Our opinion on the current state of YORK(YRK)York Timber Holdings (YRK) is a South African forestry company that owns plantations, processing plants, and a wholesaling distribution network. It is the largest player in South Africa’s plywood and timber market. Founded in 1916 by Russian immigrant Herman Katzenellenbogen, the company was listed on the JSE in 1946. The National Union of Metalworkers of South Africa (NUMSA) is the majority union representing workers at York.
York Timber has faced challenges over the years, particularly due to the prolonged downturn in the construction industry since the 2008 sub-prime crisis. In July 2007, the company’s shares peaked at R40, but since then, they have mostly been in decline or moved sideways.
In May 2022, York Timber announced that a strike at its Escarpment operations, which account for 51% of its revenue, would negatively impact production. On 5th December 2022, the company revealed plans for a R250 million rights issue, offering existing shareholders 43.12791 new shares for every 100 shares held at a price of 175c each. The rights issue announcement caused a sharp drop in the share price.
In its financial results for the year ending 30th June 2024, York reported a 5% increase in revenue and a significant turnaround in headline earnings per share (HEPS), which rose to 30.11c compared to a loss of 75.89c in the previous period. The main contributor to this profit was a R254.6 million revaluation of the company’s "biological assets," likely referring to the value of its forests.
With an average daily trading volume of approximately R94,000 worth of shares, York Timber is a practical option for small private investors. Technically, the share had been on a downward trend since early 2022. We recommended waiting for a clear break through its downward trendline, which occurred on 19th April 2024 at 165c per share. Since then, the share has risen to 241c, reflecting strong recent performance.
However, the company remains a volatile, construction-linked stock, and investors should carefully monitor its exposure to the broader economic environment and the construction sector’s performance.
