Caxton keeps on keeping on printing old-school money
Share price gained almost 5% on Wednesday
The Caxton share price gained almost 5% on Wednesday for no apparent reason. Given that Novus also ticked up 2.56% it might just be down to generally strong investor sentiment. Certainly on the basis of operational performance there does seem to be support for a strengthening in the Caxton share price but not much for an uptick at Novus.
From the beginning of April Caxton took over the printing of Media24’s newspapers in Gauteng. It also picked up the contract for printing Media24’s magazines in the Cape. The two contracts are extremely valuable and for years had been tightly controlled by Novus, which at one stage was a subsidiary of Media24.Securing the contract gives Caxton an almost dominant position in Gauteng. Although it recently lost the contract to print for the Independent Group in Gauteng, Caxton now prints for Media24 (owned by Naspers) as well as Tiso Blackstar (which publishes Business Day and Sunday Times) and its own publication The Citizen. The share is on an undemanding p/e ratio of 8.5 times, reflecting how out of favour old technology companies are.
Over at Novus things continue to look pretty grim. It essentially threw away the Media24 contract by refusing to acknowledge the new realities of the situation. The Novus board may have relied on the traditional hostilities between senior executives at Media24/Naspers and Caxton to secure its hold on the valuable printing contract. But times, and executives, had changed and Media24 had reduced its stake in Novus to an unstrategic 19%.
Novus’s relatively new shareholders, which include Caxton with a 5% stake, will be hoping to see evidence of the long-promised pick-up in other areas such as tissues and labels.