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4-Traders Homepage  >  Equities  >  Xetra  >  Steinhoff International Holdings    SNH   NL0011375019

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Steinhoff International : scandal knocks $12 billion off value in blow to tycoon Wiese

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12/07/2017 | 08:38pm CET
FILE PHOTO: South African magnate Christo Wiese, Steinhoff's largest shareholder and chairman, listens during an interview in Cape Town

Shocked Steinhoff shareholders have wiped more than $12 billion off its value since it revealed "accounting irregularities" and parted ways with its chief executive, in a dramatic fall from grace for the South African retailer.

Once a must-have for investors who backed its reinvention as a retail empire including brands such as Mattress Firm and Poundland under veteran CEO Markus Jooste, Steinhoff <SHFFp.J> (>> Steinhoff International Holdings) shares fell by 43 percent on Thursday, compounding the previous day's more than 60 percent fall.

This collapse leaves South African tycoon Christo Wiese, Steinhoff biggest shareholder and chairman, seriously out of pocket, eroding more about $2.8 billion of his net worth.

It also prompted an urgent call by South Africa's Finance Minister Malusi Gigaba for pension fund managers to report back on their exposures to the sudden sell-off, saying that the accounting issue was a "grave concern".

South African Deputy President Cyril Ramaphosa said the Steinhoff scandal was "catastrophic".

"It is catastrophic is that it destroys trust, it destroys confidence in the corporate sector," Ramaphosa said on Talk Radio 702.

South Africa's Public Investment Corporation (PIC), the retailer's second-largest shareholder, said the allegations against Steinhoff were "serious concerns".

The PIC, which manages civil servants' pension funds, said in a statement it holds around 10 percent of Steinhoff's stock.

The shares closed down 43 percent at 10 rand in Johannesburg and were down more than 40 percent in Frankfurt, where it has had its primary listing since 2015.

Steinhoff has responded by putting 76-year-old Wiese, one of the most respected business leaders in South Africa, in charge for now and calling in PwC to investigate the accounting problems, while also seeking to reassure investors by saying it has enough liquidity to fund its existing operations.

Wiese, who describes himself as a "realist, pragmatist", started his budget clothing retailer Pepkor in the 1960s, in Upington on the southern edges of the Kalahari desert.

He studied law in Stellenbosch, a close-knit town dominated by Afrikaans-speaking whites, but now lives in Clifton, an affluent area of Cape Town overlooking the Atlantic Ocean and is best known for transforming budget grocer Shoprite (>> Shoprite Holdings Ltd) from just six shops in the 1970s to hundreds of stores across Africa.

SHOPPING SPREE

Wiese and Jooste were instrumental in reinventing Steinhoff, turning it from a modest distributor of furniture made in communist era eastern Europe to a global household goods retailer, vying for market share with the likes of IKEA.

Steinhoff has been on shopping spree since 2011 when it took over French furniture retailer Conforama. Last year's string of acquisitions included Mattress Firm and Poundland, thrusting it firmly on to investors' radar screens.

"Whether Steinhoff's zealous expansion tactics amount to a winning or losing strategy really does depend on the outcome of the investigation," said Erika Sirimanne, Head of Home and Garden Research, Euromonitor International.

Steinhoff has been under investigation for suspected accounting irregularities by the state prosecutor in Oldenburg, Germany since 2015.

Four current and former managers are under suspicion of having overstated revenues at subsidiaries, German prosecutors said this week.

Steinhoff has previously said that move related to whether revenues were booked properly, and whether taxable profit was correctly declared.

(Reporting by Tiisetso Motsoeneng and Victoria Bryan; Additional reporting by TJ Strydom and Olivia Kumwenda-Mtambo in Johannesburg; Editing by Susan Fenton/Keith Weir/Alexander Smith)

By Tiisetso Motsoeneng and Victoria Bryan

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Financials (€)
Sales 2017 19 812 M
EBIT 2017 1 846 M
Net income 2017 1 469 M
Debt 2017 5 188 M
Yield 2017 22,2%
P/E ratio 2017 1,75
P/E ratio 2018 1,52
EV / Sales 2017 0,38x
EV / Sales 2018 0,33x
Capitalization 2 418 M
Chart STEINHOFF INTERNATIONAL HO
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Steinhoff International Ho Technical Analysis Chart | SNH | NL0011375019 | 4-Traders
Technical analysis trends STEINHOFF INTERNATIONAL HO
Short TermMid-TermLong Term
TrendsBearishBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 7
Average target price 5,00 €
Spread / Average Target 772%
EPS Revisions
Managers
NameTitle
Christoffel F. Hendrik Wiese Executive Chairman
Daniël Maree van der Merwe Group Chief Operating Officer
Andries Benjamin la Grange Group Chief Financial Officer
Fredrik Johannes Nel Financial Director
Deenadayalen Konar Deputy Chairman-Supervisory Board
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