BJM Private Clients

Mark Ap­ple­ton

Finweek English Edition - - Cover -

BHP BIL­LI­TON: It has world­class as­sets di­ver­si­fied by com­mod­ity and by coun­try, char­ac­terised by low cost, scale and long lives. It’s built-in growth through sig­nif­i­cant project flow over the longer-term. The com­pany ben­e­fits from a sig­nif­i­cant cost base in a weak cur­rency (rand) while its rev­enues are hard cur­rency based. Man­age­ment is highly re­garded, cash flow is strong and the com­pany ideally placed to ben­e­fit from the su­per­cy­cle. FIRSTRAND: The FirstRand stable con­sists of suc­cess­ful and spe­cialised brands, such as RMB, First Na­tional Bank, Wes­Bank, Mo­men­tum and Dis­cov­ery. The group has strong in­tel­lec­tual cap­i­tal and an in­no­va­tive se­nior man­age­ment. We’re at­tracted to the de­cen­tralised busi­ness model, as it en­cour­ages ac­count­abil­ity, and we also like the fact that man­age­ment is fo­cus­ing on or­ganic as op­posed to ac­quis­i­tive growth. While we re­gard FirstRand as a good value propo­si­tion in its own right, man­age­ment hasn’t ruled out sell­ing to an in­ter­na­tional bank, which could un­lock value for share­hold­ers. RE­UNERT: Man­ages a num­ber of busi­nesses fo­cused on elec­tron­ics and low volt­age elec­tri­cal en­gi­neer­ing. It’s a high qual­ity busi­ness with many plusses. It has exclusive use of the Nashua brand and is well en­trenched in the cor­po­rate of­fice au­toma­tion mar­ket. Nashua Mo­bile is also strongly en­trenched, CBI has valu­able pro­pri­etary tech­nol­ogy and African Ca­bles has strong mar­ket share and good mar­gins. It’s an at­trac­tively priced counter through which to gain ex­po­sure to the con­sumer, com­mer­cial and in­fra­struc­ture sec­tors of SA’s econ­omy. WOOL­WORTHS: It has a clear brand strat­egy and we like the mix be­tween food and ap­parel. Food ac­counts for more than 50% of rev­enue and has strong growth prospects. On the cloth­ing side man­age­ment is mak­ing good progress to­wards a de­sign-led process that will yield a more con­sis­tently ap­peal­ing of­fer­ing. Man­age­ment is in­no­va­tive and cash flows are strong. IM­PALA PLAT­INUM: We like the out­look for plat­inum and PMGs. And not­with­stand­ing re­cent strong price per­for­mance we don’t re­gard plat­inum stocks as ex­pen­sive. While prob­lems such as poor lease area cost per­for­mance has neg­a­tively af­fected Im­plats’ rel­a­tive rat­ing, those prob­lems are likely to be worked out in the medium term. Cash flows are likely to re­main very strong and share­hold­ers should be able to look for­ward to some good div­i­dend pay­outs.

BHP BIL­LI­TON: Buy­ing BHP Bil­li­ton is the best way to in­vest in the com­mod­ity su­per­cy­cle that re­sults from the rapid de­vel­op­ment of China, In­dia and the rest of Asia. It has world-class iron-ore, cop­per, nickel and alu­minium as­sets and is ex­pand­ing fast in oil and ura­nium. The mar­ket has con­sis­tently un­der­es­ti­mated its fu­ture earn­ings. It’s a strong buy, even at its cur­rent all­time high. MTN: MTN will con­tinue to grow rapidly in its li­censed African and Mid­dle East­ern mar­kets. Sec­ondary coun­tries in its port­fo­lio will ex­pand to ri­val their op­er­a­tions in the big three: SA, Nige­ria and Iran. Over the next five years mo­bile tele­phony will ex­pand to nearly ev­ery man, wo­man and child and mo­bile hand­sets will in­creas­ingly be­come rich lifestyle ap­pli­ances. Rev­enue growth will be driven both by voice and data ser­vices. WG WEARNE: This Gaut­eng-based ready-mix con­crete con­cern is our favourite smaller com­pany. The ready-mix mar­ket is ex­pand­ing fast, thanks to new res­i­den­tial, in­dus­trial and in­fras­truc­tural build­ing ac­tiv­ity. The Gau­train and 2010 Soc­cer World Cup sta­dium con­tracts are also in the pipe­line. We’re most im­pressed by its man­age­ment team that are both sen­si­ble and am­bi­tious. SA­SOL: De­spite its cur­rent tra­vails, Sa­sol will ben­e­fit over the next few years from high crude oil prices and the global roll­out of its pro­pri- etary syn­fu­els tech­nol­ogy. All the world’s cheap crude oil is be­ing con­sumed fast and the US, China and In­dia will look to tap their coal and gas re­serves. MASS­MART: Mass­mart is al­ready the world’s 140th largest re­tailer and ex­pand­ing fast in south­ern Africa. We’re es­pe­cially im­pressed by the rapid roll­out of its Builders Ware­house di­vi­sion. We ex­pect the spend­ing power of the SA con­sumer to grow and Makro, Game and Dion will ben­e­fit from a huge ap­petite for house­hold durable goods.¤

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