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Send  Share  RSS  Twitter  29 Oct 2008

Finance: AltX celebrates 5 years


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AltX at the Johannesburg Stock Exchange, celebrates five years of success, both for itself as an exchange and for the 78 companies presently listed and their shareholders.

Five years ago, the announcement of AltX was met with some scepticism. “But we have proved the cynics wrong,” says Lauren Czepek, Business Development Manager at the JSE. “Although the start was slow, the momentum of listings has grown rapidly over the years. We now boast 78 listed companies with a total market capitalisation of R21 billion, with four companies – Blue Financial Services, Acc-Ross, Esor and Vox Telecom – all above the R1 billion threshold. The average market capitalisation of an AltX company is around R268 million, with the majority of companies – 16 out of the 78 – being in the construction sector.”

Czepek says that understandably, in these volatile market conditions and a global growth slowdown, companies are reluctant to list and this sentiment should change when markets recover and stabilise. “We have seen six new listings on AltX in 2008, compared with a phenomenal 37 in 2007. Companies listing last year were attracting price earnings multiples of between 8 and 10 versus this year between 3 and 5. So companies without urgent capital requirements are holding back till markets improve. Listings this year have been dual listings with no capital raising requirements, reverse listings into cash shells on the DCM and VCM and transfers to AltX.”

Share prices of AltX companies have also come down significantly in recent months, as seen in all markets across the globe, although some have pleasingly maintained their levels or even risen.

“During these times we continue to advocate the benefits of a well thought out listing as part of a strategic growth plan which includes capital raising requirements to fund expansion. We hope that delistings will be few and far between. It is possible now that company management would view present share price levels as an opportune time to buy back shares. Private equity players may also see opportunities. For companies with strong fundamentals and compelling earnings potential, it is a case of riding out the present market storm.”

Liquidity on AltX compares favourably with that of the smaller companies – with market capitalisations of below R1 billion – listed on the JSE’s Main Board. In the third quarter of this year, the smaller Main Board companies were seeing average daily trading values of R229 000 per company. The AltX companies were posting trading values of around R249 000, with average daily volumes (203 000 versus 131 000) and number of trades (7 versus 6) also higher on AltX.

Relative to the JSE’s All Share Index, AltX is a less volatile board, as with only four companies dual-listed in other jurisdictions, the AltX index composition is less exposed to the swings seen in the international markets. The AltX index continues outperforming the All Share index. Starting at a base of 2 000 points on 3 April 2006, it closed on Wednesday, 22 October 2008 at 2954.9, a return of 47.8% in this period.

The compulsory Directors Induction Programme which all directors of AltX-listed companies must attend, is growing in popularity. Czepek says even directors who have been in business for decades are surprised at what they learn on these courses and these seminars are now run in Johannesburg, Durban and Cape Town. Another compulsory requirement for AltX-listed companies is they must appoint a designated advisor. At present, there are 13 AltX-approved designated advisors offering such services.

AltX has continued with its showcase format where CEOs and other executives present their companies to investors. These no-charge events are held at least monthly in venues in Joburg, Pretoria, Cape Town and Durban and continue to attract new investors to AltX

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