WHK Group
Recommendation
WHK Group has provided a mildly disappointing market update, sending its shares down more than 3%. The announcement noted ‘some principal departures’, ‘challenging’ business conditions and full-year earnings before interest, tax and amortisation ‘slightly ahead’ of 2012, weighted 45% to the first half and 55% to the second.
The second half weighting had been previously flagged and we had only been expecting a small amount of EBITA growth, but the tone of the announcement was certainly negative.
The share price fall, though, probably has more to do with what wasn’t said. The last we heard, WHK was in (‘very early stage’) merger talks with SFG Australia and the market seems to have taken the view that no news is bad news on that front.
That may be right, but our interest in the company is based on value rather than any merger speculation. The share price is down 8% since our last update on 26 Oct 2012 (Hold – $1.06). HOLD.
Note: The Income Portfolio owns shares in WHK Group.