I have played sports all my life. It’s a competitive thing. I never harboured great ambitions outside the immediate contest, but sport is still a good outlet for releasing pressure (and picking up exotic injuries to illustrate the many war stories).
I must confess, though, that surrendering a 6-3 lead in the third-set tie-break in the club champ doubles tennis tournament on Saturday will have me tossing and turning at 3am for a few weeks. It would have been an upset for the ages. After being thrashed 6-2 in the first set, we snatched the second set and literally had our much more fancied opponents up against the fence. Some of the return lobs had so much hang time that I could even work up a long string of expletives before crouching to smash the ball back. Sadly, we rushed the finish, and the match somehow slipped away.
Gutted as I am, there is still strong determination to make my fortune in the premier league. A recent column referred to my scary positions in Premier Fishing & Brands (and Choppies Enterprises). Readers might have noticed a huge, and uncharacteristic, spike in trading volume in Premier recently. Last week it advised that asset management company 3 Laws Capital had built up a stake of 29.49%. I would presume — though at the time of writing there was no confirmatory notice — that the Government Employees Pension Fund (GEPF) was a seller of its shares. 3 Laws Capital is aligned to Iqbal Survé’s Sekunjalo Holdings, which is the largest shareholder in African Equity Empowerment Investments (AEEI), which in turn is the biggest shareholder in Premier.
If I tally things up, AEEI and 3 Laws now speak for over 85% of Premier, which naturally would question the rationale for keeping such a tightly controlled company on the JSE. Now, I presume 3 Laws paid 50c-60c for its Premier shares, and I wonder what convinced the GEPF to bail out at this paltry price. Readers might remember that when Premier listed in 2017 its private placement at 450c a share was four times oversubscribed. The company had an initial market value well clear of R1bn, compared with R160m at present, and the funds raised at listing now dwarf its market capitalisation.
I can’t believe Premier will find it worth retaining its JSE listing
My rationale for investing in Premier — as opposed to doing the sensible thing by hooking up with reliable profit-spinners like Sea Harvest or Oceana — was the deep-value catch. Clearly the GEPF sees this differently. But the last time I looked, Premier held cash of R91m — which is equivalent to 36c a share (or more than 50% of the current share price). Then, the ungeared balance sheet also shows a loan to group companies of R105m, which I think is an arrangement between Premier and AEEI. That loan, which I’m sure AEEI could settle, is worth another 40c a share. So over 75c a share of Premier’s value lies in nonoperational assets, meaning that the market in effect is valuing the company’s squid, south coast lobster, pelagic and abalone farming operations at negative value. That seems a little harsh.
In the interim period the lobster business alone turned revenue of R87m into profit before tax of nearly R30m. The squid business, which is large in Premier’s life, was down markedly after lower catch rates. But I expect the R3.3m interim contribution to be a lot fatter for the full year. However, the standout figure for me is the NAV for the abalone farming business, which is shown at over R320m — exactly double Premier’s market value and double the value accorded to the large squid segment.
This shows how much Premier has invested in growing production in this export niche. With the abalone segment showing revenue of R21m and profit before tax of R1.2m, it’s clear this potential is still to flow through to Premier’s bottom line. Premier states its NAV at R757m, or 291c a share. Stripping out intangibles and goodwill I get a “hard” NAV of 257c a share. I can’t believe Premier will find it worth retaining its JSE listing.
Large acquisitions seem unlikely, and, in any event, the company would be mad to try to raise capital with the sunken share price. With such a small free float, a premium-priced offer to the few remaining minority shareholders still aboard Premier will hardly stress the bank accounts of AEEI and 3 Laws. I know what buyout price I’m angling for.
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