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#4081 Bullhunter

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Posted 06 December 2017 - 11:34 AM

Following media reports overnight, Steinhoff has released a SENS statement today indicating that it has found new information relating to accounting irregularities, prompting it to cancel its results release today and delay the audited results release until further notice. The CEO, Markus Jooste, has stepped down with immediate effect. Christo Wiese is taking over as executive chairman. We hold Steinhoff shares on behalf of our client base. To place this in context, this company is widely owned by institutional investors in South Africa and as of yesterday was a top 10 company in the JSE SWIX All Share index.

At this stage, there are clearly more unknowns than known information pertaining to the group’s real financial position and operations. It is clear that fraud remains a distinct possibility given the above information.

What we do know is the following:

  • The group has approximately R21 per share of value in the listed stakes that it owns (STAR, PSG and KAP International), per closing prices of these shares on 5th December. It is likely there is some contagion in these assets, and indeed these shares are experiencing selling pressure today.
  • There is net debt on Steinhoff’s balance sheet of ~R100bn, or R23 per share.
  • Aside from its operational household goods retail and manufacturing assets, the group is a significant investor in retail properties in Europe. While we should be suspicious of its reported segmental accounting, it disclosed €243m of operating income from properties in FY16. This could yield a value of €4bn, or R15 per share, and could be regarded as a source of liquidity should the group be broken up into its component parts.
  • This leaves the core operating assets, of which we can be highly uncertain of the value given likely fraud. The key concern investors will have now is that, short of a fire sale of the group’s non-controlled assets to reduce debt, the confidence of debt funders will have all but evaporated and this is likely to place pressure on the group’s ability to fund itself in the normal course of business. A negative operational impact is a certainty.

At the time of writing, the share price is R23.00 this morning and is likely to be highly volatile. We have taken an in-principle decision to exit our holdings given the above developments, but given the share price response this morning we will do this in a manner that maximises value for our clients. It is likely that fundamental value is above current levels – even in a break-up of the business scenario – but the company has clearly lost the trust of institutional investors (ourselves included) and this could weigh on listed values for some time.


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#4082 LiveInExcess

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Posted 06 December 2017 - 11:23 AM

This has been incredible, spent the whole morning refreshing my screen........


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#4083 DividendTycoon

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Posted 06 December 2017 - 08:15 AM

The Thomson Reuters average analyst valuation for Steinhoff is R85. With the share currently trading at around R60 per share, this suggests that there is a one-year potential upswing of 41%.

 

https://www.fin24.co...inhoff-20171030

Wonder what the 'analysts' valuations are now?? South Africa has particularly mediocre analysts, just look at the CIL saga.


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#4084 SoleTrader

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Posted 08 November 2017 - 06:15 PM

and today did not have the courtesy to issue a sens statement regarding this....Management stinks if you ask me.


And that is why the Rupert's and the Wieses don't mix. The latter think the former are snobs and the former think the latter are cons
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#4085 Spree

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Posted 08 November 2017 - 03:32 PM

and today did not have the courtesy to issue a sens statement regarding this.Q...Management stinks if you ask me.


Agree. Their consistent reluctance to disclose information raises a lot of suspicion.

If, as they claim, the rules are unclear on whether this transaction was material and, thus, notifiable, why do they not just err on the side of caution and disclose! It makes one wonder what further skeletons are they hiding in that seemingly bottomless closet??
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#4086 Polly

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Posted 08 November 2017 - 02:27 PM

and today did not have the courtesy to issue a sens statement regarding this.... Management stinks if you ask me.
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#4087 Polly

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Posted 08 November 2017 - 11:16 AM

Why the big drop today?

You know steihhoff..always fiddling and farting with their accounts....

 

In trouble again with European financial disclosure rules.Did not tell investors about $1b in transactions with related company.


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#4088 Rulz3

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Posted 08 November 2017 - 10:39 AM

Why the big drop today?


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#4089 DividendTycoon

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Posted 03 November 2017 - 11:53 AM

The fact that the directors spent an estimated R5bn of the R16.4bn proceeds from their recent listing of Steinhoff Africa Retail on Steinhoff International tells you where the directors believe the most potential is. In particular, they believe the legal action which caused the drop in the share price is spurious and believe the share price will recover once the case is resolved (should be end of November).

On the whole I would agree with you, that is a good sign and it could be under valued. Personally I am a bit shy of Steinhoff because It is not easy to understand the accounts and they make a lot of large acquisitions, but would agree on the face of it the business is a good one.

 

The point I was making is that I take specific forecasts, like 41% gain in one year, with a large pinch of salt as nobody knows the future, and I bet those analysts would not bet their life savings on even predicting a 10% increase in the share price.


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#4090 Bullhunter

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Posted 03 November 2017 - 11:02 AM

Wonder how many of those analysts sold everything and put everything into Steinhoff with the expectation of that brilliant 41% return..

The fact that the directors spent an estimated R5bn of the R16.4bn proceeds from their recent listing of Steinhoff Africa Retail on Steinhoff International tells you where the directors believe the most potential is. In particular, they believe the legal action which caused the drop in the share price is spurious and believe the share price will recover once the case is resolved (should be end of November).


Edited by Bullhunter, 03 November 2017 - 11:03 AM.

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#4091 DividendTycoon

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Posted 02 November 2017 - 03:52 PM

The Thomson Reuters average analyst valuation for Steinhoff is R85. With the share currently trading at around R60 per share, this suggests that there is a one-year potential upswing of 41%.

 

https://www.fin24.co...inhoff-20171030

Wonder how many of those analysts sold everything and put everything into Steinhoff with the expectation of that brilliant 41% return..


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#4092 Bullhunter

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Posted 02 November 2017 - 12:59 PM

The Thomson Reuters average analyst valuation for Steinhoff is R85. With the share currently trading at around R60 per share, this suggests that there is a one-year potential upswing of 41%.

 

https://www.fin24.co...inhoff-20171030


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#4093 Blackobar

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Posted 25 August 2017 - 12:21 PM

There'll always be suckers ready to be licked, don't be that sucker.
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#4094 Shi

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Posted 25 August 2017 - 10:23 AM

Given the huge volumes this morning and the lack of price increase, it seems investors is not believing much directors put out on SENS yesterday. 


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#4095 CrescoRSA

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Posted 24 August 2017 - 04:03 PM

Wont be surprised if this one goes down to R45 in the coming weeks...bad news!!! 


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#4096 Spree

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Posted 24 August 2017 - 03:59 PM

Good point, Goliath. Thanks.

You can add EOH, another former market darling to that list!

Strange that there has not yet been any sens released by Steinhoff, to calm the market and sooth shareholders concerns!

This is when your European listing could seriously backfire -- those EU regulators do not mess around when it comes to issuing fines!
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#4097 Goliath

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Posted 24 August 2017 - 02:48 PM

Do you guys think that this is a good buying opportunity, or should we wait for more clarity?

If the company is found guilty, what are the potential ramifications and effect on the company and share price? Are there more skeletons in the closet?

Or, is this a company we should steer clear of?

 

If you're a gambling man why not? But the market doesn't like something like this, just look at Pinnacle and how long it took for them to recover from dodgy directors..


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#4098 Spree

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Posted 24 August 2017 - 01:01 PM

Do you guys think that this is a good buying opportunity, or should we wait for more clarity?

If the company is found guilty, what are the potential ramifications and effect on the company and share price? Are there more skeletons in the closet?

Or, is this a company we should steer clear of?
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#4099 Rulz3

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Posted 24 August 2017 - 11:32 AM

A translation from a German magazine below:

 

The public prosecutor's office in Oldenburg is investigating the chairman of the furniture manufacturer Steinhoff, Markus Jooste, because of the suspicion of the balance sheet forgery. This is reported by the manager magazine in its new edition, which will be available on Friday, August 25th. In addition, another high-ranking group manager as well as two other men from the MDax Group, the second largest European furniture manufacturer behind Ikea and the "Poco" furniture market, were accused.

The public prosecutor's office, which has been established since 2015, has the suspicion that "excessive revenues have been included in the balance sheets of group-owned companies". The background is contracts for the sale of intangible assets and / or company shares. Sellers and buyers were companies that were to come from Steinhoff. According to the public prosecutor's office, the various transactions are "three-digit millions". She rejected a comment on the names of the accused.

 

During raids in the offices of the Steinhoff-Europa headquarters in Westerstede as well as in the private homes of two Steinhoff confidants, the investigators ensured documents, which are supposed to have been signed by Andreas Seifert, co-managing director of the XXXLutz furniture chain.Seifert told the manager magazine that he had "never seen the papers before and had not signed them". He filed a criminal complaint for counterfeiting.

 

The Steinhoff Group, which also includes the German Möbeldiscounter Poco, employs more than 130,000 people on five continents. In the first six months of the current financial year, the company's financial position has deteriorated. The operating profit margin fell from 11.6 to 8.8 percent. Net debt fell from 2.9 to 6.5 billion euros.

Thank you for the info. Was worried it has something to do with Shoprite as well.


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#4100 DividendTycoon

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Posted 24 August 2017 - 10:21 AM

Anyone know why the sharp sell-off all of a sudden??

A translation from a German magazine below:

 

The public prosecutor's office in Oldenburg is investigating the chairman of the furniture manufacturer Steinhoff, Markus Jooste, because of the suspicion of the balance sheet forgery. This is reported by the manager magazine in its new edition, which will be available on Friday, August 25th. In addition, another high-ranking group manager as well as two other men from the MDax Group, the second largest European furniture manufacturer behind Ikea and the "Poco" furniture market, were accused.

The public prosecutor's office, which has been established since 2015, has the suspicion that "excessive revenues have been included in the balance sheets of group-owned companies". The background is contracts for the sale of intangible assets and / or company shares. Sellers and buyers were companies that were to come from Steinhoff. According to the public prosecutor's office, the various transactions are "three-digit millions". She rejected a comment on the names of the accused.

During raids in the offices of the Steinhoff-Europa headquarters in Westerstede as well as in the private homes of two Steinhoff confidants, the investigators ensured documents, which are supposed to have been signed by Andreas Seifert, co-managing director of the XXXLutz furniture chain.Seifert told the manager magazine that he had "never seen the papers before and had not signed them". He filed a criminal complaint for counterfeiting.

 

The Steinhoff Group, which also includes the German Möbeldiscounter Poco, employs more than 130,000 people on five continents. In the first six months of the current financial year, the company's financial position has deteriorated. The operating profit margin fell from 11.6 to 8.8 percent. Net debt fell from 2.9 to 6.5 billion euros.


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