Avior Capital Markets - EOH Holdings Ltd. (10JC) EOH | Work in progress

Report

Avior Capital Markets

Ruhan Du Plessis

EOH | Work in progress

FY'18 was the most difficult year in EOH's 20-year history, given news allegations of corruption in government tendering, the reversal of the GCT acquisition, its first decline in HEPS and a 78% decline of its share price. GCT cost EOH close to ZAR400m in losses recognised in H1'18 with a further c.ZAR400m in receivables that are unlikely to be recovered, in our view. In total, EOH incurred c.ZAR890m in once-off losses from the GCT reversal and restructuring of the Group during FY'18. The Group has effected changes in governance and its strategic positioning, with seven executive directors resigning and the appointment of a new CEO. Despite operational challenges, EOH remains dominant in the ICT sector due to strengthened BBBEE credentials, breadth of service and unique intellectual property. We believe the current share price undervalues the normalised organic growth profile of EOH.

12/10/2018 12 EN

Underlying

EOH Holdings Ltd.

EOH Holdings is engaged in the provision of business and technology services. Co. develops business and information technology strategies, supplies and implements services and manages enterprise-wide business systems and processes for medium to larger clients. Co. operates within three segments: Infrastructure, which is engage in the sale of infrastructure products; software, which includes new software sales and maintenance; and services, which is engaged in the provision of services including consulting, systems implementation and integration and managed services. Co. operates in South Africa, Africa and the U.K.

See profile

ZAE000071072 Johannesburg Stock Exchange South Africa

Provider

Avior Capital Markets

Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.

Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.

Avior has proven that by working closely with our clients we can mutually develop dominant positions in certain sectors, going from strength to strength. Avior has a dedicated ESG team, having been ranked #1 in Corporate Governance research since 2008.

See profile

Analysts

Ruhan Du Plessis

Other Reports on these Companies

Vermilion Research

Vermilion Compass: Weekly Equity Strategy

Major Base Supports Holding Following last week's pullback, a consistent theme we are seeing is that many broad market indexes and Sector ETFs are holding above (and bouncing at) major base supports. As long as these base supports continue to hold, it tells us this is likely just a normal pullback within the overall bullish trend. Important supports that we need to see hold in order to remain bullish include 4600 on the S&P 500 and 14,400 on the Nasdaq Composite. Pullbacks to Base Supports. Broad market indexes and Sector ETFs that are holding above major base supports include 14,400 on the ...

EUR 45.61

January 9, 2024 January 9, 2024 1 EN

Avior Capital Markets

EOH | Standing, but forced into a corner

EOH's FY'19 earnings included R3.2bn of once-off costs to accurately represent the state of the balance sheet and businesses, following the previous management team's inappropriate business practises. Current management highlights R3.7bn of suspicious acquisitions and transactions between FY'13 and FY'17, which required R3.4bn of debt and generated no cashflow for the Group. We do not believe the existing businesses can service the debt due to further requirements to manage and close-out non-profitable businesses and projects in Nextec.

October 22, 2019 October 22, 2019 9 EN

Avior Capital Markets

EOH | Removing the gangrene

After 20 years of expansion and cR7.6bn of acquisitions, EOH recorded R3bn of once-off costs and impairments in its H1'19 results as it reassessed its operations. Positively, with new executive management, the Group is rationalising its portfolio for more sustainable growth. EOH will dispose of its low margin and loss-making businesses to improve cash generation. The disposals should reduce group revenue by c.21% (R3.4bn of annual revenues), with management signalling that it could raise R1bn in proceeds and increase group EBITDA by c.R400m on an annualised basis to R1.2bn. In our view, th...

April 30, 2019 April 30, 2019 13 EN

Tiger Brands | ESG | Pressed to execute

TBS receives a corporate governance score of 3.37 out of 5 (FY '18: 3.42) and is rated as â€˜good'. TBS receives an ESG risk score of 2.6 (FY '18: 2.6) which we consider moderate. As in FY '18, there were various changes to the Board which raises corporate governance concerns surrounding succession planning and the execution of strategies. Post year-end, L Mac Dougall retired as CEO of the Group. N Doyle has become the new CEO of the Group as of 1 Feb '20. We note the corporate governance concerns around the appointment of N Doyle given that he left the Group at an important juncture in FY...

February 7, 2020 February 7, 2020 15 EN

Ayan Ghosh

Ayan Ghosh

SA Investment Strategy | Review of January 2020 for SA investors: Coronavirus weighs on the ZAR

From an SA asset-allocation perspective, SA Bonds (ALBI +1.2%) outperformed cash (STEFI +0.6%) and equities (Capped SWIX -2.6%) in Jan â€˜20. The ZAR was the worst performing EM currency in Jan â€˜20, depreciating by 6.8% against the USD, as EM risk appetite declined, with the Coronavirus spreading further than the Sars virus, which began in 2002, likely to hit global growth. Our discussions with various corporates in China suggest that the Coronavirus will peak over the coming weeks and could take until Mar '20 to resolve. In USDs, MSCI SA (-8.8%) underperformed MSCI EM (-4.7%) in 2020, as ...

February 5, 2020 February 5, 2020 9 EN

Harry Botha

Harry Botha

SA Banks | Low credit risk in commercial property | Time to buy SA banks

Challenging SA economic conditions bring SA REITs credit health and banks' lending to the sector into the spotlight. Our analysis in this report provides greater detail on SA banks' exposure to commercial property and listed REITs. Our stress tests highlight that SA banks' lending to listed REITs (exposed to SA or offshore operations) has been conservative to date. REITs' equity capital and diversified portfolios support the property companies' credit health. While SA banks' near-term earnings growth prospects are geared to SA economic conditions, we highlight that valuations are undemandin...

January 28, 2020 January 28, 2020 36 EN

Sign-up for free to access full reports immediately

Email Address*

Choose Password* ( 6 or more characters )

Due to regulatory restrictions regarding the distribution of financial research, this report is restricted to a specific region or investor type. Get access to exclusive reports by answering the questions below.

Select your country*

Get financial insights straight to your inbox

By clicking "register" you accept the Terms and Conditions & Privacy Policy

Already on ResearchPool?

Almost there...

Are you a professional investor?

Select your country

REGISTER

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

In order to access this report please create an account.

LOGIN

EOH | Work in progress

Vermilion Compass: Weekly Equity Strategy

EOH | Standing, but forced into a corner

EOH | Removing the gangrene

Tiger Brands | ESG | Pressed to execute

SA Investment Strategy | Review of January 2020 for SA investors: Coronavirus weighs on the ZAR

SA Banks | Low credit risk in commercial property | Time to buy SA banks

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

Sign-up for free to access full reports immediately

ResearchPool Subscriptions

Get the most out of your insights

Why subscribe?

How to subscribe

ResearchPool Subscriptions

This report is only available to subscribers

Why subscribe?

How to subscribe