Our opinion on the current state of YRK

Oct 3, 2023

York Timber Holdings (YRK) is a forestry company which owns plantations and processing plants, as well as a wholesaling distribution network. It is the biggest player in the South African plywood and timber market. The company was founded by a Russian immigrant, Herman Katzenellenbogen in 1916. The company was listed on the JSE in 1946. The National Union of Metalworkers of South Africa (NUMSA) is the majority union at the company. York has obviously also been impacted by the general malaise in the construction industry since the commencement of the sub-prime crisis in 2008. In July 2007, York's shares reached a peak at R40. Since then the share has mostly been falling or drifting sideways. On the 13th of May 2022, the company announced that a strike at its Escarpment operations would negatively impact on its production. Escarpment contributes 51% of the company's revenue. On 5th December 2022 the company announced its intention to conduct a rights issue to raise R250m. Existing shareholders would receive 43,12791 new shares for every 100 shares already held at a price of 175c each. The announcement obviously caused the share price to drop sharply. In its results for the year to 30th June 2023 the company reported revenue down 9% and a headline loss per share of 76c compared with a profit (restated) of 53c in the previous period. The company's net asset value (NAV) fell from 857c to 579c per share. The company said that the loss resulted from costs of loadshedding, diesel, external log purchases and lower sales. The company has about R183 000 worth of shares changing hands each day which makes it practical for private investors. Technically, the share has been moving down since the beginning of 2022. It remains a volatile construction-linked counter.