BELL Share price: R8,50 JSE code: BEL

Financial Mail - Investors Monthly - - Opening Bell -

HOLD

IT’S HEAVY YEL­LOW ME­TAL

blues for Bell Equip­ment, one of the largest mak­ers and dis­trib­u­tors of con­struc­tion ve­hi­cles in Africa. The main prob­lem is min­ing, the ma­jor lo­cal mar­ket for Bell’s ve­hi­cles. CE Gary Bell says many mines have cut back on pur­chases and are wait­ing be­fore com­mit­ting to cap­i­tal ex­pen­di­ture. The re­sult has been a fall-off in de­mand for Bell’s equip­ment.

But the Richards Bay-based com­pany has been through sim­i­lar crises be­fore, and it has come through. “The com­pany is known for in­no­va­tion and re­silience,” says Bell.

A par­tial so­lu­tion would be to ex­pand out­side do­mes­tic min­ing, but here too Bell sees prob­lems. “African gov­ern­ments gen­er­ally need to con­sider be­com­ing a lit­tle more in­vestor friendly or we won’t be able to at­tract the large, rep­utable, global play­ers who are look­ing for se­cu­rity of ten­ure,” Bell notes. And with­out the global funds there won’t be much de­mand for Bell’s ve­hi­cles.

Though the com­pany sees tough trad­ing ahead, there is a lit­tle glim­mer of hope. “Our de­pen­dence on min­ing has been off­set by our north­ern hemi­sphere busi­ness, which is pre­dom­i­nantly con­struc­tion re­lated in Europe and North Amer­ica and con­tin­ues to grow,” adds Bell.

Shred­ded in­terim re­sults to end-June showed the wor­ry­ing trend of cash down and debt up. Bell has not paid a div­i­dend since March 2013.

How­ever, in­vestors should be cau­tious of selling the share now. The share price is trad­ing near its low for the year and net as­set value is more than three times higher than the price.

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