IT service company Gijima finds itself in a hole as investors struggle to see past reputational damage that has already been inflicted on the company over the past while.
Shares in Gijima declined 10% in trade on Tuesday (5 March), as the company recently forecast further losses for the six months ended December 2012.
With a share price at 18 cents, Gijima’s market cap is currently at R174.30 million, coming off a five-year best of R1.27 per share in February 2010.
The group has also halved its value since January, when it traded at 36 cents, and it is also down from 58 cents a year ago.
The company was due to publish its results in February, but they were cancelled with a new date yet to be established.
“Gijima’s recent trading statement indicated that the turnaround being attempted at the Group continues to disappoint in both timing and quantum,” said Keith McLachlan, a senior equities analyst of small-and mid-caps at Thebe Stockbroking, and financial blogger at SmallCaps.co.za.
In February, Gijima said it expects headline earnings per share for the six months ended December 2012, to reduce to a loss of between 10.30 and 10.90 cents from HEPS of 3.11 cents in 2011.
Gijima’s reported basic earnings per share for the six month period in 2012 are expected to reduce to a loss of between 2.25 cents and 2.85 cents from reported basic EPS of 3.10 cents in 2011.
In its final results ending June 2012, Gijima reported a decline in revenue to R2.5 billion (R2.6 billion).
Ebitda amounted to a loss of R517,000, from a prior loss of R211.8 million, and an operating loss of R49.1 million, from a loss of R258.2 million before.
“The market is reacting to this by revising its expectations for the Group downwards, which results in the selling pressure of the Group’s stock in the market and the falling share price,” McLachlan said.
“Overall, service businesses have the potential to turnaround quickly, once costs are managed down to where sustainable revenues are siting. Unfortunately, the reputational damage appears to have been done as well as the worrying implications of its sudden sale of its MineRP business,” the analyst said.
The group offloaded its mining technology and consulting businesses in November 2012.
“I remain fairly pessimistic regarding Gijima’s ability to trade itself out this hole it finds itself in,” McLachlan said.
Jonas Bogoshi, Gijima’s former CEO stepped down from the group last year after five years at the helm. Eileen Wilton was then appointed as interim CEO, from her prior position as chief operating officer (COO) at the group.