AMA Group (ASX: AMA) shares are down 49% on the recent share and rights issue. AMA shares are also not benefitting from the recent results announcement. In fact, they’re not doing well at all - and it’s more than just a little bit of internal manouevering. It’s entirely possible that there’s something wrong with the basic structure of the business. Which is what explains the continuing losses of course.
The story is that the results would have been earlier but: “AMA Group was due to deliver its full year results on Thursday 31 August but cancelled the webinar 10 minutes beforehand and suspended share trading until Monday. The Australian Financial Reviews’ Street Talk says it understands that AMA Group has Canaccord Genuity working on a capital raise and was expected to offer the shares at 8.5c each. The last time AMA undertook a capital raise was in September 2021 when investors gave it $100 million equity at 37.5c a share.” Having to shovel in more capital at a vastly reduced price is not one of those good looks. Nor is getting the results and then deciding that they can’t be released to the market without some pretty serious work being done on shoring up the capital base. It’s perhaps this more than anything else which explains the dive in the AMA share price. The business simply isn’t doing well.
AMA Group share price from Google Finance
As background here it is a mature business. This isn’t losses from investing for growth and so on, this is losses on an already leading market position: “Ama Group Limited (AMA) is engaged in the operation and development of complementary businesses in the automotive aftercare market. The Group is a leader in the Australian and New Zealand collision repair industry and a national supplier in the vehicle accessories market.” Not being able to profit from already dominating the market means that: “AMA Group Limited (ASX: AMA) announced that Carl Bizon will retire as Executive Director and Chief Executive Officer at the Group’s’ Annual General Meeting on November 23. Bizon was appointed to the position in 2021. The group also announced that after nearly five years on the Board, Anthony Day has retired as Chair and Non-Executive Director of AMA Group, and Paul Ruiz has retired as Chair of the Audit and Risk Committee and Non-Executive Director.” Yep, the whole senior team has gone.
Now, whether a new team and a refinancing can turn this thing around. Well, views will differ of course. But it’s worth noting that the team leaving now was brought in as the new team to turn this thing around.So we’re not sure whether it’s a bargain even at this new and lower price.
