Smaller tech stocks hammered

Stocks listed on the Alternative Exchange (AltX) have been hardest hit during the recession, according to information provided by the JSE.

In the past five years, 11 technology companies have listed, nine of these on the junior bourse. The JSE's AltX is the bourse's offering to enable small to medium-sized and family-owned businesses to list and raise capital.

Chris Gilmour, Absa Investment analyst, points out that the smaller companies are perceived as being riskier investments, especially during a downturn. He says investors would rather move their savings into money, or into larger companies such as those in the top 100 on the main board.

Gilmour adds the AltX board has been under pressure in general as a result of this trend. “It is largely a perceived riskiness of the smaller capitalised companies and this results in a move out by investors.”

However, he adds, this provides an opportunity for investors, who have done their homework, to benefit from the lower share prices.

The hardest hit AltX-listed company is IFCA Technologies, which listed in December 2006, at a share price of 57c. It was trading at 7c at the end of July, a drop of 87.7%. IFCA offers IT solutions, with an enterprise development, implementation and support capability. The share closed at 7c last night.

The next casualty is Total Client Services, which listed in April last year at 47c and has dropped 87%, to 6c, and has since lost more ground to close at 5c yesterday. Total provides technology, proprietary application software and administration services as an integrated solution to local and provincial governments for law-enforcement purposes, such as road traffic equipment to measure speed.

Antennae design company Poynting Holdings listed at 120c last July and dropped 82.5%, to trade at 21c by the end of July, before recovering to close last night at 35c.

The Huge Group lost 74.6% of its opening share price, which dropped from 300c to 76c between when the company listed in August two years ago and July this year. It closed yesterday at 75c.

Holding company Simeka Business Group, which listed as Xantium Technology Holdings, before merging with SAB&T Ubuntu, lost 53%. It listed at 60c in August 2004 and closed at 28c at the end of July, and ended yesterday at 29c.

However, software company Alliance Data Corporation has seen its share price improve 127%, to close in July at 295c. It listed in March 2005 at 130c and ended yesterday at 280c.

Vodacom, which listed on the main board in May at 5 950c, has only lost 3.7% of its share value. It has since rebounded somewhat, and ended yesterday at 5 800c.

Telemasters gained 14.2% between listing in March 2007 and July, when it closed at 185c.The share ended yesterday at 175c, having lost a bit more ground.

Blue Label Telecoms listed on the main board in October 2004 at 900c and lost 39%, to close at 545c on the last day of July, and at 550c last night.

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