GNDE - Grindrod trading is all shipshape

24/03/2004 12:03:42

Grindrod trading is all shipshape
March 24, 2004

By Samantha Enslin

Durban - The directors of Grindrod, the shipping and logistics group, have sold over 3 million shares this month.

But this is not a sinister indication of company performance.

Rather, the directors were taking advantage of the stock's strong performance and creating an opportunity for institutional investors to get hold of the share.

Ivan Clark, the group managing director of Grindrod, said yesterday some directors had originally bought shares with borrowed money and were now using the higher share price to pay off the debt.

This is despite forecasts by some analysts that the share will rise from its current level of R19.50 to R25 in the next six to 12 months.

Strong earnings growth, a road show and the consolidation of N and ordinary shares have placed Grindrod on institutional investors' radar screen.

Both last month and this month, trading volumes in the company's stock picked up.

This has been driven in part by a spate of sales by directors who were taking advantage of the strong share price but the trade is supported by interest from institutional investors.

Clark said: "If you look at recent volumes, it is unlikely to be retail investors buying the stock."

According to Profile's Stock Exchange Handbook, trade in Grindrod last year averaged 72 492 shares a week. About 3.9 percent of the stock was traded last year.

Last week 3.6 million shares were traded and the week before over 323 000 shares changed hands. Yesterday almost 50 000 shares traded.

The current strong interest in Grindrod is based on its past performance and an upbeat outlook for the next few years, as the company is expected to benefit from strong shipping markets.

At the end of February Grindrod reported a 45 percent rise in attributable income to R240 million, despite its exposure to the rand.

Some analysts have forecast earnings to rise an average of 30 percent for next two financial years, based on Grindrod's ability to take advantage of a surge in freight rates because of the shortage of vessels worldwide.

It is also strengthening its land-based businesses to ensure sustainable long-term earnings.

The shares closed 60c lower yesterday at R19.50.

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