Our opinion on the current state of ELI

Ellies (ELI) is an emerging electronics company specializing in the import and distribution of electrical products, along with providing solar power solutions. However, it has faced a challenging journey since its peak in 2013 when its shares traded at nearly R10 each. Over time, the stock's value has plummeted to a mere 2c.

From a technical standpoint, the share has remained firmly entrenched in a sustained downward trend. It is considered a thinly traded penny stock, with an average daily trading volume of around R100,000.

On March 2, 2020, the company made an announcement regarding the initiation of section 189 proceedings under the Labour Relations Act, signaling its intention to retrench 183 employees. Ellies is a company that could potentially benefit directly from any improvement in the South African economy, making its current share price appear undervalued.

In a strategic move to reduce its reliance on Multichoice and DSTV dish installations, Ellies is shifting its focus towards solar energy solutions.

However, on September 26, 2022, the company announced the commencement of a section 189 procedure, preceding potential retrenchments. This news led to a sharp decline in the share price, with a nearly 20% drop.

In its financial results for the year ending April 30, 2023, the company reported a 7.7% decrease in revenue and a headline loss per share of 10.78c, a significant improvement from the previous year's loss of 713c. From a technical perspective, these results and related news negatively impacted the share price, pushing it down to 6c.

On January 31, 2024, Ellies announced its entry into business rescue proceedings, causing another substantial drop in its share price, which fell to 2c.