Set for steady, en­vi­able earn­ings growth in­crease

Financial Mail - Investors Monthly - - Analysis -

an­tova Lo­gis­tics is still not blip­ping on the radar of too many in­sti­tu­tional in­vestors. But if the spe­cial­ist lo­gis­tics ser­vice provider can keep churn­ing out im­pres­sive profit numbers for the full year to end Fe­bru­ary, there should be one or two big-league in­vestors that start tak­ing no­tice.

Re­cently re­leased in­terim re­sults showed a solid bot­tom line fig­ure of 18c/share, backed by strong top-line growth (buoyed by the re­cent Trade­way ac­qui­si­tion), im­proved op­er­at­ing mar­gins of 28.4% (thanks again to Trade­way) and re­as­sur­ing cash generation (up 16% to R36.2m).

Based on past profit per­for­mances it seems safe to as­sume that about 60% of earn­ings will ac­crue in the sec­ond half, which would re­sult in earn­ings of at least 38c/share for the pe­riod end­ing Fe­bru­ary 2017. That puts San­tova on a for­ward earn­ings mul­ti­ple of around 9.5 — which is a lit­tle dis­mis­sive con­sid­er­ing that the com­pany has

Spumped con­sis­tently good prof­its for the past five years. Nat­u­rally the in­ter­na­tional trad­ing en­vi­ron­ment looks a lit­tle choppy at this point, and the some­what jaun­diced sen­ti­ment re­served for “com­par­a­tive” stocks such as Tren­cor and Grindrod has also in­fected San­tova.

There’s no deny­ing that trade vol­umes are stag­nat­ing or de­clin­ing (in some spheres), which pre­sents a chal­lenge in grow­ing top line, and that with on­go­ing over­ca­pac­ity in ocean and air­freight, in­tense com­pe­ti­tion (with new en­trants in SA) could grind away at op­er­at­ing mar­gins.

San­tova, though, com­mands spe­cial­ist niches that do not ex­pose op­er­a­tions to the broader trad­ing cy­cle.

The com­pany has stressed in its in­vestor pre­sen­ta­tions that its tai­lor-made solutions are able to meet di­ver­gent cus­tomer and sup­plier ex­pec­ta­tions.

Be­ing a rel­a­tively small player (an­nual turnover in the year to

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