CFI shares overvalued, unjustified: Rudland

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Zimre Holdings Ltd majority shareholder Hamish Rudland says CFI stock is a bit pricey at current prices and will come down as this price was not supported by fundamentals.

Staff Writer.

The counter was trading at 54,33 cents on Wednesday and a market cap of US$57 million. Its book value is US$36 million.
Just last month the counter was trading at 16,80 cents. He told businessdigest this week that there was no justification for the price.

“I think the stock is a bit pricey and has been pushed by Van Hoogstraten (Nicholas) to frustrate a legitimate offer process,” he said.

Rudland and the National Social Security Authority’s offer to CFI minorities last month at 22 cents per share was sabotaged by Van Hoogstraten who has been behind a number of book overs that have pushed the share price to the current prices.

“The price will come down as there is no justification to the price,” he said. “The company has a US$55 million debt and needs urgent recapitalisation.”

As at July 31, CFI had a price-to-book ratio of 1.08, showing it is now trading above its book value of US$36 million and a market capitalisation of US$39,5 million.

The stock had a price-to-earnings (P/E) ratio of 4.9. Its peer, National Foods Ltd, was at 18.18, while its price-to-book ratio was 2,85 with a market cap of US$259 million.

Rudland says although CFI has land assets, substantial capital was need to unlock value.

“While land assets may be worth money if developed and sold off, this will require large capital and time, something the company doesn’t have,” he said.

“The key is to get the operations, milling and retail running, well capitalised and making returns for shareholder, thereafter we can look at the strategic land assets and extract real value.”

He said CFI requires US$30 million over the next five years. The company requires US$30 million capital over the next five years. Then we have a real gem,” he said.

“We are strategic players in CFI. As such, the event of a stock price jump is merely an event. We believe that things will normalise and the price will settle back again to where it should be.

“Our focus remains to recapitalise the company and keep momentum going from where we have come in the last 2 years,” Rudland added.

Hamish and his brother Simon control transport and logistics group — Unifreight — and have a strategic equity stake in TSL Ltd.

The Rudland brothers along with George Manyere of Brainworks Capital are among some of Zimbabwe’s foremost value investors.
Manyere’s company, Brainworks Capital, is headed for a Johannesburg Stock Exchange-listing, a feat for a Zimbabwean-founded investment holding company.

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