The earnings before interest, tax, depreciation and amortization (EBITDA) line was already on a southward trail from 2013.
Both the QSR and the distribution group were operating at higher cost bases which were weighing on overall profitability. The subsequent restructuring exercise saw the QSR business record a 7.3% growth in profit before tax in 2015.
Using simple market capitalisation valuation which takes into account the company’s issued shares against the prevailing counter’s market price it is interesting to note that Innscor has indeed lost value on spinning off units.
The ZSE on average has been on a decline, with the benchmark industrial index having shed 14% since the year began. This is mainly due to the dearth in demand for equities by either foreign or local investors. Only a few companies are reporting improved profitability due to a weakening macro environment.
It therefore follows that Innscor’s loss in value is not only as a result of spinoffs but also attributable to the general discounting of the ZSE.
But even if the average discount is taken into account, Innscor is still worse off after unbundling. –
By Respect Gwenzi for The Source
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