It never rains but it pours for Blue Financial Services, the troubled pan-African microfinancier, a Johannesburg-based analyst said on Friday.
The comment came after Blue Financial Services on Friday said it was expecting a loss of up to R1.15 billion for the year to February, translating into a basic loss of up to R1.92 a share and a headline loss of up to R1.49 a share.
The share price has lost 92.2 percent so far this year. Trading had been suspended on Thursday at the request of the company, which said the suspension would be brief.
It recently announced it was involved in corporate action that would see a new investor come into the company. Blue had shortlisted its preferred investors in an effort to recapitalise the company.
Dave van Niekerk, the company's chief executive, said many people, including the potential shareholder, believed in the company's business model.
The loss came as a result of reduced funding, which hampered the group's rapid expansion of the past few years.
Impairments of loan advances, goodwill and deferred tax assets exceeded R850 million. The increase in loan book provisions was largely due to a slowdown in portfolio growth.
This announcement came after the company swung into a first-half loss in November last year after tighter funding and higher operating costs continued to hurt the business.
Last year, Blue appointed Shaun Strydom as its chief financial officer, after short stints by three other financial directors.
"We have an 'avoid' recommendation on the stock. I think there is a slim chance that they may survive," the analyst said. "But they would need to be well capitalised."
The shares closed 15.4 percent higher on the JSE on Friday to trade at 30c.