Agricultural investment holding company Zeder, says its annual net asset value per share will be about 40% lower than a year ago after unbundling food producer and fuel retailer Kaap Agri.
Zeder announced the unbundling of its 42.2% stake in Kaap Agri in February, giving the shares directly to investors to address its discounted valuation that once was as much as 60% lower than the sum of its parts. Holding companies on the JSE traditionally trade at a discount of about 30% to the underlying value of the assets they own.
The group expects its net asset value (NAV) per share for the year to end-August will be R2.66-R2.71, from R4.45 in the 2021 financial year.
JSE listing rules require companies to alert the market when their earnings are expected to be 20% lower or higher than the period before.
Zeder had been a shareholder in Kaap Agri since 2006 and was instrumental in the listing of Kaap Agri on the JSE in 2017.
The disposal of its Kaap Agri stake further trims Zeder’s operations, with the group also having sold or unbundled several other businesses after a 2020 review by founder PSG to address the gap in value between the share price and its underlying assets.
In November 2021 Zeder sold its ports and logistics business TLG to a private equity group for R1.6bn and paid a dividend of 92.5c a share from the proceeds.
It is now left with three smaller businesses, seeds business Zaad, fruit and wholesale company Capespan and struggling Zambian commercial farming asset Agrivision. It still, however, trades at a discount to NAV and may eventually delist, given its small portfolio.
Small Talk Daily analyst Anthony Clark says he thinks it will take time to sell or see value from the remaining businesses.
He said the Zaad seed genetics business, which is valued at R2.3bn, is a good business but he thinks it is not generating as much cash as it should and “has quite a bit of debt”.
He said selling the fruit business, valued at R1.1bn is “tricky” due to the difficulty exporters face thanks to global supply-chain issues and EU citrus regulations.
“Both assets are not the easiest to put on the chopping block, so may take time to realise value.”
In late afternoon trade Zeder’s share price was unchanged at R1.90, giving it a market value of R2.9bn.
Updated: October 6 2022
This article has been updated with additional information
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