Mustek share price hammered after poor trading statement

Mustek’s share price dropped by 9% after it warned shareholders of a 15% to 25% decline in earnings per share on Tuesday, 31 August.

Mustek enjoyed strong share price growth – from R5.73 in July 2020 to R17.34 in August – on the back of strong sales during the lockdown.

Revenue increased from R6.4 billion in FY2020 to R8.0 billion in FY2021, while headline profit grew from R89 million to R306 million over the same period.

Mustek has a good track record of consistently growing revenue and profit, but the 25.6% revenue increase over the lockdown was unprecedented.

Investors kept an eye on the company to see if it could maintain its strong financial performance in 2022, and recent data suggests that it is facing headwinds.

In a trading statement for the year ended 30 June 2022, Mustek said its headline earnings per share are expected to be between 15% and 25% lower than reported in the previous financial year.

The company expects headline earnings per share at between 331 cents and 376 cents, down from last year’s 442 cents.

Mustek added that its net asset value per share is expected to be between 2,385 cents and 2,395 cents, significantly higher than 2,046 cents as of 30 June 2021.

Investors did not take kindly to the drop in headline earnings per share, and Mustek’s share price dropped from R15.45 to R13.99 on the news. Since then, the share price has recovered somewhat to R14.20 per share.

The company expects to release its audited financial results for the year ended 30 June 2022 on 13 September 2022.