Steinhoff stock drops another 10% to near half its 1998 listing price

Cape Town - When Steinhoff listed on the Johannesburg Stock Exchange in 1998, its shares were priced at R4.00.

On Wednesday at 15:00 the conglomerate's stock had declined 10% on the day to trade at R2.24 a share, meaning its shares are now nearing half their listing price of 20 years ago. 

On Tuesday the stock had fallen about 15%.   

Trader and investor Simon Brown told Fin24 by phone on Wednesday that part of the share price decline over the past two days reflects investors’ fears over uncertainty at Steinhoff.

Another driver of the two-day loss could be shareholders who bought shares cheaply hoping to make a quick buck in December are now “throwing in the towel”.

“Maybe two or three months ago people thought something good could happen. As time drags on and as more bad news comes less people are prepared to take the risk. This makes less buyers which makes a weaker share price,” he said. 

The retailer's stock is now down some 97% from its high of around R95 a share in April 2016, “I think it can still weaken,” Brown said. 

Looking for good news

Brown said it would take some “really good news” for the share price to improve, such as a positive reaction to Steinhoff publishing its still-outstanding financial results which date back three years. 

PwC is conducting an independent forensic investigation of the firm’s books. This  investigation is expected to be completed by the end of 2018.

Steinhoff has said that only after this investigation has been completed will it be in a position to provided its audited annual results for 2017. 

“When we get clarity from the company we will know what we have got and then we can start making informed decisions again," he said. “Of course the clarity may be bad news, which may not bring up the price. That is why investors are staying away.”

Brown explained that the share could trade as a penny stock if it continues to fall. The only way it could possibly get to zero is if Steinhoff goes into bankruptcy or liquidation.

The most recent share price decrease comes after Steinhoff said payments to its ex-chairperson Christo Wiese broke company rules. Wiese, in turn, has defended the payments as legitimate

The international retail group has been under a cloud since its former CEO Markus Jooste quit in early December 2017 amid a still-ongoing accounting scandal.

The fall in the group's share price has wiped out over R200bn in market capitalisation. Once one of the top 10 largest listed companies on the JSE, Steinhoff now risks falling out of the top 100 by valuation on the local bourse. 

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