Finweek English Edition - - Companies & markets - MICHAEL COUL­SON

IT’S NOW AL­MOST 10 years since Brand­corp listed on the JSE through the old Bloch Ltd as an im­porter and dis­trib­u­tor of branded and niche prod­ucts. Within months the size of the group was dou­bled with the ac­qui­si­tion of the Ma­tus hard­ware group, which now con­trib­utes about 60% of rev­enue and op­er­at­ing profit. There are now three di­vi­sions: Ma­tus, In­ter­brand (leisure goods and ac­ces­sories) and House & Home, which dis­trib­utes a wide range of house & home prod­ucts un­der nu­mer­ous brand names.

In the six months to De­cem­ber, rev­enue rose by 23,5% to R555m and op­er­at­ing profit by 25,7% to R743m, though a higher charge for the fair value adjustment of forex con­tracts held the gain in HEPS to 12,2%, to 50,6c, tak­ing the rolling to­tal for the past 12 months to 130,6c. OP­POR­TU­NI­TIES Un­like the rest of its peer group, which con­cen­trates on ei­ther branded goods or build­ing and al­lied sup­plies, Brand­corp strad­dles both sec­tors, giv­ing some pro­tec­tion against a down­turn in ei­ther. Hav­ing said that, at present both its mar­kets ap­pear to be show­ing strong growth. At a share price of R130, a his­toric p:e of al­most 10 and prospec­tive for­ward p:e well into sin­gle dig­its, the share doesn’t look ex­pen­sive. RISKS Com­pe­ti­tion is in­ten­si­fy­ing in both the key mar­kets, with some pow­er­ful new en­trants mak­ing their pres­ence felt. • Mar­ket cap is only just over R1bn, and trad­ing vol­umes on the JSE are thin, so the share is un­likely to be­come an in­sti­tu­tional favourite. At 22 600c, a for­ward p:e of 14 and yield of 3,3%, the share is vul­ner­a­ble to ei­ther a profit set­back or gen­eral share mar­ket weak­ness.


Source: I-Net Bridge

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