Our opinion on the current state of 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 year to 30th June 2023 the company reported property revenue down 10,36% and headline earnings per share (HEPS) down 45,75%. The company's net asset value (NAV) increased 5,46% to 619,37c per share. The company says the fall in reveneu was due to, "continuous increases in interest rates, persistent inflation, and ongoing load shedding in South Africa". Technically, the share reached a high of 425c in November 2021 and has been falling steadily since then in what looks like a new downward trend - but it remains thinly traded.