Our opinion on the current state of TEXTON(TEX)Texton (TEX) is a small real estate investment trust (REIT) that owns forty-eight retail, industrial, and office properties, with 55.4% located in South Africa and the remainder in the UK. After reaching a high of 1235c in March 2015, the share price steadily declined, hitting a low of 78c on 29th October 2020. The decline was compounded by a "default event" triggered by the Public Investment Corporation (PIC), which decided to "put" its 51.9 million shares on Texton. This development added further pressure on the stock.
The company has seen a revolving door of leadership, with Marius Muller being the fifth CEO in five years. On 26th September 2020, the stock was noted to be trading at a fraction of its net asset value, which was over 580c at the time. However, on 29th October 2020, 28.3 million shares traded at 78c, and a day later, Texton announced a mandatory offer at 120c, causing the share to jump 47% to close at 115c. This insider trade was clearly visible in the volume chart, making it a case study of the importance of monitoring volume in small, thinly traded stocks.
In its financial results for the year ending 30th June 2024, Texton reported an 8.63% decline in property revenue and a sharp 84.76% drop in headline earnings per share (HEPS). The company acknowledged that its current liabilities exceeded its assets as of 30th June 2024. Despite these challenges, Texton managed to renew its facilities with Standard Bank and has been selling assets to improve its cash position. The directors remain confident that the company has sufficient resources to continue operating.
Technically, after reaching a high of 425c in November 2021, the share has been in a steady downward trend and remains thinly traded. Given these factors, there appear to be better property investment opportunities available on the JSE for investors.
