CAPE TOWN - There are times when it is more difficult than usual on the stock market. An equally weighted JSE Top40 portfolio has now been flat for three years and the JSE all share index return over the same period has been a measly 5percent per annum.
Many smaller companies had not reached previous highs again, and performed way worse than the main indices.
Investor fatigue crawled in. This has happened many times in history and it was never right to lose faith and abandon the stock market. Staying invested and being in the right shares always delivers a high return over time. The longer the market goes down or sideways, the better the chances become of a high future return.
Having a small start-up company as part of a diversified share portfolio can always be considered, though it encompasses more risk and should never have a too high weighting in one's portfolio.
Last year I wrote about 4Sight, the first pure technology play to list on the JSE in many years. It specialises in data and is the brainchild of industrial engineer Professor Antonie van Rensburg. Since they listed in October 2017 at R2 per share, it went as high as 285c, but then started dribbling downwards to as low as 120c last month. Completely forgotten and out of sight. Their first set of results were released, following some corporate action, and already there is a slight improvement.
Divisions
During the first six-month period 4Sight Holdings reported headline earnings per share of 0.50 UScents (R0.06) per share. The reported figures are higher than the prospectus forecast of 0.36c US, but slightly lower than the March update. One probable reason the share price came down after the results.
The group has two strategic divisions, “Telco/media/property” and “mining and manufacturing”. They are managed separately, because they require different technology and marketing strategies and offer different products and services.
The telco/media/property divisions’ algorithms help network operators to optimise revenue within the optimal use of the network infrastructure. Their digital media solution allows brands to reach and engage consumers in brand awareness, campaigns and customer behaviour profiling. Other operations include dynamic tariffing, network services, media applications and smart property solutions.
The mining and manufacturing segment consists mainly of two entities, namely BluESP and Age.
Revenue from BluESP arises from both annuity and project-related income through maintenance and manufacturing execution solutions.
Age is a systems integrator selling sensors, IoT, instrumentation, control system hardware, cabling and networking equipment for large industrial installations.
Current installations are being done in the mining and water segments in southern African countries, including South Africa, Botswana, Zambia, Democratic Republic of Congo, Zambia and Zimbabwe. This is the only company in the group that sells physical products and provides interfacing between the digital and real worlds.
Memorandum
4Sight recently signed a memorandum of understanding with Shenzhen Rongmei Science and Technology Limited (RM) to establish a 50:50 joint venture in China. RM’s vision is to extend its current industry focus in the government and financial services to smart factories, health and cities, backed by the Chinese government's drive to integrate the internet, big data and artificial intelligence in the next few years. 4Sight will enable the joint venture with its know-how, while RM will drive funding and take responsibility for local business development.
Historically, the group's revenue is earned 40percent in the first half and 60percent in the second half. The share is trading at 145c with a price/earnings ratio of around 10, which seems undemanding, considering their growth prospects and earnings enhancing acquisition pipeline.
Amelia Morgenrood is PSG Wealth regional director.
The views expressed here are not necessarily those of Independent Media.