Johannesburg - Investment holding company PSG Group has seen its share price tumble in the past two months. On November, the share price was quoted at R257.
However, over the past two months the share price had shed R76 and was trading at about R181, a 42 percent decline.
The share was quoted at R179.65 at the JSE’s close yesterday, down 6.63 percent.
PSG Group consists of strong performers on the JSE, such as Capitec Bank, and it is tempting to say that the company’s performance will turn around soon. It is safe to say that investors will do well not to panic, because a little more than a year ago the group’s share price was trading at R99.
A share price rally then saw the price climbing to more than R300 a share in a very short space of time.
David Shapiro, the vice-chairman of Sasfin Securities, did not see PSG Group returning to that high any time soon.
Shapiro believes that it is a matter of time before the company loses those gains.
“Look”, he said, “the company was trading at a 20 percent premium in November. You must remember that PSG is an investment holding company that has the likes of Capitec bank, Curro Holdings, Zeder and Pioneer Foods in its stable.
“All of these companies were trading at very high prices, so with the global economy slowing down, it was bound to have a negative impact on the share price of the company in the long (term). It was just a matter of time before the company came back to these levels that we are seeing now,” Shapiro said.
“I don’t see a change in the global economy any time soon and I don’t expect the company to trade at these levels for a long time. They can only go back to those highs once the global market improves,” Shapiro added.
A Stock Exchange News Service announcement on January 14 showed that Jannie Mouton, the founder and director in the company, had bought 141 587 and 650 shares at R184.77 and R185.45 a share, respectively.
The Sasfin Securities director cautioned that this did not mean the share price was on its way up again. He insisted: “He was being clever. He bought them cheap and he can sell them at a higher price at later stage.”
The share price climbed to R190 on Monday. If Mouton had decided to sell his shares he would have made a R1.027 million profit.
Shapiro likens PSG’s performance to EOH, another bright spark of 2015. “EOH was hot, hot in 2015, and now it has also retraced its gains. We saw the share price climbing to R178 a share and now it is back to R123 a share – to the same levels we saw a year ago.”
BUSINESS REPORT