Altron's trading statement gets the cold shoulder


Altron's trading statement gets the cold shoulder


Published Date: 2021-10-13 | Source: INCE|Community | Author: The Finance Ghost

Altron's trading statement gets the cold shoulder

Altron was on the turnaround train before the pandemic hit. Things were going well before the market chaos set in, so it was one of the companies that I bought in the dip-of-all-dips in March 2020.

At the end of last year, Altron unbundled and separately listed Bytes, the UK-based software, cybersecurity and cloud business. Altron did not retain a stake in Bytes.

This caused a huge drop in the Altron share price in early December 2020, as the group became a lot smaller after Bytes was unbundled. Those who bought before December would need to compare their in-price to the value of their Altron and Bytes holdings together.

Since the unbundling, Altron is up 26% and Bytes is up 45%. Bytes is the much larger of the two, with a market cap of R21.6bn vs. Altron's R5bn.

Altron has released a trading statement for the six months to August 2021. The important complexity is that the comparative period includes Bytes (as the unbundling only took place in December 2020), so one cannot simply compare the headline earnings per share for both periods.

The group uses the opportunity to disclose results from continuing operations, with separate information given for normalised comparable earnings. I'm usually sceptical of any attempt by companies to massage the numbers, but in this case the comparable period is so far removed from the current business that I'll accept the company's attempt to use a normalised number.

So, for normalised headline earnings per share from continued operations (and breathe...), the six months to August 2020 was a loss of 8 cents per share and the six months to August 2021 will be a profit of between 9 and 13 cents per share.

Although there's clearly a strong turnaround here, the share price fell 6.5% on the day. Results are expected to be published on 25 October, at which time we will have detailed information on segmental performance.

Disclosure: the author holds shares in Altron


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