PHANTOM SHARES: The Finance Ghost: Strong run by banks, Blue Label Telecoms’ complex plans to refinance Cell C

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PHANTOM SHARES: The Finance Ghost: Strong run by banks, Blue Label Telecoms’ complex plans to refinance Cell C
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Last week Standard Bank released results for the year to December 2021 that reflected a solid rebound in performance, with an increase in return on equity from 8.9% in 2020 to 13.5% in 2021. Based on the latest net asset value per share of R124.93 and a price of R173 per share at the time of writing, Standard Bank is trading at a substantial premium to net asset value of 38.5%.

Absa also reported on the same period last week. Deposits grew by 12% but gross loans and advances only increased by 7%.

The Blue Label share price has had a solid run recently but is down more than 66% over the past five years. There are many other elements to the transaction. In summary, Blue Label is giving Cell C another significant punt and is taking some big risks along the way. The company will hold 49.3% in Cell C once all the steps are completed.

There is some respite for shareholders, as EOH has announced the sale of four subsidiaries for about R420-million. The earnings before interest, tax, depreciation and amortisation multiple for the sale is about 5x, which isn’t exciting.

 

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