Sotuver's Ambitious Investment Plan Amidst Challenging Market Conditions
Underwhelming Stock Performance Despite Investment Efforts
Since the beginning of the year, Sotuver's stock performance has been lackluster, with a return of 5%, lower than the Tunindex. This is despite a 50% decline in revenue in the second quarter and a 39% drop since the start of the year.
Ambitious Investment Plan
On the other hand, the company has embarked on an ambitious investment plan worth 50,144 MTND. The program includes the reconstruction of one of the two furnaces at the factory and the acquisition of new state-of-the-art equipment to modernize its production chain, at a cost of 32,081 MTND. This operation is part of the normal cycle of exploitation, which typically takes place every 10 years. In this case, the renovation is taking place after 11 years of operation. This ambitious plan will enable Sotuver to improve its operational efficiency and technical expertise, allowing it to penetrate new markets in line with its 2025/2030 commercial policy and strategy.
Capital Opening and Internationalization
Yesterday, the company informed its shareholders and the public that "as part of its project to open its capital to a minority investor to support its growing internationalization, preliminary discussions with interested investors began in September 2023 and are ongoing, without any agreement being reached yet." This is not a cause for concern for the company, but rather due to the "regional and international situation" which is a "complicating factor and causing delays." The project remains strategic for Sotuver, and management believes it is "necessary to find the right partner and agreements that serve the company's development objectives."
Acquisition of SGI Shares
We understand why Sotuver proceeded with the acquisition of a portion of its subsidiary SGI's shares for 18,063 MTND. The operation has increased Sotuver's stake in SGI's capital to 52%, up from 30% as of December 31, 2023. This strengthening of control over SGI will enable Sotuver to better integrate its subsidiary's activities and generate significant industrial and technical synergies.
Market Expectations
The market will therefore be closely following this story. Management has sent a direct message to investors, indicating that, sooner or later, a partner will enter the scene. This news protects the stock price on the market, especially since the ongoing works are hindering the preservation of profitability at the same level as previous years. A good communication strategy is indeed useful.