So long Sekunjalo, hello AEEI

17 May 2015
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Stalwart Cape-based empowerment company Sekunjalo Investments has taken a new corporate guise – a move that has coincided with noticeable swing in fortunes for the company that in 2001 was teetering on the brink of collapse.

Sekunjalo last month changed its name to African Equity Empowerment Investments (AEEI,) a move that followed close on the heels of the retirement of founder and long-time executive chairman Iqbal Surve from the board. Surve, however, remains the majority shareholder in AEEI.

The name change, more importantly, coincides with arguably the strongest set of interim results the company has ever produced – thanks largely to a steller performance from main operational subsidiary, Waterfront-based Premier Fishing. Premier nets most of its catches from south coast and west coast lobsters (which are mainly exported to the UAE and far eastern markets,) but more recently the subsidiary has cast its nets into the pelagic, farmed abalone, hake and squid sectors.

But it’s worth noting that Premier – which ranks as the largest black owned and managed fishing group in SA – holds a dominant 60% of the south coast lobster market and 12% of the west coast rock lobster market. It also ranks as the third largest pelagic quota holder, and is ranked in amongst the top five abalone farms in South Africa.

Revenue for Premier in the six months to end February was 17% higher at R140m with earnings before interest, tax, depreciation and amortisation (EBITDA) up 14% to R26m. Operating profit was up a nifty 24% to R18.6m. History will show that Premier traditionally earns as much as two-thirds of its revenue and profits in the second half of the financial year. This suggests turnover could push close to the R400m mark, and operating profits should comfortably top R60m for the full year.

While Premier is pumping profits, AEEI is also enjoying solid performances from its technology services division, which reported interim operating profits of R12.5m from turnover of R96m. AEEI is also reaping the fruits of smart investment decisions – particularly participating in Pioneer Food group’s broad based empowerment initiative and its strategic minority stake in British Telecoms SA.

Overall AEEI is looking in fine fettle with cash flows reassuring and the balance sheet stout. In fact, the company CEO Khalid Abdullah has hinted at acquisitions in both the fishing and technology divisions in the next two years. He has targeted acquisitive growth of 10% to 20% in the medium-term.

Aside from potential acquisitions Premier is planning to crate more than 100 jobs on its new abalone farm and another 100 jobs in its Saldanha pelagic plant.

The technology division, Abdullah said, would expand its operational niche in public hospitals to seek out private sector clients as well as expand across the border into Africa markets.

The most telling pronouncement, though, on AEEI’s prospects is the fact that its share price has increased over 500% in the last year. That gives AEEI a market value of over R1,6bn – an astounding figure considering that in 2001 after the collapse of Sekunjalo’s investment in LeisureNet (the owner of the Health & Racquet Club chain) the market value was at one point less than R10m.

It’s been a gruelling road back to financial health for Sekunjalo, and it looks like AEEI is determined to make up for a lost decade.