Our opinion on the current state of CGN

Cognition Holdings operates as a conglomerate specializing in agency-based payment systems, fax to email services, knowledge creation, and management. The company positions itself as a multi-disciplinary entity that provides a wide array of services to the Fast Moving Consumer Goods (FMCG) sector, media, and digital agencies. For the six-month period ending on 31st December 2023, Cognition reported a decrease in revenue by 8.6% but saw a significant increase in headline earnings per share (HEPS) by 272.7%. Additionally, the company's net asset value (NAV) experienced a 4% increase, reaching 104.98 cents per share.

The decline in revenue was noted specifically in the Campaign Management and Research and Insights divisions, whereas the Channel Incentive unit saw a notable recovery when compared to the same period in the previous year. This recovery was attributed to a strategic shift in the services offered to clients, moving away from traditional channel incentives towards more innovative solutions.

Despite these financial results and strategic shifts within its business units, Cognition faces a notable challenge related to its share liquidity. The average daily trading volume of approximately R10,000 renders the share highly illiquid, making it a challenging investment for private investors seeking practical entry and exit points in the market. This low trading volume could significantly impact investors' ability to buy or sell shares without affecting the market price, thereby limiting its attractiveness as an investment option despite the company's operational achievements and strategic realignments.