Johann van Zyl
BIDVEST: With a market cap of R46bn it earns around 25% of its profits offshore, but otherwise should be considered a proxy for SA’s domestic economy. Its business divisions reach across most industrial sectors, with both acquisitive and organic growth. Earnings and dividends have grown on average around 25%/year and the share price has grown 30%/year for the past 15 years. Management is still aggressively looking for acquisitions. REUNERT: This electronics and electrical engineering company has experienced recent share price underperformance due to negative publicity over its black empowerment structure and cost. Yet the company’s diverse divisions, whether linked to infrastructure spending or personal and business consumption, are all performing well in SA’s currently benign economy. STANDARD BANK: It’s SA’s biggest in terms of market capitalisation (R145bn), headline earnings (R10,8bn) and advances (R458bn). The six-year compound annual growth rate of headline earnings per share is an impressive 19% and that of dividends per share 25%. Its retail banking management is forward thinking and has a good track record in identifying areas that will be profitable over the longer term. ANGLO PLATINUM: The platinum group metals basket price (in rand) is up 169% over the past year. At these metal prices we should see earnings growth for Angloplat of 30% and 24% over the next two financial years, with earnings multiples unwinding from 21 times historical, to 16x for the current financial year and 13x for 2008. The long-term price:earnings ratio for Angloplat is 21. It recently reduced its dividend cover to 1 times. If that’s maintained then the forward dividend yield is an attractive 6,2%. BHP BILLITON: Strong cash flow for global miners is a feature of this stage of the commodity cycle – and BHP Billiton is no exception. The group’s recently announced US$10bn share buyback, to be completed by August 2008, should continue to provide support for the share price. Recent upgrades in expectations for 2008 iron ore prices and a recovery in base metal prices bodes well for earnings growth, which should increase by 40% to June 2007 and by 18% to June 2008.