Our opinion on the current state of CGN

Cognition Holdings, operating under the ticker CGN, is a conglomerate specializing in a variety of services ranging from agency-based payment systems and fax-to-email services to knowledge creation and management. The company positions itself as a multi-disciplinary entity offering a wide array of services to Fast Moving Consumer Goods (FMCG) companies, media, and digital agencies, encompassing data collection, communication, research, and marketing.

For the fiscal year ending on 30th June 2023, Cognition reported a 13.6% decrease in revenue. However, the company saw a significant improvement in headline earnings per share (HEPS), recording 3.15c compared to 0.46c in the previous period. This financial year was notably marked by the disposal of the group's majority interest in Private Property, a move classified as discontinued operations. This strategic disposal resulted in a direct pre-tax profit of R66.7 million and substantially enhanced the group's cash reserves.

Looking ahead to the six months ending on 31st December 2023, Cognition anticipates an impressive increase in HEPS, forecasting a rise between 260% and 280%. Such growth points towards a positive trend in the company's operational and financial performance, reflecting the successful execution of its strategic initiatives.

Despite these promising developments, Cognition faces a significant challenge in terms of market liquidity. The average daily trading volume of its shares is around R10,000, presenting a practical barrier for private investors. This low trading volume can hinder the ability of investors to enter or exit positions without impacting the share price, making it a less attractive option for those looking to actively trade or invest substantial amounts in the company.