Standard Financial Markets
Rudi van der Merwe
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.