Our opinion on the current state of SASFIN(SFN)
Sasfin (SFN) is a banking group that specializes in various types of finance for small businesses and high-net-worth individuals. Listed on the JSE in 1987, the company has been investing heavily in its digital platforms and acquisitions. The share had been in a strong downward trend, and investors were advised to wait for a measurable turn in the price, such as an upside break through its long-term trendline, before making further investments. While this upside break has not yet occurred—primarily due to the effects of COVID-19—there are signs that the share is beginning to recover.
On 16th October 2023, Sasfin announced that it had entered into binding heads of agreement to dispose of its capital equipment finance and commercial property finance businesses to African Bank Limited. This news caused the share price to rise sharply.
However, on 27th February 2024, the company announced that it had received a civil summons from the South African Revenue Services (SARS) for a damages claim of R4.782 billion, plus interest and penalties, related to income tax, value-added tax (VAT), and penalties allegedly owed by former foreign exchange clients of the bank. Sasfin has a market capitalisation of just R484 million.
In its results for the six months to 31st December 2023, the company reported headline earnings per share (HEPS) down 62.39% and net asset value (NAV) up 4.09% to 5191c per share. The company explained that the decrease in HEPS was due to negative adjustments to its fair value loans and private equity portfolio, as well as an increase in credit impairments, reflecting the challenging economic environment for businesses in South Africa.
In a trading statement for the year ending 30th June 2024, Sasfin estimated that it would make a headline loss of between 181.41c and 200.5c, compared to a profit of 366.18c in the previous year. The expected loss was primarily due to increased expected credit losses, negative fair value adjustments, and high once-off costs, including provisions raised for administrative sanctions.
The share is fairly thinly traded, with an average of R85,000 worth of shares changing hands daily. On 15th July 2024, Sasfin announced its intention to delist from the JSE, offering shareholders R30 per share—a 66% premium to the 30-day volume-weighted average price (VWAP) as of 12th July 2024.
On 16th October 2024, *Business Day* reported that the JSE had put Sasfin on notice of suspension due to its failure to produce financial statements within three months of the end of its financial year, adding further uncertainty to the company’s position.
On 16th October 2023, Sasfin announced that it had entered into binding heads of agreement to dispose of its capital equipment finance and commercial property finance businesses to African Bank Limited. This news caused the share price to rise sharply.
However, on 27th February 2024, the company announced that it had received a civil summons from the South African Revenue Services (SARS) for a damages claim of R4.782 billion, plus interest and penalties, related to income tax, value-added tax (VAT), and penalties allegedly owed by former foreign exchange clients of the bank. Sasfin has a market capitalisation of just R484 million.
In its results for the six months to 31st December 2023, the company reported headline earnings per share (HEPS) down 62.39% and net asset value (NAV) up 4.09% to 5191c per share. The company explained that the decrease in HEPS was due to negative adjustments to its fair value loans and private equity portfolio, as well as an increase in credit impairments, reflecting the challenging economic environment for businesses in South Africa.
In a trading statement for the year ending 30th June 2024, Sasfin estimated that it would make a headline loss of between 181.41c and 200.5c, compared to a profit of 366.18c in the previous year. The expected loss was primarily due to increased expected credit losses, negative fair value adjustments, and high once-off costs, including provisions raised for administrative sanctions.
The share is fairly thinly traded, with an average of R85,000 worth of shares changing hands daily. On 15th July 2024, Sasfin announced its intention to delist from the JSE, offering shareholders R30 per share—a 66% premium to the 30-day volume-weighted average price (VWAP) as of 12th July 2024.
On 16th October 2024, *Business Day* reported that the JSE had put Sasfin on notice of suspension due to its failure to produce financial statements within three months of the end of its financial year, adding further uncertainty to the company’s position.
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