Is Vunani about to escape drought and enter a season of harvest?

Posted On Saturday, 20 February 2016 03:47 Published by
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The end of the proverbial drought is not in sight, as Vunani Limited's stock remains weak.

Vunani_CEO_Ethan_Dube

Now gyrating around an emaciated 160c, Vunani looks a shadow of its former potent self. At these levels, it has halved in value since this time in 2013. The firm commanded a commendable 400c per share in 2012.

In addition to three other operating arms (in financial services), AltX-listed Vunani, which has a market cap of R183 million and was cofounded by Ethan Dube in 1998, is involved in property. Its projects include refurbishing existing buildings and greenfield developments that span commercial, industrial, retail and residential segments. Vunani Properties has other property investments valued at over R260 million and lists Greenstone Hill Office Park and Metso Park amongst completed developments.

In November 2013, Vunani sold its stake in Vunani Property Investment Fund to Texton Property Investments for R117m. Formerly known as Vunani Investment Property Fund until August 2014, Texton Property Fund is a separately listed entity.

Asset management and institutional securities broking accounting for almost four-fifths of group revenues (down to R117 million in 2014 versus almost R200 million at its zenith). This excludes other aspects of financial services. Formerly known as Vunani Investment Property Fund until August 2014, Texton Property Fund is a separately listed entity.

It is the financial services that earned Vunani its reputation. Over the years, property stood shyly like a footnote. Towards the end of fiscal 2013, the group took a “strategic decision” to dispose of its property asset management business. On this note, it’s worth pointing out that the “property investment and development business saw a period of significant realisation during 2012 and 2013”, according to the Sandton-based firm.

Last year saw it snaffling a 70% stake in Fairheads International Holdings, an investment holding company that owns a benefit services entity. The said subsidiary, FBS, provides administration services to beneficiary funds and umbrella trusts for retirement funds and a registered pension funds administrator.

The benefit services unit claims R7.8 billion in assets under administration and a total of 107 000 dependants (of deceased members). Expect the addition of Fairheads to add impetus for the period under review to Vunani’s already bulky financial services segment.

But how the group fared in 2014 might depend on your focus. Optimists would be correct to say that profit soared eight fold to touch a decent R67 million after managing a lowly R8.3 million previously. On the other end of the spectrum would be those arguing that, because of how and what it communicates (seeing it compares like-for-like), headline earnings per share is king. In that case Vunani crumbled – swinging from negligible but positive HEPS in 2013 to report a muddy 27.5c in headlines loss per share a year later.

On that note, Sadif Analytics’ question is: are analysts being too hard on Vunani? (as per its July 2015 report) The answer seems a no-brainer.

Vunani’s financials, previously a case of bad harvest (as illustrated by, among others, plentiful headline losses per share), could just impress long-suffering investors who have mastered the art of running for the hills. Being decidedly stuck in the dugout, even this week, the stock offers no clues. Not a blip was recorded in the wake of the trading statement that was issued on the eve of Valentine’s Day. Where is the love? Punters, preferring to look the other way, could offer some interesting insights.

A week earlier, Sadif Analytics had released a report where it probed whether the AltX-listed firm was or wasn’t worth a higher bid. Is it? To be fair, by several accounts, not to mention the Fairheads buy or Vunani’s strong leadership and convincing prospects, a sapped 160c seems too low. Brave punters sticking it out, or piling in, could have the last laugh all the way to the bank.

Vunani points to a HEPS surge in the 119%-127% range for the year ended 31 December 2015. This will put HEPS around 5.3c and 7.3c. Low as it is, for a firm that has a history of losses, an uptick in the counter case seemed a given. On the contrary, it’s probably going to take a lot more to convince a dispirited market. Dube, a well-rounded business grandee, will get his turn to do the talking sometime “before the end of March” when the entity, in closed period, presents its full-year numbers.

Dube’s team is big on expertise. The executive includes Mark Anderson and Butana Khoza, both founding partners and chartered accountants, and Aphrodite Judin – another bean counter. Highly-qualified XP Guma, an academic and economist renowned for his deputy governorship at the central bank, is a non-executive director. So too are John Lacey, an academic and a CA, and Nambita Mazwi, an attorney who currently serves as the legal adviser of the SAA.

The board is chaired by Lionel Jacobs – an intrepid entrepreneur said to have “extensive negotiating and investment skills” coupled with a BCom and an MBA. However you look at the 10-member overwhelmingly male board, it’s packed with talent.

This year’s harvest, could just turn the relentless “mud, sweat and tears” into the much-awaited “bountiful harvest”.

Last modified on Saturday, 20 February 2016 11:14

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