THE BOTTOM LINE
Does anyone actually know how Ayo earns money?
PIC has poured R4.3bn into this mysterious entity
It’s hard to know where to begin with Ayo Technology Solutions, the little-known company that listed in December on the back of a staggering R4.3-billion cash injection from the Public Investment Corporation.
A cursory read of its results, released after the market close on Tuesday, would seem to indicate a company in robust health: headline earnings per share up 107% for the six months ended February, revenue up 49% and then, the cherry on top, net asset value rising almost 24,000%.Of course, that’s thanks entirely to its state benefactor. Those, at least, are hard numbers. What’s almost impossible to fathom from its results commentary is what Ayo actually does to earn its money. For example, its security solutions business saw sales rise 150%, due to an “improvement in ownership and empowerment credentials”.
How you model future sales growth on that basis is anyone’s guess. Mind you, what does “better alignment and leverage with its principle supplier” mean, and how did this see its communications division post a 58% jump in revenue?
And then there’s this: “Following extensive market engagements and the continued positive reception to Ayo’s strategy by customers and acquisitions targets, certain … processes and timelines have been extended to take better advantage of this strong goodwill … Although not ideal, this could result in our current period results not meeting the expectation set out in the pre-listing statement.”
So, great goodwill is actually leading to delays in doing deals, but that’s OK ... Alright then, if you’re buying a share for pure confusion, Ayo’s your bet.