Spun out of Grindrod in June last year, Grindrod
Shipping is a pure shipping investment
and, as such, is highly speculative.
As an industry globally, shipping
seldom actually makes a
profit, but every so often the
industry finds itself in such
a tough spot that those
left standing see profits
flowing in.
Lease rates have been
under pressure, and the
closure of the Vale exports
from Brazil worsened the
situation. This has resulted in ships
being scrapped and the current order book
for new tankers is the lowest in 20 years.Furthermore, 15% of current tankers are older
than 20 years, which makes them
inefficient and expensive to operate.
New pollution regulations are also
taking a lot of tankers out of
circulation as they get refitted
to comply.
Grindrod Shipping has
a strong balance sheet, a
relatively new fleet valued at
around R4.3bn, and a market
capitalisation of some R1.5bn.
The company is cleaning up
old joint ventures that should help
profits along. With steady demand and
lower supply, we could be heading into one of
the profit periods for the industry. ■MONDI PLC BUY SELL HOLD By Moxima Gama
HOLDTrending downwards
GRINDROD SHIPPING BUY SELL HOLD By Simon Brown
BUYmarketplace house view
16 finweek 24 October 2019 http://www.fin24.com/finweekLast trade ideas
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Photos: grinshipping.com | mondigroup.com
The Competition Tribunal approval of the
restructuring this year was on condition that
the company invest a total of R8bn in its local
operations over the next five years. It also had to
protect local jobs of employees in the Mondi Ltd
division – no staff members could get retrenched
over the next three years.How to trade it:
Mondi has fallen through the support trendline
(dated back to 2012) of its primary bull trend and
points away from key support at
27 650c/share.
It’s currently recovering and
approaching the same major
trendline.
But failure to trade above
33 130c/share (to resume
its primary bull trend) would
extend the bear trend.
Support at 27 650c/share
may then well be breached.
A head-and-shoulders bearish
pattern would also be confirmed
below that level, with the medium- to long-
term target situated at 13 335c/share. The first
target would be at 19 290c/share.
Alternatively, upside through 33 130c/share
could see Mondi recover further to 36 890c.
Above that level it could retest its all-time high at
42 565c/share. ■
[email protected]Mondi Plc’s share price fell to its lowest level
in almost three years, at 27 498c/share, after
a third-quarter trading statement, released in
October, indicated a dive of 18% in its earnings
for the three months to September.
The paper and packaging group said this
was due to lower average prices and reduced
demand for its products, which are likely to spill
into the fourth quarter.
The share price then regained upside
towards the close on the same day – testing a
day high at 29 180c/share.
However, Mondi’s share price
has been trending downwards
since testing an all-time
high at 42 565c/share in
May 2018. This trend was
triggered by plans to dump
its dual-listing structure.
By end of July this year,
following approval from
the Competition Tribunal,
Mondi announced that it had
completed the restructuring of its
dual listing. Mondi Ltd, as its JSE-listing
was known, is now a subsidiary of Mondi Plc,
listed on the London Stock Exchange (LSE).
Both listings, on the JSE and LSE, are now
under Mondi Plc – the company’s attempt
to simplify cash and dividend flows, increase
transparency, reduce complexity and enhance
strategic flexibility.STAY
SHORTSTAY
SHORTHOLDHOLDBUYBUY