Our opinion on the current state of AFINE(ANI)Afine (ANI) is a real estate investment trust (REIT) formed in 2021, specializing in acquiring petrol stations. The company acquired five petrol stations in February 2021 and two more in May 2021. In its results for the year to 29th February 2024, the company reported revenue up 2.7% and headline earnings per share (HEPS) down 4.1%.
The company said, "Afine’s balance sheet comprised assets of R408.2 million at year-end, consisting of 10 service stations valued at circa R397.8 million. This showed an increase of 11.6% over 2024. Operating profit before fair value adjustments and tax amounted to R38.9 million. Basic earnings were 94.70 cents per share, a very pleasing increase of 176.66% over the previous period. The growth can be attributed to a Fair Value Adjustment in investment property."
Despite these financial results, the company has less than R1,000 worth of shares changing hands each day on average, which makes it completely impractical for private investors. The low trading volume indicates a lack of liquidity, which can pose significant risks for investors looking to enter or exit positions in the stock.
Key Points for Investors:
1. Specialization in Petrol Stations: Afine focuses on acquiring petrol stations, providing a niche but potentially stable revenue stream.
2. Improving Financials: The company reported an increase in revenue and a significant increase in basic earnings per share due to fair value adjustments.
3. Low Trading Volume: The very low average trading volume makes the share impractical for private investors due to liquidity risks.
4. Balance Sheet: The balance sheet shows a healthy increase in assets, driven by the valuation of their petrol station investments.
Conclusion:
While Afine has shown improvement in its financial results and asset valuations, the extremely low trading volume makes it an impractical investment for private investors. The lack of liquidity poses a significant risk, as it can be difficult to buy or sell shares without impacting the share price. Investors should consider these factors and the niche nature of Afine's business before making any investment decisions.
