Tough nut to crack

Well, Imuniti Holdings – the company with some good products, but plans that always seem to go awry – has finally made a bottom line profit: only R1,9m – but that’s a lot better than the R9,4m loss in its previous financial year. It may be too early to call it a turnaround due to other current issues, but this AltX-listed small cap might just come back into investors’ sights again.

Imuniti Holdings [JSE:IMU] has battled for most of its time as a listed company. But there have been some big changes: virtually a new board of directors, a new CE and a more profitable business. Much of that comes from severe cost-cuttings. But the business is looking a lot better.

Unfortunately, we couldn’t contact new CE Henk van der Merwe. He was “up in Gauteng” and the Durban office didn’t know how to get hold of him. That’s just one of the big changes coming up at Imuniti. The business, always headquartered in Durban, will soon be moving to Gauteng.

Another change is a proposed name change that will no doubt go through at the AGM on 24 June. The company will be known as Nutritional Holdings Ltd, the core of the business that supplies high protein food packs. The new name will be a better reflection of its underlying business and might just improve the company’s luck to get away from the Imuniti name. But in an irony of ironies, Nutritional Holdings will have a JSE code of NUT. And any investor looking back on Imuniti’s colourful past five years will probably agree it’s done some nutty things. Worst was to think its food packs could carry the business, being sold to large groups such as mining houses. That never came off. The idea and product were good; the business plan just didn’t work out.

Then Imuniti famously fired its very politically correctly aligned empowerment shareholders. They weren’t doing anything for the company, it said. It was a move quietly applauded in a number of circles. This writer can remember a couple of times he sat with Paul Fouché, a co-founder and then CE, at Billy the Bums, a pub around the corner from Imuniti’s old head office. Over a few beers Fouché would passionately outline his plans for Imuniti. His ideas sounded good. Somehow they seldom seemed to work.

But Fouché is gone now, having recently resigned from the board. That alone marks a sea change for Imuniti. It has effectively become a new company under new management.

At its AGM it will also seek to raise a capital injection of R12m from shareholders. Imuniti lost some business over its past financial year due to what it called “working capital constraints”. What that means is there were times it didn’t have the cash to meet demand. Better working capital management should become a priority.

A recent new deal to supply nutritional packs under contract to a company saw its price shoot up 14% to 8c/share. That’s what happens when a share price seldom gets to double digits. Any movement is a big percentage gain, or loss. But shareholders can’t complain. Moving around at such low levels the price is up 200% over the past six months and 350% for the year. It’s currently trading at 9c/share.

But true to its past, just as things look better another problem emerges for Imuniti. This time it’s a modification in its auditor’s report. The modification is “a material uncertainty which may cast significant doubt on the group’s ability to continue as a going concern”. That doesn’t sound good.

But maybe Imuniti will again struggle through. It has lots of struggle experience. For the first time in years it looks like a company at least worth investigating as an investment.