plonky
Super Contributor
The amount of coca-cola that is consumed on a daily basis on this planet is greater than the amount of water that falls off of niagara falls over the same period That's quite a statment..where did you get that fact, and can you supply the volume that you are referring to ???...sorry for being a "Doubting Thomas" here, but it seems a bit hard to believe....
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SimonPB
Valued Contributor
nonsense example .. an well actually management did mess up coke with the new coke in the 80's .. sales crashed, share price crashed and eventually management went back to the old coke recipe .. it is always about management ..
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KVW
Super Contributor
What is preventing further downside? I agree that they have a good business, but would we ever see sub 100?
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SimonPB
Valued Contributor
somebody explain this "good" business model to me ??
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john_1
Super Contributor
Coke Sells.... because sugar and cafffine are addictive, not because its a good product or because of a good buniness plan..
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SimonPB
Valued Contributor
well except for when they botch the recipe an it doesn't ..
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Plonky
Super Contributor
I know this is a [email protected], but I am sitting in Jakarta with nothing to do, waiting for another earthquake... While I was waiting I looked up Niagra falls on Google. It states....... "More than six million cubic feet (168,000 m3) of water falls over the crest line every minute in high flow,[1] and almost 4 million cubic feet (110,000 m3) on average. It is the most powerful waterfall in North America.[2]"....there are 24 x 60 mins in a day = 1440 mins...so multiply the two = 241 million cubic metres in one day. Now convert to litres (multiply by 1000) = 241920000000 litres. There are appox 6.7 billion people on the planet (looked this up as well)...maybe my sums are wrong, but I get 36 litres per day per person...I am a geologist, not a mathematician, so maybe someone else who is bored can help me...??? do we really drink so much coke ???
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Galuc
Super Contributor
Michael explain this to me "Afdawn is in no way exposed to any of Allegro's creditors" if they own Allegro and is probably about 25% of Afdawn exposure? Crazy buy this no wonder they all got bombed!
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topgun
Super Contributor
SENS tomorrow will quantify the Allegro exposure and its impact on ADW. Some heavyweight advisors to come onboard....
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MichaelG
Occasional Contributor
SENS tomorrow will quantify the Allegro exposure and its impact on ADW. Some heavyweight advisors to come onboard.... For interests sake, where did you find this out?
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MichaelG
Occasional Contributor
Definitely possible...changes nothing. The markets irrationality is nothing unusual...
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MichaelG
Occasional Contributor
Michael explain this to me Afdawn is in no way exposed to any of Allegro's creditors" if they own Allegro and is probably about 25% of Afdawn exposure? Crazy buy this no wonder they all got bombed!" It's referred to as ring-fencing. When i say that Afdawn is not exposed to Allegro's creditors I am referring to exactly that. The company is exposed to a loss of earnings, which I mentioned in my first post, which was then confirmed by the SENS (to within a few percentage points I might add), but it is not exposed to the creditors themselves. ADW is currently priced as if it were exposed. The only risk that exists is the level of control NEDBANK can now exorcise. There certainly is a speculative factor here, but it is nowhere close to the levels many would make it out to be.
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topgun
Super Contributor
A birdie....Surely, after last week's agm and the ousting of the directors, Nedbank Capital and others who plotted behind the scenes, must communicate the way forward for the company. Wiese was after all at the agm....
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Galuc
Super Contributor
Ok Michael I understand where you coming from and it makes sense. I will keep an eye on this share.
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