I didn’t enjoy yesterday’s (February 13) SENS on Hudaco when I read that SARS wanted a vast amount from the company. Reading the report (several times), I’m reasonably confident the matter will be settled but who knows?
Investment in equities always carries some risk, and often, as in the case of Hudaco’s, sometimes alarming and unexpected. Yes, I did know there was a dispute with the SARS (it was reported in detail in the report of the financial year’s results) but the company’s management was, and still is, confident that it its tax structure valid.
The amount SARS (excluding penalties and interest) is R500m. This is more than the company’s operating profit in the last financial year.
The share price was trading around R108 before the news. Not surprisingly, the share price tumbled down to R98 at Tuesday’s market close and has lifted to R100 as I write.
I reckon the management will resolve the dispute without too much blood being shed, but there’s a probability Jean’s and my holding may need a transfusion. The latest dividend of R3,10 will be cum dividend until Friday March 1. This will relieve anaemia as we continue to hold.
I expect contrarian investors will buy, accumulate or hold the shares. Seems to me a reasonable bet.