Not one to discount
At last count, light industrial conglomerate Argent boasted a NAV of R10.50/share. Just how much the market adores this business is reflected in the share price of under 400c, offering an eyebrow-raising discount of more than 60%. I calculate its real NAV at about 980c/share (sans intangibles) — but that still represents the kind of discount associated with the peddling of damaged or faulty goods.
It’s worth remembering that Argent has over the years proved capable of generating decent profits. Despite a worsening economy, earnings for the half-year to end-september (albeit clouded by sizeable impairments) still came in at 31c/share and yielded a halfyear payout of 10c/share.
Perhaps the disconcerting discount is largely a market perception that Argent has not been aggressive enough in unlocking value for shareholders. So it might come as a great relief that the company last Friday announced the sale of its less-than-glossy Cedar Paint business (along with the Silverton property that houses it) for R51m in cash.
Personally, I thought Trellidor might come knocking to discuss acquiring businesses like Xpanda, Tricks or Life ’n Leisure. But even though the paint business has not added a big lick of black to the bottom line, it appears Argent has negotiated a satisfactory exit price. The proceeds translate into about 55c/share — significant for a company with a market capitalisation of R370m.
Argent can afford to accelerate its share buyback programme or pay a special dividend at the end of the financial year. Share buybacks in this financial year may have lacked conviction, with only R2.7m spent in two recent buybacks. Argent has shareholders’ permission to buy another 18m shares. With the shares close to a 12-month low, I suspect it’s time to snag more scrip.
Arrow seeks target
Last week, investment company Niveus finalised the acquisition of Golden Arrow Bus Services from its parent, Hosken Consolidated Investments. Niveus, which also controls La Concorde (the remnants of KWV), is now centred on mobility assets that were grouped under the grand name of Hosken Passenger Logistics & Rail.
A much-overlooked fact is that this hub has already diversified from the bus services core by shifting into the luxury coach sector with the acquisition of control in Eljosa. There have already been strong hints that Niveus’s transport division could broaden into other transport segments — most notably logistics.
So it was with some interest that I noted that Jse-listed Cargo Carriers, which is controlled by the Bolton family, has gone under cautionary around a nonbinding expression of interest to buy the company. With a market capitalisation of about R270m, Cargo could easily be hauled aboard Niveus.
Vested interest
Apologies for harping on about low-key investment counter Sabvest (my favourite portfolio position), but an uncharacteristic flurry of detail around the company’s intentions for its R1.387bn dividend from SA Bias Industries is worth explaining.
We already know that US$34M will be applied to secure a 30% interest in Mandarin Industries and R93m is earmarked for an investment in Mandarin Holdings RSA. Arrangements for an asset swap investment of R300m have been concluded, of which R200m will be applied to technology stocks “similar” to Sabvest’s existing offshore technology portfolio. Sabvest also intends holding R100m offshore, with R225m retained locally for new investments.
By far the most interesting disclosure is that Sabvest will invest R250m in certain existing holdings in SA, both listed and unlisted. The company has several portfolio holdings it could bolster, including Brait, Long4life, Metrofile, Transaction Capital and Value Capital Partners. But adding to more strategic holdings like Torre and Rolfes — both trading at depressed levels — would be bolder.
Argent’s share price represents the kind of discount associated with the peddling of damaged or faulty goods