Our opinion on the current state of TEXTON(TEX)Texton (TEX) is a small real estate investment trust (REIT). The company owns forty-eight retail, industrial, and office properties, 55,4% of which are in South Africa and the balance in the UK. After reaching a high of 1235c in March of 2015, the share fell steadily to a low of 78c on 29th October 2020.
This fall was exacerbated by the recent revelation that the company's share price has triggered a "default event," in terms of which the Public Investment Corporation (PIC) has decided to "put" its shareholding of 51,9m shares on Texton. The current CEO, Marius Muller, is the 5th CEO in 5 years. On 26th September 2020, in this opinion, we pointed out that it was trading at a fraction of its net asset value of over 580c.
Then, suddenly, on Thursday, 29th October 2020, 28,3m shares changed hands at 78c in four deals - and then on Friday, 30th October 2020, the company made a public announcement of a mandatory offer at 120c - and the share jumped 47% to close at 115c. Obviously, the Thursday trade was a highly profitable insider trade, which netted a profit of over R10m - and it was clearly visible in the volume chart. So, it is always worth watching the volume traded, especially in small companies with limited volumes traded.
In its financials for the six months to 31st December 2024, the company reported property revenue down 3,71% and headline earnings per share (HEPS) of 11,39c compared with a loss of 9,49c in the previous period. The company said, "Distributable earnings were R37,5 million, which remained largely consistent period on period. SA NOI increased by 17%, attributed to improved letting. This was partially offset by a decline in the UK due to asset sales. - LTV decreased to 14,7% due to debt repayments from asset sales, while ICR increased from 1.98x to 2.1x."
Technically, the share has been trending up since its low in October 2020, but it remains thinly traded. In our view, there are better property shares available on the JSE.
