Trading in shares of retailer Edgars Consolidated Stores (Edcon) (ECO) has proved particularly frenzied in Tuesday’s morning session, with 2,23-million shares worth R131,56-million changing hands in 53 trades by 1300 local time.
This is more than usually trades in the counter in an average month, and made it the second-highest traded by value on the JSE Securities Exchange SA (JSE) over the session, behind Anglo American (AGL), but far ahead of third- placed Richemont (RCH) with R78,4-million trading.
Edcon’s share price has fallen by one rand or 1.67% over the morning, last quoted at R59 from R60 at Monday’s close. This was weaker than the FTSE-JSE General Retail index so far on the day, which was down 0,55%. Analysts speculated that the sudden interest in the share might have come from some players having built up overweight positions in the retailer now wanting to lighten these holdings at the current attractive level.
Profit taking at the R60 level was unsurprising, they said, given that the share price has enjoyed a good run since the beginning of 2002, up 140% from R25 in January-March 2002.
At the same time, they added, some buying interest from investors believing there could still be good news coming from the group over the near-term has kept the share price from falling too far.
The activity is relatively unusual in that, according to I-Net data, trading volumes in Edcon have been relatively light throughout the second half of 2002, not even breaching the 500 000 mark since June last year. Monthly trading volumes for the past year have averaged 2,29-million shares worth R71,4-million.
However, there was no corporate action pending known in the market that was likely to have sparked the sudden investor interest, analysts added.
Edcon earlier this month reported a 31% y/y rise in its December 2002 sales to R1,5-billion. Like-for-like growth at its Edgars stores was 20% y/y, while that for its United Retail chain was 24% y/y.
A consensus of seven analysts surveyed by I-Net Bridge rate the share a “Hold+”, and are forecasting earnings per share of 687,5 cents and dividends per share of 264,7 cents for the year to end-March 2003. – I-Net Bridge