JOHANNESBURG – Reading through EOH’s trading update last week made me think of Winston Churchill’s famous quote: “If you’re going through hell, keep going.” Churchill’s first speech to the British when becoming prime minister went bluntly: “I have nothing to offer but blood, toil, tears and sweat.”
He followed that with another speech shortly after that: “…we shall fight on the seas and oceans, we shall fight with growing confidence and growing strength in the air, we shall defend our island, whatever the cost may be, we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender.”I can imagine that this is what EOH went through the past year. Two years ago the share price reached a high above R170, and in July in traded below R30. A fall from grace, fuelled by wrongdoing related to government tenders, forced the sale of directors' shareholdings and alleged fake news stories.
On top of that, Asher Bohbot stepped down as chief executive in June 2017, just days before the nightmare started. He was instrumental in building up the company from the ground into the most significant technology business in Africa.
New strategy
In March this year, EOH Holdings announced a new strategy, which centred on reconfiguring the group into two distinct and independent businesses, each with its own chief executive, unique brand and identity, business model, growth and go-to-market strategies. The ICT business now operates under the EOH brand, and the specialised solutions for high-growth industries businesses operate under the Nextec brand.
Zunaid Mayet, the successor to Bohbot, opted to relinquish his role and became the chief executive of Nextec. The EOH Holdings corporate structure is responsible for corporate finance, corporate strategy, group reporting, investor relations, risk and compliance. The appointment of Stephen van Coller as chief executive of EOH was a pleasant surprise. On the day of the announcement, the share price went up 22 percent.
Beleaguered
This month Van Coller took up his role as chief executive of EOH. He was previously MTN group vice-president for digital services, data analytics and business development – probably relieved he is leaving this beleaguered ship. He also led Barclays Africa’s corporate and investment bank for 10 years and headed Deutsche Bank’s global banking business in South Africa.
His experience is just what the doctor ordered for beleaguered EOH. At last, it seems like EOH has stepped away from the abyss. Last week’s trading update indicates the company is finally normalising. Its normalised headline earnings from continuing operations for the full year to July will decline less than initially feared. It expects a fall of between 30 and 45 percent, and revenue to increase by 8 percent to about R16 billion.
There are high expectations for what Van Coller has to offer. He has a solid reputation as a smart, talented executive with a record of stringent corporate governance. With the share price at R36 and a meagre earnings multiple, the counter seems to offer much value.
Amelia Morgenrood is a PSG Wealth financial adviser based in Pretoria. Views are of the author and not necessarily the general view of the entire PSG entity. EOH shares are held on behalf of clients.
The views expressed here are not necessarily those of Independent Media.