Set for steady, enviable earnings growth increase
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