Grindrod

With respect to the impending Primary Listing of Grindrod Shipping on the NASDAQ (18 June 2018) and Secondary Listing on the JSE (19 June 2018) the following is relevant:  

I get the sense that the market is struggling to price both Grindrod and Grindrod Shipping ahead of corporate action that will see the Shipping assets listed as a separate company.

• The share price has reacted oddly and I see value at R8,60.  

• Last day to trade in order to be recorded for the distribution was 12 June and we have seen price action leading up to this and now today. Listing date on NASDAQ 18 June 2018 and inward listing on JSE 19 June 2018.

• Issued shares of GSH (Shipping) is 19,1 million with GND remaining 762,6 million. So at a share price of R8,60 per share Grindrod ex the assets for sale is only R6,5 billion.  

• Shipping is valued at $320,7 million, hence $16,82 per share. For GND shareholders, Shipping was roughly 35% of the Group with an indicative market value pre the spin-off for GSH at around R4 billion.

• $320,7 million is in line with GSH shareholders equity and so net asset value. This is a fair price for the Shipping assets with no premium apportioned.    

• NAV for the Group I’ve had in round numbers at R14 billion or around R18 per share with GSH at R4 billion (R5 per GND share) and remaining Grindrod at R10 billion (R13 per GND share).  

• GSH, incorporated in Singapore, is unbundled as a dividend so there are no tax implications as it is capital.

• A NASDAQ listing will possibly help with price discovery as the shipping market is better understood, with approximately 40 marine transport companies to compare against.

• There is possible further value unlock if Freight and Financial Services are listed separately or subject to a trade sale.

• Balance sheets are sound and there is no debt.  

• I continue to see fundamental value in Grindrod.

Wishing you profitable investing, until next time.

Mark N Ingham