Stan­dard Fi­nan­cial Mar­kets

Rudi van der Merwe

Finweek English Edition - - Cover -

EN­VI­ROSERV: It’s the dom­i­nant player in SA’s haz­ardous waste dis­posal sec­tor. We ex­pect earn­ings of En­vi­roServ to be driven by strong eco­nomic growth in the mar­kets in which it op­er­ates, in­clud­ing SA, Qatar, Mozam­bique and An­gola. Waste is a by-prod­uct of eco­nomic growth and vol­ume growth is driven by out­put growth from ex­ist­ing clients. The trend to­ward stricter en­vi­ron­men­tal leg­is­la­tion world­wide, plus a greater fo­cus on the en­vi­ron­ment by cus­tomers and con­sumers, should sup­port the de­fen­sive na­ture of its earn­ings. High bar­ri­ers to en­try will help main­tain mar­gins.

SA­SOL: The evo­lu­tion of the busi- KWV: This com­pany will con­tinue to de­liver solid, de­fen­sive earn­ings growth on the back of its strong cash gen­er­at­ing prop­er­ties. KWV has a strong brand port­fo­lio, at­trac­tive rand-hedge qual­i­ties (which are grow­ing, care of the in­ter­na­tion­al­i­sa­tion of the SA brand port­fo­lio, with the fo­cus on Amarula, Sa­vanna and SA wine brands). The po­ten­tial ra­tio­nal­i­sa­tion of the share­hold­ing struc­ture and im­prove­ment in the trade­abil­ity of the stock pro­vide an un­der­pin in the form of a po­ten­tial rerat­ing. The div­i­dend yield is ex­pected to re­main at­trac­tive around the 4% level. ness model will over the next few years lead to in­creased ex­po­sure to for­eign earn­ings as the group mon­e­tises its pro­pri­etary gas and coal to liq­uids tech­nol­ogy in Qatar and China. Short-term con­se­quences re­gard­ing fluc­tu­a­tions in the rand/oil price and wind­fall taxes may well pro­vide at­trac­tive en­try points to this highly cash gen­er­a­tive busi­ness. ABSA: Re­cent re­sults show that syn­er­gies from the Bar­clays plc in­vest­ment are hav­ing a mean­ing­ful im­pact and we would ex­pect that trend to con­tinue. Bar­clays will con­tinue to add value from a stra-

te­gic view­point and the po­ten­tial in­jec­tion of Bar­clays African op­er­a­tions could fur­ther en­hance Absa’s foot­print and scale.

HU­DACO: Its strong mar­ket po­si­tion and highly cash gen­er­a­tive model – to­gether with ex­pand­ing min­ing, con­struc­tion and in­dus­trial sec­tors – are likely to drive earn­ings and div­i­dend growth over the next five years.

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