The investment holding company has announced a healthy dividend as it battles the discount conundrum.
In 2019 and 2020, Brimstone Investment Corp elected to suspend dividends as it focused on reducing debt and conserving cash. This year, it has reinstated the dividend and will pay out R75-million, much to the delight of its retail investors who make up 80% of investors in the company, holding 40% of the shares. Until that point, the company had not missed a dividend payment in two decades.
The share closed at R8 on Tuesday, up R1.10 on the day and 22% over the past year. Brey hopes that as the dust settles on the fishing rights allocation process, the shares of subsidiaries Oceana and Sea Harvest will rebound, supporting Brimstone’s share price and net asset value. Intrinsic net asset value at year-end, 31 December 2021, equated to R13.14 per share.
“Our journey has seen us focus on paying the debt down and dealing with our problem children, the fruits of which can be seen in these results.” About 65% of Brimstone’s value is held in two listed investments – Oceana Group and Sea Harvest . Both performed well in the past year, contributing R125-million in dividends, with a final dividend of R80.9-million expected from Oceana in April.
He adds that Oceana has contributed two million hours of labour by extending its cold room facilities, which ensure that its canning operations are kept busy, even when the catch is poor. Phuthuma Nathi, the scheme that was created in 2006 to offer black South Africans the chance to own an indirect stake in MultiChoice, MTN’s Zakhele Futhi scheme and Stadio.While investors have become vocal about the investment holding company discount conundrum, Chantal Marx, head of research and investment content at FNB, has a measure of sympathy for the management teams.Very often the only option is breaking up the holding company and unbundling the underlying entities to shareholders.
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