Ayanda Mdluli
PACKAGING company Mpact got off to a lacklustre start on its first day of JSE trade yesterday as the opening price of R16 declined by at least 15 percent, illustrating what one analyst referred to as a “wait and see approach” from investors.
The company, which officially demerged from international paper and packaging company Mondi Group with its JSE listing yesterday, saw its stock fall from R16 to close the session 16.1 percent lower at R13.60. This set the market value of the company at about R2.2 billion.
The company started trading separately on the JSE as it seeks to grow its business.
Mark Hodgson, an industrial analyst at Avior Research, said the demerging and the listing of Mpact meant that the company could develop in its own way, which was different to that of paper group Mondi.
“Mpact has a rigid plastic business and that is what they will grow and improve. “
He said that the market would have to get to know the company’s management first, and that the agricultural operations of the company would be dependent on exports and a weaker rand.
“If the rand weakens, it will move in their favour and the market will see better returns and margins,” he added.
Bruce Strong, the chief executive of Mpact, was optimistic about the company’s growth potential because demerging from the Mondi Group meant that the company would keep up with its strategy to develop and selectively grow its market positions in rigid plastic, paper-based packaging and packaging both domestically and in sub-Saharan Africa.
The company is involved in corrugated packaging, recycled cartonboard and containerboard, recovered paper collection, polyethylene terephthalate platforms, styrene trays and plastic jumbo bins. These operations account for 90 percent of its revenue.
Mpact reported revenue of R5.7bn in 2010 and employed approximately 3 500 people at 22 manufacturing sites and 29 operating sites. It earned about 10 percent of its sales outside of South Africa, including east Africa and west Africa. Its plastic operations provided revenue of R1.3bn and the paper sectors brought in R4.4bn.
Strong said Mpact had manufacturing facilities in Zimbabwe, Namibia and Mozambique.