Sellers leave Ascendis looking rather green about the gills
Healthcare conglomerate looks nothing like the market darling in 2016 famed for its acquisitive exploits
Shareholders in healthcare conglomerate Ascendis must be feeling rather queasy at this point. Since August the share price has more than halved – which at R4.60 by the close of the market on Thursday was just 19c from an all-time low hit just 20 minutes earlier.
In the year to date Ascendis has shed over 60% of its value and now looks nothing like the market darling whose acquisitive exploits helped drive the share price to as high as R28 in late 2016.
Like so many other growth-by-acquisition counters, the centre simply did not hold as firmly as expected when operational strains increased.
But the pale share price probably affords brave investors an opportunity to back a turnaround effort in its early stages. Normalised earnings for the year to end June were reflected as R738m compared with Thursday’s market capitalisation of just over R3bn.
Ascendis has already signalled an intention to simplify its breadth and scale in areas where it has a sustainable competitive advantage. This might not be a quick fix, though.
Presumably a good number of assets and brands will need to be sold off, and it will be interesting to see what prices can be garnered in the prevailing dour economic climate.
In the meantime, spare a thought for Coast2Coast (C2C) – the major shareholder in Ascendis, which backed a rights offer at R20/share in late 2017. Ascendis shareholders will be hoping C2C – which presumably has significant gearing attached to its shareholding – can endure the recuperation process. A big seller in the market is the last thing Ascendis needs right now.