The share price of diversified agricultural company TWK Investments on Monday gained 5.26% on its first day of trading on the fledgling ZAR X exchange in Bryanston, Johannesburg to close at R13.00.
TWK, with a R6.5 billion annual turnover, is the third company to list since the bourse opened in February with the listing of Senwes, also in the agricultural sector, and later related company Senwesbel.
After opening at R12.35, a total of 17 deals were concluded by late afternoon with 18 020 TWK shares to the value of R232 160 changing hands.
TWK CEO Andrè Myburgh said no new shares were issued, the main purpose of the listing being to increase liquidity and transparency.
Myburgh said the 76-year-old company, with its head quarters in Piet Retief in KwaZulu-Natal, restructured two years ago. The listed entity is TWK Investments and the structure looks like this:
The listed entity has extensive operations in Swaziland and operates in five divisions in the domestic market. Those are Retail and Mechanisation, Grain, Timber, Motors and Tyres and Financial Services.
ZAR X CEO Etienne Nel told stakeholders who attended the listing event that representatives of the exchange travelled four-and-a-half hours to Piet Retief to be there for the listing. “We won the pitch on our offering. Price is not our competitive advantage,” he said. According to Myburgh, the ease of listing on ZAR X determined TWK’s choice.
TWK developed from an association of wattle growers. It sells processed and unprocessed products in the local and export markets, negotiates prices on behalf of its members and manages logistics.
The group has diversified along the agricultural value chain and currently has its exposure spread over five large and several smaller industries.
TWK’s gross profit margin has remained around 14% since 2012 despite the drought and economic downturn, CFO Eddie Fivaz said. Ebitda grew from R150 million to R260 million from 2012 to 2016 and the trend is expected to continue, he said.
The return on equity grew from 4.5% to 13.5% over the same period, Fivaz said and basic earnings per share from R2.22 in 2015 to R3.29 in 2016.
In 2015 the company paid dividends of 35c per share and last year 44c. TWK follows a general dividend policy of five times cover.
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