The Johannesburg bourse is not recognised as a home for high quality technology players but Capital Appreciation appears to be making some headway for investors.
On Monday 7 May 2018, the company released a trading update suggesting that earnings would rise significantly. The share rose 10% with 417 243 shares changing hands.
Capital Appreciation was the first of the so-called “SPACs” (Special Purpose Acquisition Company) to list on the JSE with the company raising R1bn on listing. The purpose behind the listing was to create a vehicle to raise capital to invest in high-growth South African technology businesses in the financial technology (“FinTech) space.
The company acquired African Resonance, Dashpay and Synthesis Software Technologies in February 2017.
The acquisitions were completed in May 2017.
The trading statement released on 7 May 2018 indicated that Earnings Per Share and Headline Earnings Per Share would rise to 9c and 9.4c / share respectively. This compares positively to the 3.14c/share reported in the previous year.
It should be noted that this figure is based on 11 months of earnings as the acquisitions were only finalised at the tail-end of May 2017.
This would suggest that the company is trading on an earnings multiple of around 9 times earnings (for 11 months).
Full-year results and the dividend
Capital Appreciation will release full-year results on 16 May 2018. To register for the event, you can click here.
One area where investors will be focused is around the dividend policy going forward. The company declared a 2c/share interim dividend in November 2017. Investors will be looking to management to identify whether there will be regular dividends as part of the strategy for growing shareholder wealth or whether management can identify further investment opportunities.