Santova share price rockets, but some say it should delist
Covid-19’s effect on offshore earnings was limited, but the logistics group is concerned by the longer-term economic risk posed by the pandemic
Small-cap logistics company Santova saw its share price rocket 14.5% after it released results for the six months to end-August in which its profit jumped, thanks to a boost from its offshore operations which managed to stave off the chaos of coronavirus.
This even as partial port closures and a recessionary environment in SA took a bite out of profits at home.
Santova is small, listed ICT group with a market capitalisation of R323bn. It provides ICT services aimed at helping companies improve their supply chains.
Santova’s profit after tax increased 14.5% to R33.5m during the reporting period.
The Covid-19 pandemic’s effect on offshore earnings was limited, Santova said, though it is concerned by the longer-term economic risk posed by the pandemic.
Group revenue from logistics services grew 8.3% to R208m during its half-year, with revenue from its Africa region falling about 12% to R54.4, just over a quarter of the group figure.
Santova is represented in 10 countries with offices in SA, Mauritius, Germany, the Netherlands, the UK, Australia, Hong Kong, Singapore, Thailand and Vietnam. In the UK, it rose 9.2% to R62.6m, and in its Asia-Pacific region it jumped 38.6% to R32.3m.
Anthony Clark, analyst at Small Talk Daily, said that while Santova released a commendable set of results, it is a highly illiquid company.
“Because of the low liquidity, institutions have shied away from this stock and it really only has private investors. Given this, sadly, I think Santova needs to consider a delisting,” he said. “The company can’t issue paper to expand because the price-to-earnings ratio is so low but management doesn’t want to delist.”
Clark said Santova is a “solid little business with a great international niche”, basically doing all the things it should be to assist other companies with saving money and with improving their supply chain logistics and procurement policies.
After trading 14.5% higher, its share price closed 14% up at R2.28, its biggest one-day increase in about six months.
Update: October 27 2020
This article has been updated with comment and financial information throughout.
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