Enterprise Outsourcing Holdings (EOH) was Africa's largest information technology company with involvement in almost every aspect of computer applications. At one point, the company had 11,000 staff members, but that has now been reduced to 6,151. It was, until August 2015, the darling of the JSE because it had a long track record of steadily improving profits. It made a peak of R178 per share at a P:E of 35. An unsuccessful attempt to exceed that high (i.e., a double top) came a year later in September 2016, and since then, the share has fallen steadily to reach a low of 146c in February 2023.
This fall was initially accompanied by allegations that the company was involved in and owed its success to state capture in collaboration with the Guptas. The CEO and founder, Asher Bohbot, resigned in May of 2017 and handed over to Zunaid Mayet, who has now handed over to Stephen van Coller. Usually, when a company is run by a strong charismatic leader and that leader (like Bhobot) resigns, it is time to sell the share.
The company's 200 subsidiaries have been consolidated into three divisions with centralised debt collection and procurement. On 6th July 2021, Business Day reported that EOH could possibly be "blacklisted" by the government as a result of its past tender frauds. This would obviously be very negative for the company.
On 11th November 2022, the company announced a R500m rights issue and a R100m private placement mainly to reduce debt, and on 13th February 2023, it announced that the offer had been 135.8% over-subscribed. In its results for the six months to 31st January 2024, the company reported revenue of R3.1bn, slightly down on the previous period's R3.2bn. The company made a headline loss per share of 11c compared with a loss of 17c in the previous period.
The company said, "Operating costs continue to be a core focus, and EOH is on track to eliminate at least R50 million from the FY2023 cost base, on an annualised basis, as part of the efficiency strategy. The Group's interest charge decreased to R68 million (HY2024) from R102 million (HY2023), as a result of the R600 million capital raise and the refinancing of consortium facilities with a single bank."
On 31st May 2024, the company announced the resignation of various directors and the appointment of Marius de la Rey as interim CEO. Technically, the share is still falling as investors wait for the company to reduce debt and re-invent itself. To us, it looks like the EOH share may have consolidated at lower levels and now be in a new upward phase.
This fall was initially accompanied by allegations that the company was involved in and owed its success to state capture in collaboration with the Guptas. The CEO and founder, Asher Bohbot, resigned in May of 2017 and handed over to Zunaid Mayet, who has now handed over to Stephen van Coller. Usually, when a company is run by a strong charismatic leader and that leader (like Bhobot) resigns, it is time to sell the share.
The company's 200 subsidiaries have been consolidated into three divisions with centralised debt collection and procurement. On 6th July 2021, Business Day reported that EOH could possibly be "blacklisted" by the government as a result of its past tender frauds. This would obviously be very negative for the company.
On 11th November 2022, the company announced a R500m rights issue and a R100m private placement mainly to reduce debt, and on 13th February 2023, it announced that the offer had been 135.8% over-subscribed. In its results for the six months to 31st January 2024, the company reported revenue of R3.1bn, slightly down on the previous period's R3.2bn. The company made a headline loss per share of 11c compared with a loss of 17c in the previous period.
The company said, "Operating costs continue to be a core focus, and EOH is on track to eliminate at least R50 million from the FY2023 cost base, on an annualised basis, as part of the efficiency strategy. The Group's interest charge decreased to R68 million (HY2024) from R102 million (HY2023), as a result of the R600 million capital raise and the refinancing of consortium facilities with a single bank."
On 31st May 2024, the company announced the resignation of various directors and the appointment of Marius de la Rey as interim CEO. Technically, the share is still falling as investors wait for the company to reduce debt and re-invent itself. To us, it looks like the EOH share may have consolidated at lower levels and now be in a new upward phase.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.