Trencor: Not exactly plain sailing for ailing shipper

Business

Trencor: Not exactly plain sailing for ailing shipper

Management has led the JSE-listed company’s demise from a former global leader to a distant also-ran

Ann Crotty


The Trencor share price demonstrated remarkable resilience in the face of yet another set of grim results from this former shipping container powerhouse.
It could be that the full set of financial statements were so complicated that traders found it difficult to work out exactly what had happened in the 12 months to December 2018. The complications were caused by structural and accounting changes implemented during the year. The changes were necessitated by the regulatory issues relating to Trencor’s treatment of its primary business, a 48% stake in US-listed and Bermuda-registered Textainer.
Because of these changes the clearest way to see what’s happened to the value of Trencor is to ignore the flow of earnings between Textainer and Trencor and focus on the sum of the parts net asset value.
It is not a pretty picture, with total NAV per Trencor share down 34% to R35.87 a share at the end of December 2018 from R54.37 a year earlier. The value reduction was due entirely to the almost-halving of Textainer’s contribution – from R40.97 a share in December 2017 to R22.51 a year later. The drop in Trencor’s NAV was all the more shocking when you consider it is a pure rand hedge and the rand fell 16% against the dollar during 2018.
This is not going to please the raucous shareholders who pitched up at last year’s Trencor AGM and wanted to know what the board intended doing about the chronically underperforming Textainer management beyond the long-term promise of an unbundling.
The team in place at Textainer since 2011 has led the company’s demise from a former global leader to a distant also-ran. Despite this dismal performance Trencor seems unable or unwilling to do anything about the controversial contracts that shelter Textainer from a hostile takeover and management from being booted.

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