Mustek expects big earnings loss – MyBroadband

Mustek has released a trading statement for the year ended 30 June 2024, warning of significant earnings losses compared to the previous year.

The assembler and distributor of personal computers and associated ICT products expects its headline earnings per share to be between 70% and 80% lower than in 2023.

At the same time, it expects basic earnings per share to be between 85% and 95% lower than last year.

“Mustek’s headline earnings per share is expected to be between 70% and 80% lower than reported in the comparative period at between 75.00 cents and 112.50 cents (30 June 2023: 374.99 cents),” it said.

“Basic earnings per share is expected to be between 85% and 95% lower than reported in the comparative period at between 18.63 cents and 55.89 cents (30 June 2023: 372.61 cents).”

Mustek attributed the difference between headline and basic earnings per share to an impairment of its investment in Zaloserve (Sizwe IT Africa).

Zaloserve has been classified as an asset held for sale as of 30 June 2024.

Mustek also said the abrupt and extended suspension of load-shedding hurt its growth in 2024.

The company’s backup power products are among its most popular offerings.

“The operating environment for the year ended 30 June 2024 was marked by tough economic conditions and cautious market sentiment leading up to the general elections in South Africa,” said Mustek.

“Prevailing uncertainty froze corporate and government spending and the unexpected abatement of load-shedding abruptly ended the renewable energy boom, which fuelled our growth last year.”

To this end, Mustek says it faces a challenging situation as demand for green energy products has plummeted, and it still holds surplus stock at high interest rates.

Despite the poor performance in 2023/24, many analysts believe Mustek still offers a great investment opportunity.

Protea Capital Management CEO Jean Pierre Verster explained Mustek is a small-cap stock that will strengthen as the local market becomes more positive.

Mustek’s low value makes it an acquisition target, and many companies may see it as an opportunity to buy the company at a bargain price.

Umthombo Wealth chief investment officer Alex Duys explained that although Mustek is taking pain because it overstocked on power backup products, there is still demand for these products. It is still selling them, albeit at lower margins.