Our opinion on the current state of YRK

York Timber Holdings (YRK) is a prominent forestry company in South Africa, boasting ownership of plantations, processing plants, and a wholesaling distribution network. Established by Russian immigrant Herman Katzenellenbogen in 1916, the company has been listed on the JSE since 1946 and holds a significant position in the country's plywood and timber market.

Over the years, York Timber Holdings has faced challenges stemming from the construction industry's downturn, particularly since the onset of the sub-prime crisis in 2008. Despite reaching a peak in July 2007 with shares valued at R40, the company has experienced a downward or sideways trend in its share price since then.

Recent announcements have further impacted investor sentiment. A strike at the company's Escarpment operations, responsible for 51% of its revenue, was reported on May 13, 2022, contributing to production disruptions. Additionally, a decision to conduct a rights issue to raise R250 million, announced on December 5, 2022, led to a sharp decline in the share price.

In its financial results for the year ending June 30, 2023, York Timber Holdings reported a 9% decrease in revenue and a headline loss per share of 76c, compared to a restated profit of 53c in the previous period. The company attributed the loss to various factors, including costs related to load shedding, diesel, external log purchases, and reduced sales, resulting in a decline in net asset value (NAV) from 857c to 579c per share.

Despite these challenges, York Timber Holdings remains accessible to private investors, with approximately R183,000 worth of shares traded daily. However, the company's technical outlook indicates a downward trend since the beginning of 2022, underscoring its volatility and its sensitivity to construction-related factors.

In a trading statement for the six months ending December 31, 2023, the company projected a further decline in headline earnings per share (HEPS) by 62% to 67%, citing expectations of significantly lower cash generated from operations compared to the previous comparative period. Investors should consider these factors when evaluating York Timber Holdings as an investment opportunity.