THE BOTTOM LINE
Resilient’s little bounce may have been a tad premature
Investors seemed to have found an appetite recently for the embattled property group. Until Wednesday, that is
Property investors betting on a continued recovery in the share prices of embattled Resilient and Fortress will no doubt be disappointed by the losses recorded by both counters on Wednesday.
Fortress B slumped nearly 7% in early morning trade and ended the day 4% lower while Resilient was down just more than 2%. That has partially wiped out the gains recorded by both stocks since end-July.Allegations of insider trading and share-price manipulation earlier this year led to the near collapse of both share prices. And despite the market still eagerly awaiting the outcome of the Financial Sector Conduct Authority’s probe into the allegations, investors have in recent weeks seemingly regained their appetite for the two counters.
Wednesday’s sell-off appears to have been triggered by a weaker-than-expected dividend growth guidance for the 2019 financial year given this week by the two companies at their respective results presentations.The lower dividend growth numbers reported by both companies relate primarily to the restructuring of BEE scheme, the Siyakha Trusts, following market criticism on how the companies distributed interest accrued on the loans advanced to the scheme.
But the operating environment has also deteriorated and, like most other property companies that have reported results so far this month, Resilient and Fortress’s earnings are also being squeezed by higher vacancies and lower rentals amid a weak economy and tougher trading conditions.