The market, these days, seems less enamoured of the Nestor of the JSE’s broader tech sector, Altron. In fact, the market has seemed distinctly undecided, looking at the share price spikes in early January and late May this year.
The share is down more than 20% since the end of May and it’s worth watching for further weakness after the release of mixed interim numbers this month. Punters may, justifiably, argue that slow burners such as Datatec, fast-recovering iOCO and the sprightly Karooooo look like more compelling tech-flavoured options. I can’t disagree. But Altron, for the patient investor, holds some promise in its key business segments and, I think, some interesting optionality on the dealmaking front.
It’s not been the best time for Altron, with its share price down 11%, 17% and 9% respectively across 12 months, six months and three months. The share is now settled closer to its R16.50 12-month low than its R25 annual high. While the interim performance was nothing to write home about, the strident growth in dividends stands out. The interim payouts have grown since the first half of the 2024 financial year from 25c a share to 40c in 2025, and now 48c for the 2026 interim period. Those are confident increases that suggest management is banking on a sustained building of margins, market share and operating cash flows.
Altron CEO Werner Kapp talked of a “high-performance culture” — not a term casual observers would apply to Altron, especially those (myself included) who viewed the tech conglomerate as ripe for a breakup, with a separate listing for the Netstar vehicle tracking and fleet management business. The body language at the investor presentation suggested that the centre will hold at Altron, even if some market watchers might still bristle at the stark contrast in the margins of the platform businesses (Netstar and fintech) at 22% and IT services at a paltry 7%.
Of course, Netstar remains key to Altron’s short- to medium-term fortunes. Though Karooooo, the owner of Cartrack, is still setting a cracking pace, the overall picture at Netstar no longer induces as many winces as in previous years. Subscribers are up 11% to 2.1-million, with annuity revenue at 90%. While the churn rate edged up to 18% (17%), the ebitda margin was a well-reinforced 44%. Kapp said Netstar is “exceptionally well positioned for growth”, and reported that the Australian segment is expected to break even by the end of the financial year.
The overall picture at Netstar no longer induces as many winces as in previous years
The very promising fintech segment was in fine fettle too, but the gloss came off with a horrible fizzle at Altron Digital Business (ADB), which hurtled into the red. Kapp said the first quarter (March to end-May) was “probably the worst order intake I’ve seen in IT for a really long time”. At least Altron executives took the opportunity to take out about R150m in costs at ADB, but that did not stop investors asking why this business had underperformed so badly against a listed peer such as iOCO.
Predictably, questions were also raised about whether ADB really belonged in the group, its cyclical nature putting it at odds with the high annuity flows of Netstar and the fintech segment.
Interestingly, investors at the presentation were also keen to know whether Altron had looked at possible deals with complementary fintech/tech businesses such as Bank Zero, iOCO and Jumo. Yes, it had … along with a number of other acquisition possibilities. But the executives warned against dealmaking fomo, saying: “If there is no strategic rationale, we don’t even look at the numbers.”
Altron, in the meantime, seems very excited about its AI Factory — the first in Africa and a possible game-changer that comes, I’m glad to see, without a hefty capital expenditure burden (a mere R20m has been spent on infrastructure). Still, I would not bet against Altron beefing up its fintech offering in the medium term or seeking deals to smooth out ADB’s performance. Araxi (formerly Capital Appreciation) and 4Sight spring to mind. Another year of downward drift in the share price might well see Altron’s major shareholders, including Value Capital Partners, stirring things up.
Speaking of moving and shaking, low-key packaging group Transpaco has added a fair bit of bulk to its plastics packaging hub with the R128m acquisition of Premier Plastics, a recycler of plastic materials as well as a supplier of recycled materials used mainly in carrier and refuse bags.
Transpaco did rather well out of its acquisition of two specialised businesses from Nampak many years ago, and Premier might be an opportunity to do the same. At the end of the 12 months to end-June this year, Premier turned over R503m and managed R17m at the level of net profit after tax. That net margin of 3.3% is well below what Transpaco achieves on its combined paper and plastics packaging business, last seen at over 6%. There’s presumably scope for improvement in Premier, remembering that Transpaco’s plastics segment turned over R1.26bn and showed R90m in pre-tax profit in the past financial year.
For thrill seekers, keep an eye on green energy business Montauk Renewables. Aktiv Asset Management, associated with asset manager Adrian Zetler, has built up a meaningful 15.7% stake in Montauk. Aktiv recently took Montauk to task publicly about several aspects of the renewable energy business in the US. I expect Aktiv won’t hesitate to up the ante.
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