Lift­ing and shift­ing, plus turn­ing junk into money

Financial Mail - Investors Monthly - - Analysis -

ith the mar­ket these days show­ing a rather cu­ri­ous in­cli­na­tion to back niche fund man­age­ment com­pa­nies, one might ex­pect more at­ten­tion to be fo­cused on Global As­set Man­age­ment (GAM).

But GAM is not at all in­volved in fund man­age­ment (cue name change pro­posal), and can be found toil­ing away valiantly in the in­dus­trial sec­tor by of­fer­ing fi­nanc­ing on fork­lifts.

The fork­lift trade hardly seems a com­pelling busi­ness propo­si­tion, yet GAM earns a fair keep from this niche.

In the half-year to end May GAM’s profit per­for­mance was marginally be­low bud­get even though new rental con­tracts were

Wsigned. The bot­tom line was strained some­what as cost of sales in­creased with a more ag­gres­sive de­pre­ci­a­tion pol­icy be­ing ap­plied to sec­ond­hand fork­lift trucks. The roll­out of new rental ini­tia­tives also in­creased op­er­at­ing ex­penses. Still, GAM man­aged to pro­duce in­terim earn­ings of close to 10c/share, backed by re­as­sur­ing op­er­a­tional cash flow of R39m (equiv­a­lent to around 85c/share).

The fork­lift busi­ness, dull as it may be to the many ex­citable small-cap pun­ters on the JSE, does pro­vide a fairly solid plat­form for GAM’s rather sur­pris­ing diver­si­fi­ca­tion into the more riv­et­ing re­new­able energy sec­tor through its new GAM New

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